Greenhill & Co. Chief Executive Officer Scott Bok said the focus at public companies on raising shareholder payouts has been a drag on mergers and acquisitions.
“The corporate bias towards dividends and buybacks” has to change before any significant rebound in mergers and acquisitions, Bok told analysts today in Boca Raton, Florida during an industry conference sponsored by Credit Suisse Group AG. The pace of deals probably will quicken because of an improving economy, low interest rates, more company breakups and scarce internal growth, Bok said.
In 2007, four dollars were spent on M&A for every one spent on dividends and buybacks in the U.S. and Europe, said Bok, whose New York-based investment bank advises on deals. “Today it is more like one-to-one,” he said, citing a desire by investors for yield amid low interest rates.
Bok, 54, said Greenhill has no meaningful need for cash and the excess is routed to shareholders. The firm, founded in 1996 by former Morgan Stanley President Robert F. Greenhill, will cross the billion-dollar mark later this year in terms of dividends and share repurchases since going public in 2004, he said.
Greenhill’s stock pays a 3.6 percent annual dividend. The shares fell 16 percent in the past 12 months excluding dividends, compared with a 12 percent gain for the Standard & Poor’s Midcap Financials Index.