March 26 (Bloomberg) -- On a Thursday evening in September 2003, Pamela Daley, General Electric Co.'s top mergers and acquisitions lawyer, boarded Chief Executive Officer Jeffrey Immelt's custom 737 in pursuit of the company's biggest acquisition. The jet touched down near London, where Amersham Plc CEO William Castell and his advisers climbed in.

Immelt and Castell and their teams settled into separate onboard offices. Daley shuttled between them with GE's offer and Amersham's responses, knocking on the doors to move things along.

``At some moment, Jeff said, `That's as far as I can go,' and Sir William looked down -- 30 seconds is an eternity in that setting -- looks up and says, `Let's do it,'' Daley recalls. ``And that was it.''

Twenty-three hours after taking off from a tarmac near GE's Fairfield, Connecticut, headquarters, Daley and Immelt were back in the U.S. with an agreement to buy the medical-diagnostics and biotechnology company for $10 billion. Daley, 54, is now chief dealmaker at GE, the second-biggest company in the world by market value, after Exxon Mobil Corp.

She's in charge of every acquisition and sale not related to the company's financial units -- a realm that accounted for more than 60 percent of GE's $163.4 billion in revenue last year.

In addition, Daley, whom Immelt promoted to head of business development in July 2004, sits on the GE board that studies finance-related mergers.

More Deals

``She's seen more deals than most bankers I know,'' says Dennis Hersch, chairman of M&A at JPMorgan Chase & Co. in New York.

GE spends $500 million a year on fees for M&A and issuing debt, more than any company aside from private equity firms, according to people familiar with the matter. Daley has been butting heads with some of those firms lately as they go after the same deals.

Immelt, 51, is counting on Daley to deliver acquisitions in areas including health care, water treatment, oil and gas exploration equipment and alternative power generation, like wind turbines. He's agreed to $80 billion of purchases so far.

Daley has been Immelt's chief strategist in GE's exit from the insurance industry, part of the $35 billion of assets he has shed in slow-growing or volatile industries.

Daley orchestrated the divestiture of Genworth Financial Inc., the life and mortgage insurance unit that GE sold in public offerings totaling more than $11 billion during 2004, '05 and '06. She was the leader of hundreds of meetings about Genworth during almost two years, says Thomas Roberts, a New York-based senior partner with law firm Weil, Gotshal & Manges LLP, which advised GE.

Stagnant Stock

``It's a monumental undertaking of which she was a critical part,'' says Roberts, who met Daley in the late 1990s when she was GE's head M&A lawyer and she suggested the two have dinner at Asia de Cuba, a fusion restaurant in Manhattan.

In 2005, Daley steered one of Immelt's biggest deals: GE's $7.7 billion sale of its reinsurance unit to Zurich-based Swiss Reinsurance Co. Former CEO Jack Welch pushed GE into insurance in 1983. By 1998, profit at the reinsurance unit had peaked at $790 million, Welch wrote in his memoir, ``Jack: Straight From The Gut'' (Warner Books, 496 pages, $29.95).

Immelt, who took over from Welch four days before Sept. 11, 2001, determined after the terrorist attacks that insurance required too much capital and detracted from his goal of getting annual profit growth humming at more than 10 percent. He failed to reach that target in 2002, '03 and '04 and returned to that pace in '05.

`Call Me Personally'

Immelt still has a way to go to sell his overhaul of GE to investors. GE shares have slid 9.7 percent during his tenure, to $35.82 on March 23. The Standard & Poor's 500 Index gained 32 percent in that time. In Welch's first 5 and half years as CEO, from April 1981 to October 1986, GE stock soared 115 percent.

Welch, who now teaches a class on leadership at Massachusetts Institute of Technology's Sloan School of Management, interviewed Daley in 1989. She was working as a partner at law firm Morgan, Lewis & Bockius LLP in Philadelphia, where she specialized in cross-border tax financings. He hired her to start in the tax division.

``At the end of the interview, which really wasn't an interview, Jack gave me his card. Can you imagine?'' Daley recalls, seated at a table in her office, the sun streaming onto bookcases filled with deal mementos, including a bottle of champagne bearing Genworth's star burst logo.

``He said, `If you have any inclination that you're going to decline this offer, I want you to call me personally and explain to me why before you do it.''' She didn't.

`We Bring Good Things'

By 1991, Daley, who was first in her class at the University of Pennsylvania's law school in 1979, had landed the job of GE's top M&A lawyer. Hersch met her the next year, when GE was selling its aerospace unit to the company then known as Martin Marietta Corp. for $3.05 billion. At about 3 a.m., when details were wrapped up, Hersch commented that he'd like a drink. Nothing was available.

