The big investment banks are everywhere these days, underwriting public offerings, advising buyers and providing deal financing – often on behalf of the same company, notes DealBook.
This ubiquity raises eyebrows, but the dilemma is partcularly acute when a bank is needed for a “go shop” provision in a takeover agreement, provisions which create a window during which the target tries to drum up better offers.
The dilemma, says DealBook, is whether the desire for a completely independent bank trumps the desire for a bank with sufficient resources and relevant experience.
In a panel discussion Thursday at Tulane Law School’s Corporate Law Institute, Vice Chancellor Strine suggested that a conflict-free bank is not always the best choice.
“I question bringing in a Mickey-Mouse-size bank to represent a go-shop,” he said. “I still err on the side of repeat players” — meaning banks that may already have an interest in a company or a deal — who “know the tricks of the game.”
Morgan Stanley’s Rober Kindler, vice chairman of investment banking, was even more succinct, the blog reported. Referring to the universe of big banks such as his own, he said: “We are totally conflicted — get used to it.”