In this edition we continue our coverage of the Corporate Transparency Act, with three articles covering the legal implications for a wide range of businesses. We also discuss the sea change in the treatment of college athletes under new NCAA “name, image, and likeness” compensation rules, business certification options for companies interested in pursuing contracts with federal, state or private sector contracting authorities, and the impact of new messaging technologies on government enforcement regimes.
There are a lot of other topics we could have written about, that have major impacts on our clients’ businesses, finances, and transactional strategies. It is a presidential election year in the United States, wars are raging in various places around the world, and interest rates have recovered from their record lows following the 2008 financial crisis and the COVID-19 pandemic, including the unwinding of unprecedented negative interest rate regimes in several major economies.
That last point certainly has had an outsized impact on our work as corporate transactional and finance lawyers. Generally, we have seen continued strong activity in our M&A and capital markets financing practices over the past several years, during the era of ultralow rates. After a banner year in 2022, followed by a mild downturn in early 2023, especially in more rate-sensitive areas, activity seems to be picking up again as we head further into the presidential year of 2024.
The subjects of interest rates and government monetary policy are deeply complex, and probably not best addressed in this column. It is a truism that the current level of rates reflects the current complex state of the world in 2024.
What is driving this pickup in activity, as interest rates appear set to remain “higher for longer” according to many observers? In historical terms, current rates in the range of 5% are not unusually high. Investors as well as buyers and sellers in the M&A market seem to have adjusted their rate expectations and corresponding valuations to the new interest rate regime. The underlying motives driving transactions remain constant, such as generational ownership transitions, capital demands to support growth, and opportunities presented by exciting new technologies and business models.
Basically, life goes on, as people are getting used to higher rates. Continued higher rates certainly will benefit savers, retirees, pensioners, and others who rely on fixed income returns. They also represent a perhaps welcome sign of a return to normalcy in the financial and capital markets. One thing is certain: The clients and businesses we serve, as always, are finding ways to adapt and thrive in the current environment.
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