The next day, a slender box arrived from Daley with a bottle of vodka bearing a tag that read, ``We bring good things to life,'' GE's advertising slogan at the time. Daley continues that tradition, sending flowers to the spouses of bankers and staff members when a deal takes months of their personal time. When a transaction is completed, she may also send Cristal champagne.

Cultivating a relationship with Daley in Immelt's acquisition-hungry era is a prize for Wall Street investment banks.

`All Roads Lead to Her'

``For bankers wanting to do business with GE, all roads lead to her,'' says Ruth Porat, who runs the financial institutions group at New York-based Morgan Stanley and who was on the other side of the Amersham acquisition.

Porat recalls that Daley worked on the U.K. tender documents, on employment agreements for Amersham executives and on how to handle the announcement to the media, as well as the larger issue of bargaining over price. ``She doesn't skim,'' Porat says.

Now, Immelt wants Daley to jump on deals that take advantage of what GE estimates will be $4 trillion in global spending by 2015, as China, India and other developing countries build utilities, airports, railroads and hospitals.

GE already has a $120 billion backlog of orders in those areas, Immelt said in his letter to shareholders in February. GE is also going after companies that can deliver in the worldwide race for energy.

``Acquisition-related growth is going to be a key for them going forward -- and being able to execute on that,'' says Stephen Hoedt, an analyst at Cleveland-based National City Corp., which owns more than 21 million GE shares.

A $15 Billion January

Daley picked up the pace in January with plans for about $15 billion in acquisitions. One indication of GE's deal-making reach: That figure was equivalent to more than half of the total of $24.7 billion in global leveraged buyouts announced during the same month, according to data compiled by Bloomberg.

Daley's team led GE's $1.9 billion agreement to buy oil and gas drilling equipment maker Vetco Gray Inc. from private equity firms including 3i Group Plc. Vetco's 18 percent sales increase last year fits with Immelt's profit goals and his demand that GE deliver a 20 percent return on the capital it invests.

He's also striving for annual sales growth from companies GE has owned at least a year to outpace the rise in global domestic product by two to three times. Last year, Immelt's goal for GE was about 8 percent. This year, it's about the same.

Daley is ditching units that don't measure up. In another January deal, she prepared the proposed sale of GE's 77-year-old plastics unit, where both Immelt and Welch cut their teeth. Higher costs for benzene, a material derived from oil, are making plastics too risky for predictable growth. The unit's profit declined 12 percent in the fourth quarter after GE had forecast a 5 percent rise.

`Hopelessly Modest'

Daley will evaluate the bids and help choose the winner. GE wants to reap about $10 billion from the deal and plow proceeds into areas more likely to generate reliable profit increases.

Gordon Dyal, global head of M&A at New York-based Goldman Sachs Group Inc., estimates that GE does about one in 10 of the deals Daley's team evaluates.

``She's the head of M&A at a company that's the size of a small country and which executes a massive amount of M&A transactions,'' he says. As for Daley, ``she's hopelessly modest,'' Dyal says. ``She'll say she was superficially involved when she drove the bus across the country.''

The road for GE has gotten rougher lately. Last year's record $700 billion of buyouts led by private equity firms means Daley is navigating a more complex world than when Immelt took charge.

Private Equity Dominates

``I can't remember a deal we did with private equity until 2002, and now they're the buyer or seller on probably half the deals we look at,'' Immelt says. ``We need someone who can walk into an office at a KKR or Apollo and be able to hold their own.''

Apollo Management LP, Kohlberg Kravis Roberts & Co. and others bring more competition -- and potentially higher prices -- when Immelt goes shopping. With Amersham, GE paid 800 pence a share, or 51 percent more than the 530 pence at which Amersham was trading when the company announced it was in acquisition talks. Premiums like that are giving some investors pause.

``Strategically, everything makes sense,'' says Peter Bates, an analyst at Baltimore-based T. Rowe Price Group Inc., which owns more than 132 million GE shares. ``I just don't want to see them overpay.''

Private equity firms also mean a wider pool of buyers for the pieces of GE that Immelt doesn't want. With more buyers and sellers out there, GE uses bankers for intelligence about the market, Daley says. She asks advisers for a two- to three-page summary -- not an opus.

Do You Know GE?

``People are too busy to be taken through a 50-page pitch,'' she says. On an acquisition, she needs to know a target's customers, how it sells to them and how GE can make more money than the business is currently making.

