Frank Aquila Global M&A Partner Discusses Geopolitical Pressures

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I interviewed Frank Aquila, Global M&A Partner of Sullivan & Cromwell on Thursday, February 1st, 2018.
We covered a lot ground in such a short period of time.
Frank and I discussed the global M&A market and how several geopolitical situations will impact large deals. We talked about some of his large deals such as InBev-Anheuser Busch and Diageo’s acquisitions. Frank provided advice for the experienced or aspiring M&A attorney. We discussed the new US tax legislation, NAFTA trade negotiations, populism, the US’ reaction to Chinese companies entering the US, French President Macron and his economic aspirations, etc. We talked about the big tech companies, antitrust issues and their influence on inflation. We talked about Janet Yellen, her successor and the Federal Reserve. We also talked about activist investors, love for wine and all things New York, his travels and recommended readings.
Here are some highlights of my interview with Frank Aquila:

“Sometimes the biggest transactions are not the most important ones.”

“You can’t get rid of NAFTA, you can’t get rid of global trade.”

“You don’t need to break these [Big Tech] companies up or overly regulate them to have the innovation that we need.”

“As technology seeks more outlets into legacy businesses, we’re going to see more of these disruptive deals.”

“When you understand where your client is coming from and the other side is coming from, you then have a different picture when you’re sitting at the negotiating table.”

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Links referred to in this episode:

Frank Aquila Web Bio

Wikipedia Profile of Frank Aquila

Frank’s Twitter Accout

Amazon Acquires Whole Foods for $13.7 Billion – Bloomberg

Anheuser-Busch Agrees to be Sold to InBev – NY Times

The AntiTrust Case Against Facebook, Google and Amazon – WSJ

Don Angie – Greenwich Village Italian Restaurant

Ron Chernow – Amazon Author Page

Benjamin Stapleton – Sullivan and Cromwell

H. Rodgin Cohen – Sullivan and Cromwell

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Audio Transcription 

To Download the PDF Transcript, click here. (Look in the top right corner and click on the three dots to download.)
Hi listeners, this is Chris Batz, your host of the Law Firm Leadership podcast.
Today’s episode I’m excited to share is about my conversation with a highly visible global M&A law partner in New York at an Am Law 10 firm. Today we talked about large corporate M&A and global markets as it relates to the political climate of the U.S. and other countries and economies. I also asked him about his advice for aspiring or seasoned M&A partners.
Just a reminder, the PDF transcript of this audio is available to download. Go to
As many of you know, we interview corporate defense, law firm leaders, partners, general counsels and legal consultants. You’re listening to episode number twenty of the Law Firm Leadership podcast.
Chris: Welcome to the Law Firm Leadership podcast, I’m your host, Chris Batz with The Lion Group. Today I have the pleasure of speaking with Frank Aquila, law partner of Sullivan & Cromwell. Frank is consistently recognized on the global M&A world. He is known for his Chambers Global Band 1 recognition as the American Lawyer “Deal Maker of the Year” and the Atlas Award “Global M&A Lawyer of the Year.” Representative clients include, but are not limited to, Amgen, Anheuser-Busch InBev, Diageo, Cheniere Energy, Kraft Heinz again, just to name a few. He currently is the member of Sullivan & Cromwell’s Management Committee. Frank received his JD from Brooklyn Law School and undergrad from Columbia. Welcome, Frank, to the Law Firm Leadership podcast. It’s a pleasure to have you on the show.
Frank: Good to be here, Chris.

