10 July 2020

Global M&A slowest since financial crisis as deal appetite slumps amid Covid-19 pandemic

Wall Street

A deserted Wall Street at the height of the lockdown

Latham & Watkins replaces Wachtell Lipton Rosen & Katz at top of global M&A advisory league table for first half of 2020

Global M&A activity slowed sharply in the second quarter of the year as the impact of the coronavirus pandemic roiled markets around the world and prompted dealmakers to shelve transactions.

Only 2,630 deals made it over the line between April and the end of June, compared to 4,308 in the first quarter, according to Mergermarket’s 1H20 M&A Report. That caused deal volumes to slump by a third in the first half of the year compared to the same period in 2019, while deal values dropped by more than half to $901.6bn.

Despite the volatile market conditions, Latham & Watkins was able to leapfrog Wachtell Lipton Rosen & Katz to top the global M&A advisory rankings, having worked on 177 deals worth $133bn — the bulk of them in Latin America.

Freshfields Bruckhaus Deringer continued its strong performance from the first quarter, remaining in second place having worked on 70 deals worth $132bn. That is a significant jump up the rankings for both firms compared to the first half of 2019, when they finished 10th and 16th respectively. Wachtell slipped to third having worked on 35 deals worth $120bn.

Mark Druskoff, data-driven content coordinator at Mergermarket, said: “Such activity levels were most evocative of 2008 and 2009. And while the global financial crisis remains the best historical comparison, Covid-19 has generated its own unique brand of mayhem.”

Even though the pandemic has spread worldwide, the impact on M&A activity has been uneven across regions, Druskoff said. In China, where the virus was first identified, deal count only fell by 7% compared to the same period in 2019, while deal values fell by a fifth. The hardest hit region was the Americas, led by the US. The region’s overall share of global M&A activity by deal value dropped to 33% in the first six months of the year, compared to an almost 53% share at the same point in the calendar in 2019.

Druskoff added: “China experienced the earliest onset of — and recovery from — the virus, providing a hopeful note that as other countries and regions recover, they too will show an improving deal environment. Resurgences of Covid-19 could constrain the upside, however.”

Other firms that enjoyed a decent first half showing compared to last year included Skadden Arps Slate Meagher & Flom, which moved three spots up the ranking to fourth, working on 73 deals worth $109bn, and Allen & Overy, which climbed 14 places to sixth, having worked on 87 deals worth $97bn. 

Kirkland & Ellis fell three places to fifth, working on 191 deals worth $98bn — 75% lower than in the first six months of 2019.

As would be expected, the half-year table by volume was less volatile, with Kirkland swapping places with DLA Piper to gain the top spot, although its deal count was 42% down on its 1H 2019 tally of 338. 

Notable climbers were Ropes & Gray, which jumped from 17th place to seventh, advising on 99 deals, just 11 fewer than the same period last year, and Sidley Austin, which was the only firm in the top 10 to increase its deal count year on year, advising on 97 deals — 19 more than 2019 — to put it in eighth place, up from 28.

Mergermarket: Global Deals in H1 2020 by Value
2020 2919 Firm Value ($bn) Deals
1 10 Latham & Watkins 132.6 177
2 16 Freshfields Bruckhaus Deringer 132.1 70
3 1 Wachtell Lipton Rosen & Katz 119.9 35
4 7 Skadden Arps Slate Meagher & Flom 109.3 73
5 2 Kirkland & Ellis 98.3 191
6 20 Allen & Overy 96.9 87
7 6 White & Case 90.7 141
8 12 Weil Gotshal & Manges 89 74
9 3 Davis Polk & Wardwell 86.7 63
10 5 Cleary Gottlieb Steen & Hamilton 81.8 34

Mergermarket: Global Deals in H1 by Volume
2020 2019 Firm Value ($bn) Deals
1 2 Kirkland & Ellis                                     98.3 191
2 1 DLA Piper 15.6 187
3 3 Latham & Watkins 132.6 177
4 6 White & Case 90.7 141
5 4 Goodwin Proctor 32 136
6 5 Jones Day 23.7 121
7 17 Ropes & Gray 42.3 99
8 28 Sidley Austin 26 97
9 7 Baker McKenzie 16.4 92
10 9 Allen & Overy 96.9 87

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Further reading:

Latin America Covid-19 woes see region's M&A activity plunge to lowest on record — Deal value in first six months of the year falls below previous record low in 2003, Mergermarket report shows

Asia Pacific region least impacted by coronavirus-fuelled global M&A slowdown — Indian law firms dominate top echelons of Mergermarket's APAC M&A advisory league tables

Freshfields and DLA Piper top European H1 M&A tables for value and volume as deal activity plunges — Allen & Overy and Herbert Smith Freehills jump up rankings as Slaughter and May drops out of top 20

Covid-19 sees US M&A activity suffer bigger decline than during financial crisis — Wachtell Lipton and Kirkland & Ellis cling on to top league table positions despite slowdown

Q1 global M&A suffers sharp fall as Covid-19 bites

Wachtell tops US M&A advisory rankings as Covid-19 pandemic halves Q1 dealmaking

Political uncertainty weighs on Latin America M&A activity in first quarter

Asia Pacific M&A slowdown fails to derail region's top deal advisers

Wachtell, Sullivan and Kirkland top global M&A ranking after a near-record year for mega deals

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