Daley has a rule for any banker seeking a toehold in her universe: Know your strengths -- and know GE. Advisers who want to break into GE Energy, the world's biggest maker of turbines, or GE Healthcare, now home to Amersham, need to do their homework.

``Figure out if you have the best energy bankers,'' Daley says. ``Visit our energy business. If you're better in health care, go see the health care guys. The worst thing you can do is send a mediocre team into one of our big businesses. That will hurt you.''

Daley recalls one case when bankers didn't get it. They pitched her on dot-com acquisitions. ``That's an example of somebody coming in, recommending big deals that weren't really in GE's best interest,'' she says. ``They were in the bank's best interest. Not a good fit.''

Field General

Rick Leaman, joint global head of investment banking at Zurich-based UBS AG, worked with Daley on the sale of GE's Advanced Materials unit, the maker of everything from lipstick additives to caulking. The talks spanned 16 months, ending with a $3.8 billion sale to New York-based Apollo in December.

``If you're providing value, her feedback is supportive,'' Leaman says. ``If you're not, her feedback is just as direct.''

With Apollo, Daley needed to persuade Bayer AG and Toshiba Corp. to speed the sale of their stakes in Advanced Materials joint ventures so GE could sell the whole unit by December 2006.

``We were e-mailing daily,'' says Keith Sherin, GE's chief financial officer. ``We were talking every couple of days.''

JPMorgan Chase Vice Chairman James Lee Jr., who also advised GE on the sale, says it was one of the most complicated he'd seen. GE wound up with a 10 percent stake and $400 million in notes.

``She was a field general,'' Lee says of Daley. ``She was at the law firm at 2:30 in the morning grinding through the details with the top people from Apollo. I know because I was there with her.''

Rating Bankers

Sherin says Daley takes on the most-contentious parts of a deal herself. ``She tackles the top three to five issues in any transaction, distills them and gets decisions made around those issues,'' he says.

GE evaluates and measures everything, rating its bankers every six months. It asks about 50 questions to gather complaints, praise and comments on recent deals. This year, Daley is adopting a second survey.

The main question in both is: How likely are you to recommend this bank to a colleague? A score from 0 to 6 is labeled a detractor, from 7 to 8 is termed passive and from 9 to 10 is a promoter. GE calculates the percentage of promoters and subtracts from it the percentage of detractors.

``It's a very small handful of banks that have a positive net promoter score,'' she says.

GE shares reviews, good or bad, companywide, potentially blowing chances for bankers in dozens of industries. ``If you're great on energy and lousy in health care, doing something mediocre in health care will get over to the guy at energy,'' Daley says.

Attention, Intensity

Daley gets her own feedback from her boss, Immelt.

``I have just never seen anybody that could sustain the level of attention and the intensity that Pam can,'' he told GE executives during annual planning sessions in January 2004 in Boca Raton, Florida.

At the dinner for 600, he gave Daley the chairman's award, recognizing her contribution to GE's growth. The prize, which goes to one person a year, included a $25,000 donation to a charity of her choice. Daley selected the Connecticut Audubon Society.

Daley meets with Immelt about once a month to go over what's on her plate. She likes his immediate reactions to her team's ideas. He personally reviews every proposed deal worth more than $5 million.

That's vital, Daley says, because right away she knows the likelihood of getting it done. The two sit down more often if a big transaction is brewing. GE's typical deal size is about $500 million-$1 billion.

Yankees Fan

They share an understanding about GE's bankers: Immelt needs to know and trust them. ``I'd be hard-pressed to take a brand-new banker or a brand-new firm and recommend them to Jeff on a big deal,'' Daley says. ``He's entitled to work on a deal with somebody's he's familiar with.''

That was the case with Amersham. Goldman's Dyal was GE's adviser as the two sides negotiated on the jet outside London. Immelt had worked with Goldman bankers when he ran GE's medical equipment division. Goldman is now advising on the GE Plastics sale. For Dyal, it was the first time working directly with Daley.

Daley grew up in Longmeadow, Massachusetts, near Springfield in the western part of the state. Her father, Edward, built a company that supplied construction materials after World War II. Daley followed in his footsteps in one way: She developed a passion for the New York Yankees in a region obsessed with the archrival Boston Red Sox. Daley describes her mother, Elizabeth, as a bridge player and math whiz. Both are deceased.

Ivy League

Daley says she admires her older sister, Jennifer Daley, an internist, for pursuing her love of medicine. Jennifer, 57, is chief medical officer at Tenet Healthcare Corp., the second- biggest hospital chain in the U.S.

