From the deregulation of commercial banking in the Reagan administration until the great financial crisis, bank M&A was a pillar of the M&A market, accounting for 10% to 20% of overall deal activity and many of the largest deals in any given year. Companies such as Bank of America (BAC) and JPMorgan Chase (JPM) grew by making ever-larger acquisitions, as did regional banks that were often swallowed up by larger competitors when they reached a certain size.
But after the near collapse of the financial system in 2008, the strictures of the Dodd-Frank Act and regulatory conservatism have combined to quell merger activity. During the Obama administration, there wasn't a single bank deal worth more than $9 billion, and last year saw only six worth more than $1 billion, the largest being Canadian Imperial Bank of Commerce's (CM) $3.9 billion agreement to buy PrivateBancorp, according to Dealogic.
That may change under President Donald Trump if Congress and regulators relax aspects of Dodd-Frank, which would be good news for lawyers and bankers who specialize in financial services M&A, though stability at the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency means a shift would not be immediate.
Two law firms have had dominant positions in bank M&A since the 1980s: Sullivan & Cromwell and Wachtell, Lipton, Rosen & Katz, which have worked across from one another on each of the four largest bank deals announced since 2009. The lawyers who built those practices are leaders of their firms. H. Rodgin Cohen was Sullivan's chairman from 2000 to 2009 and is now senior chairman, while Edward Herlihy is the co-chairman of Wachtell's executive committee.
They also showed up on several of last year's largest bank deals. Sullivan's Mark Menting represented Scottrade Financial Services on its $4 billion agreement to sell to TD Ameritrade Holding (AMTD) , which tapped Wachtell's Herlihy, Matthew Guest and Richard Kim, while TD's largest stockholder, Toronto-Dominion Bank, used Lee Meyerson at Simpson Thacher & Bartlett. Menting, Cohen and Jared Fishman advised FirstMerit on its $3.6 billion sale to Huntington Bancshares (HBAN) , which tapped Herlihy and Nicholas Demmo. Menting and Cohen also advised EverBank Financial on its $2.7 billion agreement to sell to Teacher Insurance and Annuity Association of America.
On the investment banking side, Kenneth Coquillette at Goldman, Sachs (GS) had a very strong year, advising Scottrade, Huntington and PrivateBancorp, which used Herlihy, Guest and Kim for legal counsel.Financial services boutique Sandler O'Neill + Partners was the other standout on the banking side. James Dunn III advised FirstMerit and teamed with Goldman to advise PrivateBancorp, while Sandler's Mark Biche and Ben Schmitt worked with Chemical Financial and Jonathan Doyle and Scott Clark represented Yadkin Financial on its planned $1.5 billion sale to FNB. ( FNB)