ALUMNI
P ROFILE
Managing the IPOs Then, and Structuring their Bankruptcies Now Paul Cohn ’81 remembers working on Lehman Brothers’ IPO over 25 years ago while at Skadden Arps. Today, at Weil Gotshal, he is helping restructure parts of Lehman in its bankruptcy. He can detail most of the financial cycles during his career, from the merger and acquisitions heydays of the 1980s, the ’87 crash, the savings and loan crises, the rise of securitization and structured finance—and their recent free fall—the emergence of private equity as a market force and now, perhaps, the role of private equity as a key player in restoration of the capital markets. “The capital markets always run in cycles,” Cohn said. “It’s a process. The boom cycle of securitization has come to a screeching halt, and now we have to look at what went wrong at the end of the process. And we have to look at what makes sense to preserve.” Cohn can’t help but see the big picture, given the enormous size of the transactions he’s handled. This includes two firstever combinations of an IPO with a securitization for aircraft companies completed in 2006 for General Electric Capital Aviation Service’s launch of Genesis Lease Limited; and in 2007 for Babcock & Brown’s launch of Babcock & Brown Air Limited. Both transactions realized proceeds in excess of $1.3 billion from the IPOs and simultaneous securitizations. While his work covers a variety of financial transactions, 50
Albany Law Magazine
Fall 2009
some of the most visible are the large bankruptcies, where, as he said, “We’re trying to sort out the salvageable pieces of the carcass.” “I’ve always done complex corporate transactions—which has often been about building companies,” Cohn explained. “Restructuring is no different. You’re dealing with a tainted product, but it’s still about building. You need to be creative. What parts do we rescue? How do we best keep the solid businesses going?” Cohn cited the iconic Enron collapse to make his point. “The headlines are about the excess. But you don’t hear about the 30 or so companies that spun out of Enron and which now employ tens of thousands of people and remain profitable.” Like the end of any prominent cycle, he said, “business changes. But it also stays the same. As we enter the next cycle, the business fundamentals don’t change.” For the near future, Cohn sees a round of careful bank lending, and smart private equity growth, where investors will be looking for moderately leveraged bargains in the middle and upper markets. “Money isn’t free anymore,” he said. “We all know this personally since people aren’t going to get 13 credit card offers every month anymore. Business will be conducted much more rationally.” He described the largest changes in the globalization of finance—off-shore deals, like the infusions of capital in India and Asia for example. “This adds a level of complexity and variety.”
Paul Cohn ’81 Cohn has a B.S. in Civil Engineering from Princeton University. And while he’s not building bridges, he said the combination of his engineering and law degrees give him the technical rigor and ability to build complex financial structures required for his field. “These large deals are financially complex,” he said. “Each cycle adds more levels, and you need to bring your previous experience with you to apply it to the next round of transactions. The math and science and law that I learned in school and in the practice of corporate law give me the discipline and precision needed to approach this work properly.” Cohn has fond memories of his law school experience. He likes to mention how Prof. David Siegel made a call to Skadden Arps on his behalf, leading to Cohn’s first law job and subse-
quently launching his career. He also likes to recall how impressed he was, and is, by Albany Law School professors’ keen ability to provide students with rigorous legal foundations and training, while sharing their real world experience and genuine enthusiasm for their areas of specialty. —DS
“Restructuring is no different. You’re dealing with a tainted product, but it’s still about building. You need to be creative. What parts do we rescue? How do we best keep the solid businesses going?”