Paul S. Ware is a partner in the Birmingham, Alabama, office of Bradley Arant Boult Cummings LLP, and chairs the firm’s public company practice. He concentrates on mergers and acquisitions, particularly involving financial institutions, having advised on the purchase or sale of more than 100 banking institutions. He also frequently advises public and private boards of directors on fiduciary and corporate governance matters. Most recently, he represented ServisFirst Bancshares Inc., a multistate bank-holding company, in its initial public offering.
Ware serves on the advisory board of the University of North Carolina School of Law Banking Institute, and in 2013 he was recognized as “Lawyer of the Year” in Birmingham for corporate law.
As a participant in Law360's Q&A series with dealmaking movers and shakers, Paul Ware shared his perspective on five questions:
Q: What’s the most challenging deal you’ve worked on, and why?
A: On a purely technical and substantive basis, as far as whether the transaction was going to be legally achievable and ultimately approved by regulators, it probably was the acquisition by SouthTrust Corp. of the National Bank of Georgia. It was fairly early in my legal career and the National Bank of Georgia was an affiliate of First American Bankshares and the Bank of Credit & Commerce International (BCCI). The magnitude and extent of the global financial fraud by BCCI, both internationally and in the United States, was finally being realized and litigated.
BCCI assets and operations had been frozen and seized, and an order of forfeiture had been entered whereby much of the U.S. assets of BCCI, including the National Bank of Georgia, were subject to forfeiture. Which meant, among other things, that we had to have written confirmation from the Justice Department that they would not pursue forfeiture of these assets. We had to navigate the federal, state and international criminal investigations, charter a new national trust company to acquire the personal and corporate trust operations, move more than $1 billion of bank assets and operations almost one piece at a time, as well as implement a significant revolving loan arrangement with First American and the Federal Reserve to facilitate the sale and the orderly liquidation and distribution of the First American assets.
We ultimately obtained the Federal Reserve’s written assurance that it would not pursue forfeiture; however, given the time, effort and expense expended to obtain what was an extremely brief communication, one of the participants in the efforts remarked, with apologies to Churchill, “Rarely have so many given so much to receive so little.”
Q: What aspects of regulation affecting your practice are in need of reform, and why?
A: This won’t happen, but I would put specific size caps on financial institutions. For example, no bank could exceed $50 billion in total assets. Or pick a different number or cutoff point. You could create a category of banks with caps at $10 billion or $25 billion.
Currently, institutions become subject to different levels of regulations as they reach certain asset thresholds; but to me that isn’t working very well. Smaller institutions tend to be overregulated, whereas the larger and largest financial companies have become unmanageable. They are so large and so complex, it’s not a question of putting on more oversight or more regulations — there is no way that anyone or any organization can know everything that is going on. Not senior management, not the board of directors, not the auditors and not the regulators. And that’s pretty scary. You just hope that you have good and honest people involved, and most people are good and honest. But that’s not a very comforting regulatory scheme.
Q: What upcoming trends or under-the-radar areas of deal activity do you anticipate, and why?
A: First of all, activity begets activity, and over the last year and half, there has been a steady increase in deal volume. Stock prices have appreciated substantially, companies have significant levels of cash, and interest rates remain low. The growth rate of the economy, though, remains sluggish, and many individual companies and industries are challenged to achieve internal organic growth. Those conditions generally would indicate that the merger and acquisition pace will continue, as companies and investors seek earnings and growth.
I expect the deal activity to remain steady, with particular activity in health care, pharma and energy, and to a slightly lesser degree in financial services and insurance. In financial services, I expect to see more volume in the smaller and regional transactions, with fewer megadeals. In the health care area, the Affordable Care Act has injected substantial regulatory and industry changes and movement, which will continue to spur transactions. Apart from the legal and regulatory front in health care, the aging population is putting more attention and focus on long-term care, home health care and hospice.
Q: What advice would you give an aspiring dealmaker?
A: Know your clients and their industries. Read the documents and be the most prepared person in the room. You may not be the smartest person in the room, but there is absolutely no reason you cannot be the most prepared. And if you hear something that either you do not understand or that does not make sense to you or is inconsistent, ask the person doing the talking to explain it, or go over it again. Which gets to another point of advice: Listen. Listen carefully. There is very little I can learn when I am doing all the talking. I want to listen and learn what is being communicated by the clients, the other lawyers, the accountants and investment bankers. Pay attention to what is being said and by whom. Most people love to tell you what they do and how they do it, and they really appreciate an engaged and informed listener. And if my job is to leverage their business, technology or service into an offering document or merger agreement, I want to use their words and their descriptions.
Q: Outside your firm, name a dealmaker who has impressed you, and tell us why.
A: There are two actually, that come quickly to mind. The first is Rodgin Cohen of Sullivan & Cromwell, and the second is Tony Gaeta of Gaeta & Eveson in Raleigh, North Carolina.
I first worked with Tony Gaeta in the late 1980s and early 1990s, primarily with financial clients that were expanding into the Carolinas. Tony was extremely knowledgeable about permitted activities and operations of financial institutions, particularly as banks were expanding across state lines and nationally. But what I admire most about Tony is his incredible involvement in the University of North Carolina Banking Law Institute. His support of the Banking Law Institute and mentoring of both practicing lawyers and law students is a wonderful model for what all lawyers should aspire to be: a strong and dedicated practitioner who fosters scholarship and professionalism.
I have worked on several transactions with Rodgin Cohen and the Sullivan & Cromwell firm, including Mitch Eitel and various members of their financial services team. They epitomize professionalism and integrity and they treat every person involved in a matter or engagement with courtesy and respect. If anyone is entitled to a huge ego and to posture and preen, these guys are — but that’s not how they conduct themselves. Their focus and energy is entirely on the substance of the transaction, the key issues and getting the deal done with superb quality and efficiency. As a result, the heavy lifting and analysis is devoted to the tough and challenging issues, coordinated and managed to achieve outstanding results.
The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
Republished with permission from Law360 (2014). This article first appeared in Law360 on August 27, 2014.