David de Rothschild, chairman of Rothschild Group, said he expects the merger advisory business to continue to expand in the U.S. as companies seek expertise on global deals.
“It’s a moment where U.S. corporates are looking for international investments and contrary to a lot of U.S. boutiques, which are full of very talented people, we have a very strong international, global network,” de Rothschild said in a June 7 interview in Venice. “We had quite a good year last year, we are seeing much more momentum.”
Rothschild, the world’s largest family-owned advisory firm, has gained market share in North America, where it ranked 10th last year for mergers, up from 16th in 2011, data compiled by Bloomberg show. This year, Rothschild ranks 32nd in the region after missing out on the top 20 deals, and globally slipped to 16th from No. 9 in 2012, the data show. Recession is holding back mergers and acquisitions in Europe as an uncertain outlook makes executives wary of combinations, de Rothschild said.
Companies are “conscious of the fact that the environment is difficult, that they do not want to overpay,” said de Rothschild, 70. “They don’t want to do something wrong just because they have the opportunity of doing something.”
Overall, business has been tougher this year than in the second half of 2012, said de Rothschild, who was in Venice for a meeting of The Council for the United States and Italy, an organization that promotes cooperation between the two nations. Mergers so far this year total $834 billion, compared with $1.2 trillion in the second half of 2012, according to data compiled by Bloomberg.
Rothschild’s biggest merger assignment this year is advising Joh. A. Benckiser on its purchase of D.E Master Blenders 1743 NV, a $10 billion transaction that will build a coffee conglomerate in the industry’s biggest deal ever. In the U.S., Rothschild is advising AMR Corp. on its combination with US Airways Group Inc., a $3 billion deal.
Rothschild last year combined its French and U.K. arms under Paris Orleans SA, a French publicly-traded company controlled by the banking dynasty that made its fortune financing the Duke of Wellington’s campaign against Napoleon almost 200 years ago. Paris Orleans posted a 22 percent rise in advisory sales to 256.8 million euros ($339 million) in the three months to December.
On June 26, the company reports earnings for the fiscal year ending March 2013, according to its website.
This year, Rothschild has slipped behind Lazard Ltd., the largest independent merger-advisory firm, which ranks eighth among global merger advisers after securing a role on three deals of $10 billion or more, data compiled by Bloomberg show.
“As soon as there’s an element of visibility, whatever that is, sentiment becomes more positive, there will be more activity,” said de Rothschild. “There’s definitely a bounce back in the U.S.”
The firm is attracting bankers in the U.S., said de Rothschild, without elaborating. He sees some banks eliminating more jobs as regulators demand that lenders increase their capital and business remains sluggish.
“Have we reached a point where things have stabilized? Probably more or less, on global view,” said de Rothschild. “But there are probably still some firms that have to reduce and are cutting costs.”