James Woolery of JPMorgan Surveys the M.&A. Scene
Reposted from New York Times | by Steven M. Davidoff
Earlier this year, James C. Woolery left one of the plum legal jobs in the world, as a partner at Cravath, Swaine & Moore, to become the co-head of North America mergers and acquisitions alongside Chris Ventresca at JPMorgan Chase.
At Cravath, Mr. Woolery was one of the rising young superstars at the firm, advising Air Products on its $6 billion hostile offer for Airgas, Affiliated Computer Services in its $6.4 billion acquisition by Xerox and TXU in the largest private equity deal in history, its sale to Kohlberg Kravis Roberts and TPG.
He is off to a strong start at JPMorgan, already advising on two of the biggest deals of the year: AT&T on its $39 billion acquisition of T-Mobile USA and Meco Health Solutions in a $29.1 billion acquisition by Express Scripts.
While Jim Woolery, a Kentucky native, will not admit whether he misses the private dining room for Cravath partners or is working harder now at JPMorgan, he was quite open about the challenges and rewards of his new job when I spoke with him last week.
Q. You turned investment banker from a lawyer and partner at Cravath. What has been the big difference between the two jobs?
A.JPMorgan is a large, diverse company. The number of different people I come into contact with, internally and externally, in a given week is enormous. I enjoy the people side of the business — so it’s a plus. Cravath is an amazing firm. By definition, you are deeply involved in a fixed number of client projects there — rewarding work. The number of people you interact with in the job is greater here.
Q. Do you find your law background useful?
A. Very useful. Every transaction has a financial and a legal side to it. To marry the two in a way that prioritizes issues for the client and achieves the client’s goals is helpful to me — and more importantly is of great value to the client. The law — and great lawyering — is a worthwhile, important profession. It is very important to folks who have spent time in the practice – regardless of their career path.
Q. What’s your day-to-day life like?
A. I spend a good part of the day with clients of JPMorgan — whether they are engaged in a transaction or not. I travel a fair bit — so the old saw about bankers and airplanes is true. I spend the balance of my time with my partners across the company — Jimmy Lee in the investment bank, Doug Petno and Rob Holmes in the commercial bank, John Duffy in the private bank, Jim Casey and Andy O’Brien in leveraged finance, Isabelle Seillier and Severin Brizay in Paris, and so on. We are in a unique position to deliver JPMorgan across industries, across products and across regions. In order to do that, we maintain an incredibly active dialogue with each other, and in between all of that, my partner, Chris Ventresca, and I spend time on the M.&A. floor every day, in the analyst bullpen and in the managing directors’ offices. There is simply no substitute for personal interaction in our business.
Q. I would suspect that you are pitching business much more now. What have you learned about how to make a good “pitch”?
A. This business is extremely competitive. To win a pitch, you have to demonstrate that you have the team and the ideas to deliver for the client. You also have to sell it straight — some of the best advice we give is not to do a deal. So put M.&A. with capital markets, industry know-how, rollout capability, market and investor relations, senior JPMorgan leadership and stay with it — and you will be successful. I find I pitch better when I let my partners do most of the talking.
Q. What about AT&T and Medco in terms of approval? These are big deals — lots of implications.
A.Both deals are in review and the clients are managing the process, so I would defer to them to comment specifically. I will say in general that antitrust policy in this country should be struck in terms of what is good for consumers and what will enhance a consumer-centric economy.
You cannot benefit the consumer by locking up the economy. Our businesses must be fit to compete in a global arena. Given the velocity of the global economy, we must be careful not to fight the last war in terms of policy, but the government has a job to do — that it is mandated to do — and it’s a process. Patience with the process is a necessity.
Q. To what extent is your job balance-sheet banking? How much do your skills matter versus the fact that you can provide the necessary financing for deals?
A. Strategic advisory skills are crucial to achieving an M.&A. role. Clients are sophisticated. They can choose financing banks and M.&A. advisers. If it were otherwise, boutiques would not exist. So the notion that providing the balance sheet delivers the M.&A. role is just plain wrong — and the numbers bear that out. We have more sell-side assignments this year with no financing role than we have assignments with financing — and we still lead the tables when you take out deals with our financing. Having said that, combining M.&A. advice with financing advice — particularly in these challenging markets — is a winning combination. You need both to deliver a complete advisory service to clients.
Q. How do you see the M.&A. market unfolding over the next year or so?
A. This market is trading on macro concerns that have a political and regulatory genesis. The market wants clarity and resolution. It will be a bumpy ride for a few months — with continued volatility — and then the market will begin to look to the U.S. elections in the spring for direction. What is different now versus 2009 is that many companies are well capitalized with access to attractive financing. Investors want that capital deployed to achieve growth, including through synergistic, scale, core acquisitions. The market has rewarded buyers who move in that direction.
We have many clients who want to play offense in these markets to drive shareholder value. So deals will occur and will gather steam into the second quarter of next year. But overall deal volume will probably be challenging until the market gets the clarity it wants and equity values level off. The sooner we get clarity, the sooner volumes will return. The demand for deals is there.
Q. It is almost four years after the credit crisis began and private equity still has yet to do a $7 billion deal. What will it take for this to happen?
A.The market for large, leveraged deals is choppy right now. Deals of size demand more equity and carry more risk. Having said that, when the economy begins to grow at a sustainable, foreseeable rate, leverage will be more attainable, valuations will be more robust and shareholders will want the opportunity to take money off the table, including through larger LBOs. We aren’t there yet, but sponsors are creative — and they will adapt and deploy capital in a variety of ways to achieve returns. We believe more sponsors will look to bridge companies through choppy markets and will of course look to public company carve-outs, including large carve-outs, in which to invest. A large LBO will happen at some point — and then we will stop talking about when and if.