A lot of people have been asking how Schulte Roth & Zabel are doing during the economic downturn. It’s a relevant question given Schulte’s large book of hedge fund business.
But even as hedge funds are slowing down, Schulte could get a lot of work thrown their way if there is any fire to these G.M./Chrysler talks. According to AmLaw Daily Cravath is advising G.M. during the preliminary merger talks, while Schulte is advising Chrysler.
The high profile M&A work is being thrown Schulte’s way because of their longstanding relationship with the private equity giant Cerberus:
[Cerberus] bought Chrysler from Stuttgart, Germany-based Daimler for $7.4 billion in 2007–roughly $30 billion less than Daimler paid for the company in 1998.
In fact Cerberus could be the key to the whole deal:
[P]eople close to the merger talks said that Cerberus had proposed to contribute cash to GM-Chrysler in addition to the estimated $11 billion in reserves that Chrysler has on its books. In return, Cerberus would receive equity in the combined company and become a large shareholder.
It’s important to remember how young Schulte Roth is, having just been established in 1969 (compared to Cravath’s nearly 200 year history). A huge deal like this probably won’t offset the general slow down in hedge fund work, but it does show that Schulte has a couple of clubs in the bag to get through the current downturn.
Cravath, Schulte Roth Involved in GM-Chrysler Talks [AmLaw Daily]
Cerberus’s role crucial as GM-Chrysler merger talks continue [International Herald-Tribune]