Merger Arbitrage: Opportunity in Regulatory Complexity

In this episode, Suzy Gibbons, Partner and Head of Research, sits down with Zach Altschuler, Head of Merger Arbitrage, and Michael Chiaramonte, Deputy Head of Merger Arbitrage, to discuss our viewpoint that merger arbitrage is entering one of its most attractive periods since the Global Financial Crisis – with global M&A activity rebounding while regulatory review has become increasingly complex and fragmented. They explore how that regulatory complexity creates a "complexity premium" in merger arbitrage spreads, particularly for large transactions, offering what we believe to be attractive risk-adjusted returns for investors capable of conducting deep research and underwriting global processes.The conversation dives deeper into the analysis beneath the recent white paper that Suzy, Zach and Michael co-authored, Merger Arbitrage: Opportunity in Regulatory Complexity.Read the white paper here: Merger Arbitrage: Opportunity in Regulatory Complexity — Davidson KempnerDKCM Website: Home — Davidson KempnerDKCM LinkedIn: LinkedIn — Davidson Kempner

We believe that merger arbitrage is entering an especially attractive period. Global M&A activity is rebounding while regulatory review has become increasingly complex and fragmented, conditions that may usher in a new golden era for sophisticated investors.In our latest white paper, Merger Arbitrage: Opportunity in Regulatory Complexity, we explore the recovery in global M&A activity following a cyclical slowdown, and why larger transactions increasingly require review across multiple antitrust, foreign investment, national security, and sector-specific regimes. The white paper also considers what this means for merger arbitrage investors evaluating global, multi-jurisdictional transactions.Read the white paper here: Merger Arbitrage: Opportunity in Regulatory Complexity — Davidson KempnerDKCM Website: Home — Davidson KempnerDKCM LinkedIn: LinkedIn — Davidson Kempner

In this episode, Suzy Gibbons, Partner and Head of Research, sits down with Tony Yoseloff,  Managing Partner and Chief Investment Officer, to discuss how dislocations in private equity and direct lending – driven by higher interest rates, excessive leverage and delayed defaults – are creating what we view as a large and growing opportunity set. They explore how opportunistic credit can enhance portfolio construction while extending the “efficient frontier.”   The conversation dives deeper into the analysis beneath the recent white paper that Suzy and Tony co-authored, Optimizing the Efficient Frontier: Opportunistic Credit Amid a Capital Structure Reset. Read the white paper here: Optimizing the Efficient Frontier: Opportunistic Credit Amid a Capital Structure ResetDK Website: Home — Davidson KempnerDK LinkedIn: LinkedIn — Davidson Kempner

We believe we are in the early innings of a capital structure reset. Higher-for-longer rates, refinancing pressure, and aging private equity portfolios are reshaping capital needs, creating what we view as a compelling backdrop for opportunistic credit.  In our latest white paper, Optimizing the Efficient Frontier: Opportunistic Credit Amid a Capital Structure Reset, we explore why this backdrop may prove attractive for opportunistic credit investors across capital solutions, restructurings and special situations. The white paper also discusses how opportunistic credit strategies can offer what we believe to be attractive risk-adjusted returns for institutional portfolios with moderate-to-high public equity exposure. Read the white paper here: Optimizing the Efficient Frontier: Opportunistic Credit Amid a Capital Structure ResetDKCM Website: Home — Davidson KempnerDKCM LinkedIn: LinkedIn — Davidson Kempner

In this episode, Suzy Gibbons, Partner and Head of Research and Patrick Dennis, Co-Deputy Managing Partner, examine the increasingly commoditized nature of corporate direct lending—which we believe is characterized by tighter spreads and weaker recoveries—and contrast it with select areas of private asset-based finance.  They highlight potential opportunities in U.S. second-lien residential mortgages, European SME asset-based lending, and U.S. mid-ticket equipment finance, where we believe strong collateral and structural protections may support more attractive risk-adjusted returns.The conversation builds from the recent white paper that Suzy and Patrick co-authored, Rapids of Private Credit: Opportunities in the ‘Eddies’ of ABF.Read the white paper here: Rapids of Private Credit: Opportunities in the Eddies of ABFDKCM Website: Home – Davidson KempnerDKCM LinkedIn: LinkedIn – Davidson Kempner

Triggered by the rapid expansion of direct corporate lending over the past decade, competition across the leveraged credit landscape has intensified — contributing to weaker credit documentation, compressed spreads, and declining recovery rates.In our latest white paper, Rapids of Private Credit: Opportunities in the Eddies of ABF, we explore how certain pockets of private asset-based finance — including U.S. second-lien residential mortgage lending, European SME asset-based lending, and U.S. mid-ticket equipment finance — can offer compelling risk-adjusted spreads supported by strong collateral and structural protections.Read the white paper here: Rapids of Private Credit: Opportunities in the Eddies of ABFDKCM Website: Home — Davidson KempnerDKCM LinkedIn: LinkedIn — Davidson Kempner

The sharp repricing of commercial real estate (CRE) across sectors and regions – triggered by steep interest rate hikes that began in 2022 – marks a structural reset leading to more differentiated outcomes for real estate investors.In our latest white paper, we explore how this environment creates an ideal setting, in our view, for alpha generation for investors with nimble capital and structuring expertise, a global strategy with local sourcing capabilities, and a special situations orientation.Read the white paper here: Real Estate Reset: Capitalizing on Record DispersionDKCM Website: Home — Davidson KempnerDKCM LinkedIn: LinkedIn — Davidson Kempner

Market fragmentation, lower valuations, and scarcer private institutional capital, in our view, make Europe an attractive market for flexible capital providers.In our white paper, we examine these and other factors and make the case that Europe offers compelling investment opportunities even amidst heightened volatility around tariffs and the trend toward deglobalization.Read the white paper here: Europe: Opportunity in Fragmentation — Davidson KempnerDKCM Website: Home — Davidson KempnerDKCM LinkedIn: LinkedIn — Davidson Kempner 

The environment of higher rates, inflation and deglobalization has resulted in elevated idiosyncratic risk and, in turn, an improved opportunity set for absolute return strategies.In our white paper, we examine the performance of absolute return strategies across different rate environments. Since 1990, absolute return strategies generated on average 52% higher excess returns above the three-month U.S. Treasury bill during periods of higher interest rates. We believe the environment has become more supportive for absolute return and, in particular, event-driven strategies. Read the white paper here: Absolute Return: The Party Is Just Getting Started — Davidson KempnerDKCM Website: Home — Davidson KempnerDKCM LinkedIn: LinkedIn — Davidson Kempner 

In 2023, credit markets appeared to be on the verge of an “old-fashioned” distressed cycle due to higher base rates and elevated leverage. Leveraged loan defaults have risen since then, largely dominated by liability management exercises (LMEs). However, this has been far from uniform. There is significant dispersion in default rates, prices and recoveries across different parts of the corporate credit market.In our white paper, we explore why this dynamic portends an extended distressed cycle with multiple overlapping waves and highlight the importance of selective credit underwriting in today’s environment.Read the white paper here: The Tides of Credit: Opportunity in Dispersion — Davidson KempnerDKCM Website: Home — Davidson KempnerDKCM LinkedIn: LinkedIn — Davidson Kempner