2018 Global M&A & Geopolitical Forecast        

Chris: Frank, I know you have a busy schedule and I’m sure things are quite interesting watching the current political climate in the U.S. and also around the world. I wanted to just jump right in and ask you your impressions of what you anticipate M&A-wise because of the tax code revisions, the lower rates, repatriation, that sort of thing. What are you anticipating?
Frank: First of all, I’m anticipating a very busy year. January was the busiest January for the M&A market in at least a decade, probably longer. It’s really being fueled by and large by the tax cuts, at least here in the U.S.
Chris: That’s excellent. Is there any specific sectors that you’re seeing more activity in?
Frank: Well, I think one of the things about any big consolidation boom, any big period of M&A, is that it’s across sectors and across geographies. I think that’s what you’re seeing so far and that’s what we’ll continue to see. Obviously consumer and retail are hot, but I think we’re going to see it in financial institutions. I think we’re going to see a lot of tech and media. But it’s going to be across the board.
Chris: I’m sure you watched a little bit of Davos and maybe you’re agnostic, but I’m curious what your impressions are post Davos, post Trump’s trade war comments with China and what’s going on globally. How do you think that’s going to affect M&A?
Frank: Well, I think clearly if you looked at 2015/2016/2017, things were moving definitely towards populism, anti-global trade. I think everybody’s recognizing that you can’t get rid of NAFTA, you can’t get rid of global trade and we’re starting to see the swing back towards global trade and global integration. Just the phrase ‘it’s not America alone’ signals that we’re not in 2017 anymore. I think we’re going to see a lot more cross-border M&A.
Chris: Okay. With regards to China’s tech companies wanting to come to the U.S. markets, do you anticipate this administration cracking down on matters of security? I’m curious of your impressions of China wanting to come into the U.S. and even finding different ways of getting in here.
Frank: CFIUS, which is essentially the national security regulation for acquisitions in the United States or even of non-U.S. companies that have significant interest in the United States, have not allowed that many Chinese acquirers over time. Certainly in the tech sector, it’s difficult. I think we will not see a lot of Chinese acquirers in the tech sector, but in other sectors, I don’t see any reason why we shouldn’t see deals and I expect to see deals in other sectors.
Chris: Tell me about those other ones? Are you thinking more like the EU with Brexit and what’s happening in the strengthening era?
Frank: Well, I’m talking first about the United States. I can see certainly in consumer and retail, deals in those sectors being approved. And of course, deals in the EU as well, where Asian companies, Chinese, Japanese and otherwise, wanting to have a position both in the UK, which will be a large independent economy, and in the rest of the EU as well.
Chris: With Brexit continuing to unfold before us, what are you anticipating between an agreement say between the UK and the EU? I don’t know if you saw the article about comparing the UK with Norway or with Canada and the different approaches, but I’m curious what kind of result UK is going to end up with.
Frank: Well, it’s hard to speculate on that given the fact that the deal still has not yet been cut. Clearly, it’s going to have an economy that will be integrated in some way with the rest of Europe. It naturally has to be because it’s a big trading partner with the rest of Europe, so both sides will want to assure that. Having said that, the UK will have some trading partners that are going to be different than the rest of the EU. Net-net Brexit is probably negative for the UK, but at some point, we’ll see where it comes out.
Chris: With Macron taking the reins in France, I’d love to get your opinions on how their economic engine is starting to rev up and what you anticipate seeing there.
Frank: Well, I think for a long time France was a real drag on the European economy and in fact now France is in growth, so as a consequence we’re seeing growth in the Euro zone generally. Certainly, we’re seeing strong growth out of Germany. Hopefully the positive policies there will be much more positive than the populist agendas of some of the other politicians in Europe.
Chris: And probably also protective with their labor laws. It seems to be that’s a big contention there too.
Frank: That’s a very big part of it.

Anti-trust, Big Tech and the Federal Reserve

Chris: I’d love to get your impressions on the rumors that tend to float around when you look at a company like Amazon or other big emerging companies in the U.S., Google, Facebook, as it relates to just government involvement in anti-trust issues. Are you going to see another situation like a Baby Bell happening through these big companies and really taking up the market?
Frank: I certainly hope not. I think that it’s one thing when you had the old AT&T, and I’m not talking about the current AT&T, but the old AT&T had such a monopoly and the way it grew up, it really stifled growth in telecommunications at a point in time where telecommunications was exploding. The fact of the matter is, in the tech sector, in the internet sector, there is so much innovation. You do not need to break these companies up or overly regulate these companies in order to in any way shape or form have the innovation that we need. We certainly have the innovation that we need. They’re competing with each other. They’re competing with legacy businesses, so I don’t see any reason to have to break them up.
Chris: Yeah. I’d love to get your thoughts on the unique effect that even the Fed is having to pay attention to, which is the desire for inflation, but yet, again, going back to Amazon and these different companies that are keeping potentially the price of goods down because of competition. Do you have any predictions as to how long this would continue and are we going to actually see inflation?
Frank: Well, we were talking about the tax cut at the beginning here and if this is additional Keynesian stimulus, then you would presumably have inflation. On the other side, if this infusion of capital leads to more innovation and greater production, then you’re going to see greater competition and that will actually tamp down inflation. I hope that the Fed is cautious in not raising rates until we actually see inflation because so far we haven’t. Now, we may with skilled labor shortages in the next couple of years actually see that inflation, but it’s not there yet.
Chris: Yeah. Yesterday Janet Yellen stepped down and they all have kind of unanimously voted not to raise rates, so it will be fascinating to watch.
Frank: I just want to say something about Janet Yellen because I think it is timely. She really truly did an absolute outstanding job as chair of the Federal Reserve for the last four years. It was in a transition period after Bernanke after the financial crisis. I think she deserves a tremendous amount of credit. She did a fabulous job.
Chris: Yeah. I’d have to agree, just the ability to be very scrupulous in how quickly or how slowly to raise those rates without overheating the economy. It’s a very tough position to be in I would assume.
Frank: Truly masterful.
Chris: Yeah. Do you think her successor is going to follow the same line of thought and expertise?
Frank: I would certainly hope so. Whatever you think about our government under either administration, I think the Fed, whether it was under Bernanke, under Yellen, has truly served us well over very difficult financial periods over the last decade.

