Q&A with Attorney Phil Taub
‘This is the busiest M&As have been in the last 24 years,’ says Nixon Peabody attorney Phil Taub, who heads the firm’s Private Equity and Family Office practice group.
Bedford resident Philip Taub has come a long way in both miles and milestones since his birth in Rhodesia (now Zimbabwe) in 1968. He arrived in Boston during a snowstorm in 1986 with his worldly possessions contained in two suitcases and enrolled in Boston University. He went on to law school at George Washington University in Washington, D.C., and moved with his Boston-born wife, Julie, to New Hampshire, where he went to work for a company then known as Peabody and Brown, at an office in Manchester.
Twenty-four years later, he is with the same firm, now the global law firm of Nixon Peabody, and has been the midwife of numerous mergers and acquisitions both nationally and globally as head of the firm’s Private Equity and Family Office practice group.
In the spring of 2017, the Taubs started a program to benefit veterans, called Swim With a Mission, and have raised more than $1.2 million for a number of veterans organizations, including the Navy SEALs Museum in Florida, Veterans Count in New Hampshire, The Fallen Patriots and the Bridge House Veterans Homeless Shelter.
Taub is also president of the Granite State Children’s Alliance for victims of child abuse and has served on a number of boards, including the Derryfield School and the YMCA.
Q. Is this a hot market for mergers and acquisitions?
A. Yes, this is the busiest M&As have been in the last 24 years. As the economy is strong right now, there is the sense that we’re on the tail end of this business cycle, so we have a whole bunch of CEOs looking to sell at a premium now before we head into another downturn like we did in 2008.
Q. It’s not going to be that bad, is it?
A. Nobody knows. When you see the debt market seem to tighten up, you know what’s coming because right now there’s a lot of so-called cheap debt that’s readily available to private equity funders and strategic buyers. So right now you’re seeing very high premiums being paid for companies.
Q. After the financial crisis of 2008, Congress passed some legislation to prevent another such collapse. Is it working?
A. A lot of that legislation was aimed at very large financial institutions like banks and there have been a lot of cases we read about in the papers where large banks have settled with the feds over various allegations of wrongdoing. But I’ve heard a lot of complaining from those financial institutions that those feds went too far in trying to regulate, and it’s become overly burdensome.
Q. In what ways and to what extent do you think the collapse of 2008 and the recession that followed resembled the economic collapse known as the Great Depression?
A. I’m a deal lawyer, not an economist or necessarily a good student of history. I’ve spent a lot of time in deal markets, working for a lot of Wall Street firms and for some of the largest companies all over the U.S. In all industries all across the spectrum of people, there are very honest and ethical people, and on the other side folks who are not ethical and are trying to operate outside the rules and take advantage of people, and so you always have businesspeople who are highly speculative, whether in the Great Depression or in the savings and loan scandal.
Another example is the Bitcoins. A lot of average people are thinking about getting involved in Bitcoins on the premise that they’re not regulated. As a result, it’s highly speculative and could be easily manipulated by a small group of people.
Q. Is it all funny money? Look at the market value of baseball teams today and their operating costs, with players’ salaries and all, and you might wonder how many financial institutions must be holding mortgages on Fenway Park.
A. Sports teams are not good representatives of the economy. A few sports teams are run by billionaires who like to own sports teams as a trophy. Most make pretty good money.
We’re a big country with over 300 million people. Regulation is all about striking the right balance. In our country we tend to overreact. Look at 9/11. We’ve been in a war on terror for a very long time and it’s taken a big toll on a lot of people, especially veterans and their families. We should have been more proactive. We’re operating now in almost every country on earth.
New Hampshire has 130,000 veterans out of a population of 1.2 million, one of the highest percentages of any state, and we don’t even have a major base. A lot of veterans need help.
