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O’Melveny’s Easton Quoted in Daily Journal, Law360 on M&A Trends

January 24, 2013

O’Melveny & Myers LLP partner Mark Easton was quoted in the Daily Journal’s January 23, 2013, article “Lawyers handle surge in health care M&A deals.” The article reports that the passage of the Affordable Care Act has accelerated the uptick in health care deal activity that had begun in years prior, as companies have faced more immediate pressures—in part as a result of impending federal mandates—and have looked to acquisition and consolidation as a way to control spending.

In remarks to the publication, Easton, a Los Angeles-based member of O’Melveny’s Mergers and Acquisitions Practice, noted the key role of regulatory lawyers, who help clients sort through the issues—from regulatory compliance to product liability—that abound in the highly regulated health care sector. "Every deal that gets done has a regulatory overlay," Easton said. "That puts lots of regulatory lawyers to work."

Easton also commented in the January 4, 2013, Law360 articles “US Buyouts Hit Post-Lehman High In 2012,” which discusses the strong finish for North American private equity spending last year despite a slow start, and “Blackstone Hops On Dual-Track Trend In Sea World Dealings,” which discusses the dual-track process, an approach being taken by some private equity firms that involves planning for an IPO while also pursuing a sale.

“2012 started slow, and I think everyone was a little worried, but it finished very strong,” Easton said, attributing the uptick to a combination of growing confidence in the economy and a desire to “surf the fiscal cliff wave.” He also noted that dividend recapitalizations were so popular that bankers could scarcely keep up with the demand for new debt. For companies with less buyout debt, Easton said, recaps have tended to occur earlier in the life cycle of a portfolio company. “It does seem that lenders are willing to revisit companies earlier than they were a couple of years ago,” he remarked. “For a company that's been pretty stable and doesn't have unsustainable amounts of leverage already, it’s much easier to propose that, and the pace of recaps really peaked in Q4."

On the subject of the dual-track strategy, Easton shared his view that it can be a smart hedge for sponsors, especially those whose investments are nearing the end of their lifecycle. “It’s not for the faint of heart, and you have to be willing to invest a lot of resources to go down both paths at once, but it’s an effective insurance policy against a hiccup in one market or the other,” Easton said.