(Bloomberg) -- Jonathan Orszag, the co-founder of economic consulting firm Compass Lexecon, is making a fresh bet that mergers and acquisitions are only going to get more complicated.
Orszag and eight other economists have founded Econic Partners, a consultancy with an initial focus on antitrust issues around M&A. The firm is being launched with backing from Goldman Sachs Asset Management’s alternatives unit at a time when companies face increasing levels of scrutiny when doing big deals.
“I’ve been at this for 25 years, and the amount of revenue that economic consulting firms are now earning from antitrust work has skyrocketed in the past two decades,” Orszag, who is the brother of Lazard Inc. Chief Executive Officer Peter Orszag, said in an interview.
Demand for economic consultants has taken off as regulatory guidelines on M&A have evolved. This week, US President Donald Trump’s administration said it would follow the tougher M&A review rules adopted under Joe Biden’s government, surprising dealmakers who’d hoped a rollback of those requirements would ease the path to larger transactions.
An antitrust specialist, Orszag said “the increasing politicization of antitrust and the proliferation of data has increased the role and importance of economic consulting on large merger matters.”
Orszag has worked on blockbuster deals like Amgen Inc.’s $27.8 billion acquisition of Horizon Therapeutics Plc, Agrium Inc.’s merger with Potash Corporation of Saskatchewan Inc. and AON Plc’s $13 billion purchase of NFP Corp.
Econic’s co-founders include Nathan Miller, former chief economist in the Department of Justice’s antitrust division under Biden, and Kevin Murphy, a professor of economics at University of Chicago Booth School of Business. Econic has also lined up academic affiliates that include three ex-chief economists at the Justice Department’s antitrust arm, as well as former staffers at the Federal Trade Commission and Federal Communications Commission.
Christine Varney, chair of the antitrust practice at law firm Cravath Swaine & Moore LLP, said Econic’s bench includes some of the “the best economists we work with.” She said that without such skill sets, many large M&A deals wouldn’t receive regulatory clearance.
Broader Scope
Economic consultants are relied upon by companies and law firms to explain the impact of complicated corporate actions through economic theory. Sometimes used as expert witnesses in court, they can charge handsomely for this knowledge — fuboTV Inc. and FuboTV Media Inc. paid $1,800 per hour for Orszag’s services in litigation against Walt Disney Co.
Miller, a professor at Georgetown University’s McDonough School of Business, said Econic will need to be up to speed with trends such as artificial intelligence and algorithms. “All of this requires a firm that’s going to be at the frontier of economic thinking, operating at the highest level, and we think we can do that,” he said.
Earlier in his career, Orszag served as an economic policy adviser under President Bill Clinton. In 2000, he and his brother founded Sebago Associates and later combined it with the practices of Robert Willig and Janusz Ordover to create Compass. FTI Consulting Inc. bought Compass for about $72 million in 2006, merging it with Lexecon to create Compass Lexecon in 2008. Compass Lexecon sits within FTI Consulting’s economic consulting unit, which accounted for 22% of company revenue in 2023.
Orszag left FTI in 2023, following a dispute about control and compensation relating to Compass Lexecon. FTI sued Orszag, alleging he threatened to start a competitor upon his departure and solicit senior employees to join him, in violation of his employment contract. Orszag has denied any such violation and has filed a counterclaim.
Econic has also secured funding from the family offices of Willig and Ordover, among others. It already has roughly 100 people on board, according to Orszag, and eventually plans to push into other areas of expertise outside of antitrust.
“The goal is to be the best economic consulting firm,” Orszag said. “My view of the world is that it’s a virtuous cycle. If you do good work, you attract clients that hire you, which attracts good people to help work with you on it.”
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