Talking Large M&A Deals

Chris: Yeah, and I would have to agree with you too. I wanted to talk to you a little bit more about your role in M&A, rather influential. You’ve been involved in some very large significant deals. If I’m not correct, it was the Kraft Heinz deal,?
Frank: I represented Kraft in the combination with Heinz, that’s correct.
Chris: Yeah, and then also the rather, I don’t know if it’s called aggressive, but the InBev-Anheuser Busch deal, you were involved in that one as well, correct?
Frank: It was unsolicited. Some called it hostile at the time.
Chris: Right. Then you’ve been a part of the company that now has morphed into what used to be Guinness. They’ve rebranded, do I understand that correctly?
Frank: Well, it’s now Diageo. The old Guinness and Grand Metropolitan became Diageo.
Chris: Those are monstrous deals that changed the global landscape. We’re anticipating the same this year. It’s always the question of Is Kroger going to get bought up and other very large name brand companies?
Frank: I think what I would also say is that sometimes the biggest transactions are not the most important ones. Often they are, but let me give you an example. One of the most important transactions of 2017 was’s acquisition of Whole Foods. Certainly not the biggest deal of the year. I don’t even know if it was the biggest deal of the month, but it was disruptive and it changed a number of sectors. I think what we’re going to see is that as technology changes, as technology seeks more outlets into legacy businesses, that we’re going to see more and more of these disruptive deals. Some of them will be huge, some of them will be much smaller, but those are going to be the ones that have the long-term impact.
Chris: What is your take on the most recent announcement of JPMorgan, Amazon and Berkshire coming together in the healthcare industry?
Frank: Well, that’s an interesting announcement. I think we have to wait and see what they actually do. That’s a powerhouse between the three of them, but we have to wait and see what comes of it.
Chris: The press release they talked about “Oh, this is not a for-profit initiative,” but it’s hard to believe that that won’t eventually become so, disrupting the rest of these other public healthcare companies.
Frank: Again, a press release is easy to write, actually putting it into action is much more difficult. I think when you look at the three players involved, they’ve all been outstanding at generating shareholder return and will they have the same level of impact for something like this. I think it remains to be seen what actually happens there. It’s going to certainly be interesting to watch.
Chris: Very interesting to watch. You’ve done a number of large deals, noteworthy deals, would you mind sharing briefly maybe one of them that was the most noteworthy or maybe the most interesting or fun?
Frank: There’s so many because I’ve been doing this for so long. I do think that one of the most interesting was one that you mentioned earlier, InBev’s acquisition of Anheuser Busch. It was completely unsolicited. It was in an election year. Most of the analysts said that we would never be able to take over Anheuser Busch. It was an American icon. People predicted that if we were successful it would take us a year to get it done and a lot more money. And 34 days after we launched our bid, we signed an agreement to get it done. Then even after that, there was the Lehman crash and suddenly you couldn’t finance a car loan for a period of time and we were able to pull together and keep together 55 billion dollars’ worth of financing and close at the beginning of November of 2008, which is to say was a really difficult time for the credit markets globally, so it was an exciting deal from beginning to end.
Chris: Yeah, and sounds rather miraculous.
Frank: It seemed like we needed a miracle every single day and somehow we seemed to get one and some days, two.

Advice for M&A Attorneys

Chris: That’s excellent. What advice would you give either seasoned or aspiring M&A attorneys, either delivery of service or looking at deals?
Frank: Always try to understand the objectives of your client. And you may say, well, don’t you know your client wants to buy that company or your client wants to sell their company, but typically, there are bigger, more strategic issues that your client is looking for and you want to understand that. You also want to understand what are the motivations on the other side because when you understand where your client is coming from and when you understand where the other side is coming from, you then have a different picture when you’re sitting at the negotiating table. All too often lawyers and sometimes bankers have too narrow a focus instead of on the big picture.