Both Daley women are Ivy Leaguers. Jennifer graduated magna cum laude from Brown University; Pam was a 1974 summa cum laude graduate of Princeton University with a degree in Romance languages. She was editor in chief of Penn's law review and taught at the school as an adjunct professor for most of the 1980s.

Today, she serves on the university's board of bar overseers. Daley married her second husband, Randall Phelps, in August 1995. The announcement in the New York Times said he was president of U.S. Energy Corp. Today, he invests in real estate, Daley says.

The two adopt stray cats from shelters because they don't believe in promoting the breeding of pets, she says. Over the years, they've taken in two or three at a time. At the moment, they have one.

Big Cats

Daley joined the board of the World Wildlife Fund in 2004. ``She's a great lover of cats,'' says Carter Roberts, the group's CEO, who says Daley is interested in preserving the roaming corridors for endangered tigers and snow leopards. Daley has traveled with the board to the Galapagos and will be going to the headwaters of the Amazon River in Peru.

``She has been great at making connections to business leaders who can help with our work,'' Roberts says. After Amersham, Daley persuaded Dyal to join the fund.

Daley, who's 5 feet 9 inches tall, was one of about a dozen professional women who posed for an advertising campaign that Annie Leibovitz photographed. The spread ran in ``Elle,'' ``Mademoiselle'' and ``Vogue'' in 1998.

``It was a crowning professional achievement,'' jokes Daley, who says she got her break because she knew one of the designers. Daley, her layered hair blown back, is wearing bluejeans, a V-neck blouse and a blazer.

``This was all Anne Klein clothes,'' she says. ``One is a great pair of jeans I still have.'' Ann Richards, the late governor of Texas, actress Joan Allen and professional basketball player Lisa Leslie were among the other models.

Born Teacher

Daley describes teaching as her first calling. ``When they ask you the question when you were a little girl, 'What are you going to be when you grow up?' I was going to be a teacher,'' she says.

She returns to her West Philadelphia stomping grounds once a semester, armed with cases from GE deals. Students from Penn's law school and the university's Wharton School attend her class.

``We've got students from both schools hooked on the idea of being great lawyers that have to work with great business people and vice versa,'' says Michael Fitts, the law school's dean.

In 1989, while Daley was at Morgan, Lewis & Bockius, GE's top tax attorney, John Samuels, learned she might be open to leaving Philadelphia. Daley says she knew Samuels from years earlier when he'd tried to recruit her for New York-based Dewey Ballantine LLP.

Because Daley was getting a divorce from her first husband, she was willing to move. In what she says was a short time, she was interviewing with GE's top brass: now retired executives Dennis Dammerman, General Counsel Ben Heineman, Senior Counsel Phil Lacovara and, later, Welch.

Tungsram Deal

Daley says that conversation was mostly personal as Welch had just gotten married over the weekend to his second wife, Jane. Welch declined to comment for this article.

Her first big deal came with now retired Vice Chairman Paolo Fresco, who oversaw GE's international units. In 1990, after the fall of the Soviet Union, GE paid about $150 million for Tungsram Co., Hungary's largest maker of light bulbs. General Motors Corp., Levi Strauss & Co. and McDonald's Corp. followed, opening Eastern bloc nations to Western development.

Daley reaches into the bottom shelf of one of her book-cases for a leather-bound book listing transactions from her first years with GE. She finds Tungsram.

``This is how deals used to be memorialized; it's a lost art,'' she says, showing the deal book and recalling the celebratory dinner in London with Fresco and a small group of GE executives. It was truffle season, and they dined on the delicacy, she recalls.

Making the Rounds

Daley, a vegetarian, loves to cook. Her favorite dish to prepare is penne pasta with five cheeses and tomato. ``It works for me,'' she says of not eating meat. ``I have unbelievably low blood cholesterol.''

Heineman set up Daley for her current job over lunch at a diner near GE headquarters in 2004. He told her the business development position was being vacated by Robert Jeffe, who's now at Deutsche Bank AG. Daley said she was interested, and Immelt blessed the idea.

In her first 18 months in the new job, Daley made the rounds on Wall Street to introduce herself to top bankers. Now, she spends about half of the year in Fairfield, managing a staff of four women and eight men.

Many joined GE from Wall Street. Another two dozen people on her team are in Europe; 13 are in Asia. The rest of GE's 180 business development employees are spread across its divisions. They coordinate with Daley's office, reporting to both their division CEOs and to Daley's team.

Didn't Need Banker

Every year, Daley asks GE's business heads for their wish lists: the top five acquisitions and top five joint ventures. She evaluates each to make sure it fits Immelt's goals. The chiefs present the lists to Immelt and top executives. Her staff keeps a running tally on every part of the target -- from earnings and sales to changes in the industry. At any point, anybody with authorization can tap the database.