Q. Are you disappointed that this article won’t be published before Veterans Day?
A. Every day should be Veterans Day.
Q. Are all of the mergers and acquisitions creating too much concentration of economic power? Are we creating more institutions that are or will be “too big to fail?”
A. I’m a free-market guy. I like the idea of markets regulating business. I think it’s a misnomer to talk about “too big to fail.” There was just way too much speculation going on, on Wall Street. The average person didn’t have any idea what was going on. Wall Street did come very close to a meltdown.
The biggest thing I fear is that Amazon is really hurting a lot of companies that don’t want to compete head-to-head with Amazon. Amazon has done a lot of damage to a lot of brick-and-mortar pet stores, for example, by selling pet foods, pet toys and supplies online. But it’s one of those things where businesses continue to evolve.
Kodak, for example was once on the cutting edge of the high technology of its day. Kodak should have become Facebook. They didn’t react to a changing market. At the end of the day, the market determines winners and losers, not the government.
Q. Is the Dodd-Frank law too much government regulation?
A. I’m not sure I’m qualified to say. I’m one of the co-founders of Primary Bank in Bedford, a small commercial bank that’s growing fast. On the one hand, there’s an obvious need for some regulation to ensure that people’s deposits are protected. But we started the bank in 2015, and it’s only the second de nova to be formed in America since 2008. Meanwhile, 9,000 banks since 2008 went away, either through mergers and acquisitions or they simply went out of business. So there are 9,000 fewer banks than there were in 2008, and only two new banks came into the system.
We created a bank here to create jobs and support small businesses that need access to capital, but given the amount of regulation they have to comply with, it does feel quite heavy and frankly makes it hard to run a bank.
Q. Might it not be the case that, as a smaller number of farms than there used to be are providing an ever greater amount of our food, the smaller number and larger size of banks are providing as much or more service to customers than the greater number of smaller banks.
A. In aggregate that’s probably true. There are certainly a lot of opportunities at the top of the market. That’s not the case at the bottom of the market. Because as the banks get bigger, there is more pressure on them to make bigger loans and that leaves a void at the low end of the market.
Q. Has the freewheeling and dealing in the financial markets that preceded the collapse of 2008 still going on?
A. I don’t think it ever goes away. Often it’s the ability of Wall Street to divert various income streams and build them up in pools that form liquidity in the economy and fuels more growth. There’s a limit to everything. It’s a matter of striking the right balance. It’s not a matter of black and white, this is good and this is bad. The CEOs that were at the heart of the downturn in 2008 came right back later. Sometimes we’re just destined to have history repeat itself over and over again.
Q. Inflation in the housing markets was at the root of a lot of the economic disaster a decade ago. Do you see any problems there?
A. I travel a lot on business down to New York City, Miami, out to Los Angeles. and the level of construction going on in the major cities looks a lot like what we saw six or seven years ago. A lot of those skyscrapers and hotel resorts were stopped dead in their tracks and they sat vacant for a while until the economy got strong again and they were finished.
I’m amazed at how much is going on in some of the big cities. You know the economy is strong if you sit in traffic driving from Manchester to Boston. This is the worst I can ever remember it. One of the few silver linings of a few years ago is the commute got better as the economy got worse. Right now there are too many cars on the road. The infrastructure can’t handle it.
Q. It used to be working-class Americans never expected to get much more from whatever surplus they could earn than their interest on their savings accounts. Now they have all kinds of investments from their savings and from their pension funds. What advice can you give them?
A. I have helped a lot of people make a lot of money. I’ve spent most of my professional career advising wealthy people. For working families or serious investors, the advice I give them is diversify the risks. Whether you have a lot or a little, diversify, diversify, diversify. Don’t put all your money in one location, like the stock market. If you have the ability, put it in other places -- real estate, private equity ventures, precious metals like diamonds, gold or silver. You know, Bitcoins are highly speculative, so don’t bet the farm on it. If another 2008 or market crash occurs, you’ll lose only some percentage of your net worth instead of all of it.