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00:00What's next you're gonna look like? Well, I think the in the board room right now. Alex, we're seeing a reset where boards are now resetting the forecasts that they're seeing internally, which means they're going to be ready to transact. The challenges on that are going to be a lot of our shareholders are not reset. And so they're looking still for much higher prices and they're going to want to stick around. I think we're going to see a little bit of tension between boards and shareholders were boards are going to proceed and transact. But I also think what's going to happen is the boards are going to go ahead. There may be some noisy, cranky shareholders, but we're going to have deals. So we get them approved and the 70 percent range rather than in the 80s, not such a big deal. The challenge on these deals is going to be financing, right. Because it's very hard right now to get from the commercial banks. You've got to work with these direct lenders or try and go out and build your equity check even larger from Middle East. And that that's hard. That money is not it's challenging to put it all together. You don't know that it's there and that the private equity portion is almost commodities. It's the direct lending where the real challenge and where advisors are earning their fees. So then obviously you're going to go to companies that have a boatload of cash that can kind of do the transactions, which leads us to what we were talking about for that whole hour, which is energy companies. What do you think we're going to see a slew of? They have a lot of money. Valuations in general are a little bit better. Assets and resources are really maturing that they need to build out growth. They've got to go. And there's also the puts into alternative energy. Yeah, I think renewables, alternative energy, very big. All cash rich companies, not just energy, but all a lot of cash rich buyers. I think you're going to start are going to be serial acquirers. One of the big challenges, though, there is going to be antitrust. Right. And right now what we're doing, a fresh fields is we're working very aggressively with clients on how to do the antitrust regulators. Right. And there's a lot of ways to get there, such as expediting the way you respond to their requests, doing fix it first remedies and then most importantly, being ready to go to litigation with and go to court with. The regulators and clients are up for it. They're, you know, they're not intimidated. And we're expediting these timelines because basically what the antitrust regular leaders have is what I call a sand in the gears strategy. But they just wanted to lay the deal, create noise until you just run out of time and or the deal just stops being attractive for other reasons. So they just try and run out the clock. But if you can get if you can accelerate the process and get in there quickly and get your story in order, then I think there's a real chance that these cash rich acquirers could get their deals done. Before I ask a question real quick, I ip is that a yes. That puppy in there. Okay, guys, go ahead. He's good. Excellent. Well, I hope you can hear me. Good morning. Hey. Can you give me an idea of how different the current landscape is in public markets versus private markets? Yeah, well, as I said, in public markets, the big issue is, is getting these forecasts together and you got to deal with these public shareholders, a lot of whom are not all that happy with transacting at premiums at today's prices. I think in the private markets, companies are holding out and a lot of I don't know if we're gonna see companies that still have hopes for an IPO at getting they're going to stick it out and try and hope for an IPO chance in the coming year. Do you think there's a valuation? There's been a lot of talk about the fact that the public markets to a certain extent have reset. Maybe there is a bigger reset still to come, but private markets still happens. When you talk to clients, what do they tell you about kind of valuations? Are they expecting next year to be a much bumpy ride? And does that throw up opportunities or is it old threats? Yeah, I mean, I think even on the private markets, as you said, the valuations are pretty good. So I I think there's we're going to even see private clients using their stock. So these are unlisted companies using their stock as acquisition currency for other private companies so that they can keep growing their base. I mean, there's some really very impressive companies that are not yet publicly listed and they're perfectly happy and they have and their stock is worth something and they could even use it as acquisition consideration. How do you look at cross-border MBNA, where I feel like national security is super tight on that right now? Yeah, it's this is an area that you've gotta watch because it's not just in the United States with syphilis, but also outside the United States. So many of these regimes are coming up and they're expanding their scope. And it's a it's an area where a lot of deals deal. Folks are missing the impact on timing, the impact on financing. And I think it's just going to get worse. There's even talk now in Washington about imposing. Limits on the ability of U.S. firms to invest outside the United States, which then could start sort of what I would call the reverse serious. And then that could prompt similar restrictions on coming into the United States by folks outside. So this could lead to a lot of bumps, a lot of unintended consequences. There's a rule in Europe now where they intended to capture the Chinese as so these state owned enterprises. And instead, it's capturing all deals for and requiring clearances if you receive any kind of subsidy in excess of 50 million dollars from any kind of governmental entity. So this is real. This is an area where I don't see it's going to kill deals, but it's really going to change timelines and impact finance. Is this the new normal? Is that going to be something that we should just simply get used to? Do you think, Ethan? Yes, I think you can debate whether it makes sense or not, whether it's good policy or not. But I think the train has left the station and we've have to deal with it. You were talking about off ramps earlier in the IPO market. What kind of open? So based on what you're saying in terms of the cross-border deals being really tricky, and if we go into recession and the IPO market stays closed, what are private equity do like what a holders do that that want an off ramp? Like what is that off ramp? There's always more private equity to buy to flip to right and then sell. Then you can always sell to the cash rich acquirers. So I think that I think private equity will keep churning the as I said, the real challenge there is on the direct lending and getting sovereign wealth to help build up the check. The one other area where I think we're going to see deal activity if directors get their act together is going to be mergers of equals because there's a lot of boards that now they're looking at the next 15 months say. It's kind of math. I'm scared we may be outperformed by our peers. There's a deal that we can do where maybe I lose my board seat, maybe my management team doesn't continue, but we could generate a lot of shareholder value, get a multiple bump, get some great synergies. And I think there's going to be some parole boards that come out and do some really interesting combinations in the next year to.

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Freshfields' Klingsberg Says Financing Deals Will Be A Challenge

Ethan Klingsberg, Freshfields Co-Head of US Corporate and M&A, joined "Bloomberg Markets: Americas" with Alix Steel and Guy Johnson as M&A deals in North America are down more than 30% this year. (Source: Bloomberg)

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