Activist Investor Movement

Chris: I appreciate you sharing that. What is your take on the activist investor movement? Do you see them as helpful? Do you work with them? Have you come across Carl Icahn or other activists that are very well known out there and their involvement in what’s happening, kind of more or less their impression of policing the publically traded companies in the United States?
Frank: I think you have to step back and understand first of all that corporate governance in America has changed fundamentally and part of the reason it’s changed is you go to the 1950s, 5% of publically traded shares were held by intuitional investors, today, 5% of the shares are held by individuals and 95% are held by institutions, so the intuitional investor is much more powerful. It changes the whole relationship with the board and management.
Not all activists shareholders, not all hedge funds, not all institutional shareholders are the same. In some cases, many of the so-called activists are some of the long-term shareholders. They’re not trading in and out of the stock every day. I tell boards don’t think that every single activist is the same, be open to their ideas, talk with them, talk to all your institutional shareholders. Engagement with your shareholders is a good thing, particularly when they are sophisticated institutions. That doesn’t mean that you do everything they say. That doesn’t mean that everything they tell you is necessarily going to be good because they’re working on public information; you know a lot more about your business. But engagement, listening to their ideas, that’s never a bad thing.

Frank’s Personal Passions

Chris: Yeah, very good. What I like to do with each interview is just having my listeners learn a little bit more about you personally. What you do say outside of the practice of law that you’re passionate about right now?
Frank: Well, a big thing for me and it’s always been, because I’ve been married for over 30 years, is my wife Cathy and our three daughters, who are now grown and my oldest daughter is married and my two other daughters, one’s a teacher another one’s a law student. And they growing up and now as adults, have always been a big part of our lives.
Chris: You also had mentioned to me at one point that wine, and New York sports teams, and restaurants, and travel were important to you.
Frank: Yes, I’ve been a wine lover for a long, long time and have a lot of old wines that luckily some of the wines I bought 20 years ago are starting to really peak and come of age and continue to buy some of the best wines in the world, so I love that. The New York restaurant scene is obviously great. I think one of the great things about rooting for the Mets, and the Jets, and the Knicks, and the Rangers, those are my teams, is you build a lot of character because you know how to deal with loss and root for the Mets and Jets even though they struggle. I think it builds a lot of character rooting for those teams.
Chris: Yeah. Do you have any choice restaurants in town that you enjoy frequently?
Frank: I think one great new restaurant that is just over the top, it’s in Greenwich Village. It’s an Italian restaurant called Don Angi and it’s just absolutely phenomenal. Husband and wife team are the chef/owners. They’re behind a number of great restaurants in the city and this is their first independent effort. If you like Italian food and you’re in Manhattan, that’s the place to go.
Chris: Excellent, I’ll definitely note that. Tell me about travels. Do you and your wife have a favorite place you like to frequent or are you more adventurers finding new places?
Frank: Adventurous. We’ve been to all seven continents, Antarctica, Galapagos, Bhutan. Yeah, we really have been all over. Then our daughters, we’ve infected them with the travel bug as well, so we really have been all over the place.

Recommended Reading

Chris: Fun. You had mentioned earlier too that you were a history major at Columbia. Do you have any recommended or current readings of history books or biographies? What are you reading right now?
Frank: Clearly the book of 2017 was Grant by Chernow. As I think many people know, Chernow’s previous book was Hamilton and that morphed into Hamilton: An American Musical by Lin-Manuel Miranda. So first of all, Grant was just a phenomenal book, but I just wondered how in the world Lin-Manuel was going to turn this into a musical, but I suspect it’s not going to wind up being a musical, but it’s a great book. I was very lucky, we actually were able to see it first at the Public Theater downtown and then, of course, later on Broadway and seeing it first at the Public Theater before anybody really knew about it was really a very rare treat.


Chris: I would say so. Well, I wanted to bring it to a close and bring a final question. Do you have any mentors or people who are heroes for you that come to your mind as you’re in this position at a firm like Sullivan & Cromwell, one of the top M&A firms in the world, just reflecting from a place of gratefulness, who’s influenced you to get you to this place?
Frank: Well, certainly many of the partners here who came before me who were partners when I was a young associate. I owe a lot to I think two in particular, one Ben Stapleton, who was the longtime head of the M&A practice here and is now a retired partner. The other is our senior chairman and former chairman of the firm, Rodge Cohen, who is a legend in the legal profession. Both of them I worked with quite a bit during my associate career and were just terrific mentors to me and continue to be terrific mentors.
Chris: That’s amazing. What a rarity just to be among those men and for now you to step in their shoes in some regard.
Frank: A true professional and personal privilege.
Chris: Yeah. Frank, it’s been an honor and truly a pleasure to have you on the show. Thank you for your time today.
Frank: It’s been great speaking with you. I’ve really enjoyed it.
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