How a business reporter became hooked on covering M&A

Tara Lachapelle is a mergers and acquisitions columnist for Bloomberg Gadfly, a fast commentary section of Bloomberg’s editorial operations that launched in November.

Before joining Gadfly, Lachapelle wrote Bloomberg’s Real M&A column and had brief stints on the stocks and corporate finance teams. She is a graduate of Suffolk University and holds a master’s degree from Northwestern University.

Gadfly’s analysis pieces typically run between 400 and 800 words, and they appear on the Bloomberg terminal 15 minutes before they appear online. Gadfly has a team of about two dozen journalists.

Lachapelle spoke to Talking Biz News earlier this week by email about covering mergers and acquisitions and about Gadfly. What follows is an edited version of that conversation.

How did you first get interested in covering mergers and acquisitions?

Back in early 2011, Matt Winkler, our editor in chief at the time, was putting together a team to write a daily column with smart M&A analysis. The goal was to use a combination of reporting skills and the vast, invaluable data on the Bloomberg terminal. I was incredibly excited to be asked to join this team, and thus became the first writer of the Real M&A column. Between the quick deadlines and number-crunching, it was love at first sight.

How do you develop sources in investment banks?

It just starts with a phone call. You have to take the chance that some people will hang up on you at first, but you just keep pressing. I’ve also found that meeting in person and keeping in touch even when you don’t have a story really improves the relationship. But while most M&A reporters are looking for scoops and are predominantly speaking with investment bankers, I’m usually focused on the analytical aspect. So my sources span banks, the analyst community, companies, activist investors, attorneys, asset-management firms and merger-arbitrage funds.

Why do you like the M&A beat?

I’m someone who loves to keep busy, and I’m also just curious about anything and everything. There is no shortage of activity on this beat. It’s go, go, go! And because I don’t focus on a particular industry, one day I could be writing about an oil deal, the next day a beer industry merger, and the next a pharmaceutical takeover. There’s so much variety, and you get to learn about so many different things. As a result — and probably more than any other beat — deals reporters can tell you the most random did-you-know facts.

Tell me about the M&A team at Bloomberg.

We’re covering deals from all angles at Bloomberg. For more than four years, I was one of the writers of the Real M&A column. It was part of Bloomberg’s deals team, which is led by executive editor Dan Hauck and global managing editor for Deals Jeffrey McCracken.

At Bloomberg Gadfly, Brooke Sutherland, Gillian Tan and I are covering deals from New York, along with our colleague Nisha Gopalan in Hong Kong.

What was your favorite deal to cover in the past five years, and why?

Not so much a deal, but my favorite dealmaker to cover has been Valeant. I’ve watched Valeant go from a fairly obscure drug company, to the industry’s most-active acquirer, to now a tarnished business that is having its entire M&A-driven business model called into question. It’s been fascinating. In early 2014, I began to raise doubts about the sustainability of Valeant consistently increasing debt to make acquisition after acquisition while investing minimally in research and development.

And when I wrote that, I received some backlash from readers who were very much bullish on Valeant at the time. Now it seems that almost everyone is asking these questions now, and its stock has suffered as a result. Remember: This is the company that essentially inspired the pharma industry’s merger and tax-inversion frenzy.

What’s changed in covering M&A since you started five years ago?

For the first time, we’re seeing just about every industry consolidate at once, and it’s creating a lot of work for the government — from regulators that need to make sure these deals don’t hurt consumers, to the Treasury and IRS worried about companies using these deals to dodge taxes. It might be the first time that mergers and acquisitions have played such a large role in political rhetoric. And some of the prices we’ve seen have been eye-popping.

The timing of this M&A cycle has coincided with the U.S. presidential race, and candidates have even started using the topic of M&A in their talking points. For example, some have spoken out against tax inversions and pharma companies raising prices of drugs they acquire. Next, they may start questioning the so-called synergies that companies extract from deals when they fire heaps of employees.

How is covering it as a news story different than as a Gadfly columnist?

Bloomberg’s broken news on a number of deals this year. As a columnist with Gadfly, we’re able to write off that news and dig in to the details to do smart analyses of these transactions. We strive to find unique, truly helpful insights and angles for our readers — and quickly.

I’ve heard from investors and analysts that the sheer volume of deals affecting so many stocks in their portfolios this year has made it difficult for them to do deep-dives on each one. That’s certainly created an opportunity for me and my team. It’s important to take a step back and consider whether these deals are truly beneficial to a company and its shareholders in the long-run, or if it could turn out badly, as so many in the past have.

Your Gadfly column uses graphics to help tell the story. How are those picked?

This is one of the best parts of Gadfly. We are a treasure trove of charts displaying really interesting data that can often times make a point better than words can. Writers decide what data would be most useful in chart form, and we make them ourselves using a program that some really talented people here built. I have a passion for design and data visualization, so it’s great to be able to do this on a daily basis. Journalists today should always be asking themselves: “What’s the best way to present this information to readers?” Readers are in a hurry, so you have to try to be as useful to them as possible.

Why do you think M&A activity is up in 2015?

Companies have become desperate for growth. When I started on the deal beat, it was more about scale or taking advantage of cheap valuations and utilizing excess cash that companies saved after the financial crisis. But they’ve simply run out of ways to grow, so they’re left to buy one another.

Companies are also less interested in being diversified than they once were and are selling off units that aren’t their primary focus. A lot of this has been spurred by shareholder activism, which is not only forcing the hand of some companies to explore deals and breakups, but also even putting pressure on those that don’t yet have an activist investor present.

What do you see next year in terms of covering M&A?

While this year has been fun because of all the activity and high-profile names that have struck mega-deals, next year may be even more interesting. That’s when many of these transactions will close and start to be digested. We’ll get to see how many buyers overpaid and are experiencing buyer’s remorse. I’m guessing quite a few. This is where Gadfly will really come in handy for people. I’m pumped.