That's what happened in January, when GE agreed to buy part of Abbott Laboratories' diagnostic equipment units for $8.13 billion in cash. ``We coveted Abbott's business,'' Joseph Hogan, CEO of GE Healthcare, said when the purchase was announced.

Abbott CEO Miles White and Immelt had been talking for years about partnerships. White called Immelt in mid-2006 to discuss a sale. Daley's team had been collecting facts on the Abbott units for more than three years and had them available for Immelt.

``We were familiar with the target,'' Daley says. ``We really didn't need a banker in this case.''

Red-Yellow-Green

Planning how to fold a company into GE begins long before Immelt signs the final papers. Managers in the acquiring unit look at the pieces on both sides -- from which factories and research teams will be better for the combined company to which duplicate suppliers GE can eliminate.

Immelt or the CEO of the unit appoints an integration manager for most deals. Deputies enter details of the combined company that they're responsible for into a red-yellow-green electronic checklist. Red items indicate what needs attention, such as bottlenecks in combining a sales force.

``Issues bubble up to the top from people doing every little task to the next level, up to the very senior managements,'' Daley says. ``There's a lot of accountability.''

When an acquisition doesn't go as planned, it's part of Daley's job to autopsy what went wrong. That happened with a purchase from Enron Corp. In 2002, GE bought the wind turbine business for about $205 million in bankruptcy court.

`Harder Than We Thought'

Later, American Electric Power Co., an Enron customer, complained to the bankruptcy court in Manhattan that Enron hadn't completed the turbines on time or didn't have them working as warranties required.

GE argued the complaint wasn't relevant to the case, according to documents filed at the time. GE worked to fix the problems, heading off a conflict that could have lost American Electric Power as a customer.

``There was some customer dissatisfaction with the product that we needed to fix,'' Daley says. ``Those issues turned out to be harder than we thought. But we fixed them.'' Last year, GE's wind unit generated about $3 billion in revenue.

In the 2005 sale of the reinsurance unit to Swiss Re, the buyer wanted terms that exceeded what Immelt was willing to do, says Rob Duffy, who joined GE in 2004 from Credit Suisse First Boston and is on Daley's team of 12 in Fairfield.

`Drawing the Line'

Daley had to negotiate terms that would satisfy Immelt's limit for a loss. GE wound up retaining a stake in Swiss Re to share the risk with the buyer. It completed the sale in June 2006. The sale produced a $2.8 billion loss for GE from the write-down of goodwill, book value and taxes.

On March 1, it sold its remaining $2.8 billion stake for a pretax gain of $565 million. Duffy, who participated in the talks, says Daley held her ground. ``She's very good at drawing the line,'' he says.

Daley is working on ways to ferret out customer complaints. ``We should ask to talk to key customers, and that's not typically what's been part of pre-signing due diligence because of confidentiality concerns,'' she says. ``It's something we're going to try to see whether we can be more proactive in.''

Daley draws from her deals when she teaches classes at the John F. Welch Center in Crotonville, New York. On an October afternoon, the topic is GE's growth strategy. Daley, wearing a silver-gray and black patterned blazer modeled on an Ellen Tracy design, glances at a small screen in front of her to keep tabs on her PowerPoint presentation.

`A Lot of Work'

The audience of about 75 people on the business development staff watches a larger screen from stadium-style seats. Daley flips through slides packed with details: There's a chart from 2002 that shows GE's lineup after Immelt took over.

``He sees 75 percent of businesses he likes,'' she says. ``He sees 10 percent that he labels `reposition for value.' That includes insurance. Then 15 percent in the middle that could go either way.''

Daley asks her students to think about what came next.

``This is what we've done since '03 through '06,'' she says. The slide lists the year and color-coded transactions, showing most of Immelt's $35 billion of sales and $80 billion of acquisitions.

``This was a lot of work,'' she tells the group. ``And the people in this room and your predecessors had everything to do with this.''

Minutes later, she shows the cash GE has left after it pays for the dividend, share repurchase, research and development and capital investments.

There's about $17 billion for non-financial acquisitions before counting proceeds from sales or other gains. Daley says Immelt can make more cash available by shifting resources around if the right deal comes along.

With GE's stock price stagnant and Immelt's profit growth goals to meet, it's up to Daley to deliver.

To contact the reporter on this story: Rachel Layne in Boston at rlayne@bloomberg.net

Last Updated: March 26, 2007 00:02 EDT