Lipton, Altman See Slow Recovery in Financial System, Economy
The financial system is in a slow state of recovery, and a pickup in takeovers will require more confidence in the U.S. economy, according to Evercore Partners Inc. Chairman Roger Altman and M&A lawyer Martin Lipton.
“The U.S. has a lot of work to do,” Altman said in a panel discussion at the Bloomberg Dealmakers Summit in New York today. “It will take a long time for final demand to improve.”
Mergers and acquisitions are on course to reach about $2 trillion this year, compared with a record $4 trillion of announced transactions at the peak of takeovers in 2007, according to data compiled by Bloomberg. There were $1.76 trillion of deals last year and $2.47 trillion in 2008.
While the third quarter of 2010 has been the busiest for M&A in two years, there is still a “reluctance to get involved in significant transactions,” said Lipton, who is a founding partner of Wachtell, Lipton, Rosen & Katz.
“There are sharp reactions in the market to meaningless economic data,” said Lipton. “You don’t get this unless there’s a lack of certainty.”
Lipton and Altman credited U.S. officials including Federal Reserve Chairman Ben Bernanke, former Treasury Secretary Henry Paulson and current Treasury Secretary Timothy Geithner for saving the financial system from collapse.
There has been further improvement in credit markets in 2010, said Clayton, Dubilier & Rice LLC Chief Executive Officer Donald Gogel, who noted that 2010 has been “one of the lowest LBO loan-default years ever.”
All three panelists agreed that a U.S. economic recovery would be gradual. The U.S. economy grew at a 1.7 percent annual rate in the second quarter, revised figures from the Commerce Department showed today, marking a slowdown.
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