WHEN BARCLAYS PUT MERGERS AND ACQUISItions at the heart of its new, slimmed-down investment banking strategy a year ago, the British firm turned to Gary Posternack to lead the charge. Promoted to global head of M&A last July, Posternack takes a measured view of his role.
While the business has become more sophisticated since I started, says the veteran deal maker, who spent 13 years at Lehman Brothers Holdings before Barclays bought the troubled U.S. bank at the height of the 2008 crisis, we are not trying to sell clients the latest and greatest mousetrap but looking to provide them with honest advice on the issues they face.
Posternack, 48, has worked on more than $500 billion worth of transactions during his 27-year career, and clients appreciate his down-to-earth style. Last year he advised U.S. energy conglomerate Williams Cos. on its $10 billion takeover of oil and gas infrastructure provider Access Midstream Partners and the subsequent $50 billion merger of operating subsidiary Williams Partners with Access Midstream. Williams chief executive Alan Armstrong notes that his Tulsa, Oklahomabased company has used Lehman and Barclays for all of its major deals over the past two decades.
Whats different about Gary is that his intellect always drives his response, Armstrong says of Posternack. Hes very straightforward, chooses his words carefully and tells me what I need to hear, not just what I want to hear. He can be a man of few words, but Ive learned to listen very closely to those words.
Posternack, who runs half marathons, must ensure that Barclays keeps pace among Wall Streets top M&A banks as it shifts from its historical emphasis on fixed-income trading. In response to pressure from regulators to bolster capital and shareholder demands to boost returns, the firm is focusing on providing advice and underwriting to clients. That puts M&A at the sweet spot of our strategy because it is the most capital-light, highest-return business, Posternack says.
Barclays ranked sixth in global M&A last year, Dealogic reports, advising on 238 deals with a combined value of $550 billion. Thats down one spot from 2013, when it advised on 212 transactions worth a total of $476 billion. The London-based bank also placed sixth for U.S. M&A deal volume in 2014, with $413 billion, versus No. 5 with $379 billion the previous year.
Posternack has always found deal-making intellectually satisfying. While earning an economics degree at Harvard University in the mid-1980s, the Philadelphia native keenly followed the first big M&A boom on Wall Street. Right from graduation I wanted to gain a deep understanding of the strategic issues that drove companies, and I saw banking as the best way of doing that, recalls Posternack, who headed Barclayss Americas M&A practice for five years before taking his current post.
He began his career in 1988 as a financial analyst with Dillon, Read & Co. in New York. In 1991 he moved to London to set up a European M&A operation for the investment bank, going head-to-head with the biggest players. Posternack caught the deal bug when he advised U.K. engineering group BTR on its 1993 acquisition of vehicle parts maker Rexnord Corp. for close to $1 billion. We won the mandate purely on the advice we provided, he explains. It was then that I understood the power of ideas.
In 1995, Posternack joined Lehman Brothers as a vice president with its industrial sector M&A team; two years later he defended U.S. motor oil specialist Pennzoil against a $6.4 billion hostile bid from Union Pacific Resources Group, a Fort Worthheadquartered oil and gas explorer and producer. Pennzoil whetted my appetite for defense work, says Posternack, who was tapped to run Lehmans new takeover defense practice.
Posternack also led Lehmans industrial M&A group from 1998 until 2004, when he began directing the banks natural resources M&A effort. In 2005 he represented Chevron Corp. on its $17.9 billion purchase of fellow American oil company Unocal Corp., a deal that saw U.S. Congress block a rival offer from state-owned China National Offshore Oil Corp. in a four-month takeover battle that strained relations between Washington and Beijing.
Barclayss M&A push comes as global deal activity is booming, partly driven by activist investors. Theres been a major shift in the mind-set of long-only investors who used to be skeptical of the motives of so-called raiders, Posternack says. Now long-only investors are not only supporting these types of transactions but are in fact proactively reaching out to activists to encourage them to agitate at specific companies.
For his part, Posternack thrives under pressure. Nothing is more rewarding than being the person who gets the call from the clients CEO when the going gets tough, he says.