Paul Parker has made a name for himself advising the CEOs of big companies like Sprint Nextel Corp. on mergers. Now he must use all his expertise to integrate the mergers and acquisitions business of Lehman Brothers Holdings, where he worked for 13 years, into that of Barclays Capital, which bought Lehmans U.S. investment banking business and its midtown Manhattan office tower for $1.35 billion on September 20. In many ways the pieces fit like lock and key. Barclays Capital is a dominant force in debt capital markets, particularly outside the U.S., with leading positions in foreign exchange, interest rate hedges, commodities and lending. Lehman brings a strong U.S. franchise in equity sales and trading, global research and corporate advisory work.
Barclays will be a global bulge-bracket capital provider, says Parker, who now runs global M&A at Barclays Capital, the investment banking arm of parent Barclays, the global banking giant based in London. That will be great for advisory work, because 37 percent of all deals are cross-border. You cannot be a major advisory provider if you dont have a global perspective.
Parker, 45, became sole head of global M&A when longtime Lehman co-head Mark Shafir left to join rival Citigroup on September 18, just days after the LehmanBarclays Capital deal was announced. Though he expects the financial crisis to cause global M&A to drop by about one third, to $2 trillion, this year compared with 2008, he is racing around the globe to build his division and gain market share. Hes adding 50 M&A bankers in Europe, with a focus on key markets such as France, Germany, Italy, Spain and the U.K. If my market is $2 trillion, and I have 250 people, Im happy with the odds, Parker says.
Growing up on a farm in North Carolina as the stepson of a Navy commander who got the family up every morning at 4:30 to run five miles, Parker was a straight-A student through high school and majored in international studies and French at the University of North Carolina at Chapel Hill. A nine-month training program at J.P. Morgan & Co. led him into M&A, and he went on to advise on some of the most complicated deals in the telecom industry, including the wireless joint venture in 2000 between BellSouth Corp. and SBC Communications, both now part of AT&T.
Client loyalty sure helps. Its unprecedented to allow your client to agree to a joint venture with equal control, says Keith Cowan, then chief planning and development officer of M&A at BellSouth. Paul was critical in the negotiations.
When Reston, Virginiabased Sprint Nextel lost close to 1.5 million customers during the second half of 2007, management chose to explore a deal between its cash-burning broadband wireless business and Kirkland, Washingtonbased Clearwire Corp., another capital-constrained wireless broadband developer. In May 2008, Cowan, by then president of strategy and corporate development at Sprint Nextel, once again turned to Parker, who helped negotiate a $12 billion joint venture that includes the wireless broadband assets of Sprint Nextel and Clearwire, as well as $3.2 billion in cash from a consortium counting Bright House Networks, Comcast Corp., Google, Intel Corp. and Time Warner Cable as members. The deal closed November 28.
Parker has a reputation for bringing divergent parties into agreement. In 2007, Triad Hospitals of Plano, Texas, received a $4.7 billion buyout offer from GS Capital Partners, an arm of Goldman Sachs Group, and from affiliates of CCMP Capital Advisors. Parker persuaded the divided board to accept the terms with a low breakup fee of $40 million. But it wasnt an ironclad deal. He also advised them to hold a one-week competitive auction, in which Goldman and the CCMP group would be treated like other potential suitors. The auction led to a much higher offer, $6.8 billion, from Franklin, Tennesseebased Community Health Systems. The deal closed later that year.
You need to put yourself in the other sides shoes and understand what brings them to the table empathy is key, Parker says. If you approach negotiations with a scorched-earth mentality, that is often the foundation you are left with once the deal closes.