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Timothy J. Scallen
Timothy J. Scallen, Fox Rothschild

The POWER 30: Timothy J. Scallen

Fox Rothschild’s mergers and acquisitions practice is a significant presence in the corporate world here in Minnesota.

Its clients include big Minnesota names — Ecolab, Toro, Prime Therapeutics and Andersen Windows, to name a few. Partner Timothy Scallen, co-chair of the firm’s Mergers & Acquisitions Group, with three other lawyers recently represented Prime Therapeutics in its recent acquisition of Magellan Rx Management for $1.35 billion. Both are pharmacy benefits companies.

Institutional clients such as Prime Therapeutics are always looking for strategic investments, Scallen said. Those businesses are less likely to slow down than private equity in the uncertain future, he said. He noted layoffs in the national investment bank sector of the economy, which is simultaneously hiring executive employees. At Minnesota Lawyer’s deadline in December, Morgan Stanley had recently laid off 1,600 employees, Goldman Sachs CEO David Solomon was reported as warning of “bumpy times ahead” and Bank of America chief Brian Moynihan said his firm would slow hiring.

“We’re going to see banks slowing,” Scallen said. “It’s interest rates and the general uncertainty about the economy. People are afraid.”

Private equity financing depends on debt as well as equity, so the debt markets are important, and thus the investment banks are wary, it has been reported.

“The scales are going to turn in favor for buyers’ non-financial terms, such as  equity, Scallen said. Buyers will be able to have more leverage, and do more diligence. With more limited buyers, they will take their time to do things right,” Scallen predicted.

He’s not worried about banking in Minneapolis, Scallen said. With about 37 investment banks, “we’re a well banked town,” he said.

“We have very competitive, high-quality bankers, along with a high-quality corporate bar,” Scallen said.

But buyers who see the market as riskier, and will turn to their lawyers to help them assess the risk, which makes the trust of attorney-client relationship critical, Scallen said. “That’s what good M&A lawyers do and it needs a level of trust.”