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July 2, 2009 3:17 PM

Skadden, Wachtell Dominate M&A League Tables

Posted by Zach Lowe

As we've touched on before, it's impossible to find a full consensus among the four major league tables (Mergermarket, Bloomberg, Thomson Reuters, and Dealogic) because of differing methodologies. But the tables out this week tracking deals for the first half of 2009 have some common themes: Deal volume is way down, and the top firms are doing fine, especially Skadden, Arps, Slate, Meagher & Flom and Wachtell, Lipton, Rosen & Katz.

As was the case after the first quarter, those two firms rank near the top of all four lists, including finishing first and second on both the Mergermarket and Bloomberg lists--with Skadden topping both. But there are the usual interlist quirks. (Bloomberg has Skadden advising on $190 billion worth of deals so far, while Mergermarket, which counts dead deals, credits Skadden for work on $225 billion worth of deals.) The Reuters list, for instance, ranks Linklaters the world's top M&A firm by deal value so far this year, even though Links doesn't crack the top ten in the Dealogic and Mergermarket rankings and ranks eighth on the Bloomberg list. 

One quirk we can't explain: Dealogic has the Australian firm Allens Arthur Robinson ranked second in deal value--and first, leapfrogging Skadden, on their list, which includes only advisers to buyers and targets (and not firms that represent financial advisers on deals). We scoured our archives for the deal, dead, alive or just announced, that would explain Allens' place on the Dealogic list, but we couldn't find it. Help us, dear readers. Allens doesn't crack the top ten in the Bloomberg and Mergermarket listings. 

In any case, Skadden and Wachtell being here isn't a surprise. Wachtell advised Schering-Plough on its $46 billion merger with Merck in the first quarter, and Skadden advised BlackRock Inc. on the private equity firm's $13.5 billion purchase of Barclays Global Investors last month. (Skadden also has been active in the red-hot pharma sector; the firm repped the financial advisers for Pfizer in the company's $68 billion merger with Wyeth, and it advised Express Scripts on its $4.7 billion buy of WellPoint's pharmacy management business in April.)

The usual suspects round out the top ten of each list: Sullivan & Cromwell (ranked third in three lists), Simpson Thacher & Bartlett (fourth in Bloomberg, fifth in Mergermarket and Dealogic), Clifford Chance (in the top five on three lists and sixth on another), Cleary Gottlieb Steen & Hamilton; Paul, Hastings, Janofsky & Walker, Freshfields Bruckhaus Deringer, Shearman & Sterling, and others dominate the top ten on each listing. 

Jones Day has done well in midmarket deals and ranks first in the raw number of deals, according to both Bloomberg and Mergermarket.

So much for the good news. The bad news, as we all know: Deal volume is way down after a stronger-than-expected first quarter. Mergermarket has total deal value down about 43 percent compared to the first half of last year (to about $708 billion). Dealogic is slightly more optimistic, with deal value down 35 percent (to just over $1 trillion) compared to the first six months of 2008. (Bloomberg and Reuters fall between those two estimates.)

There's one area, of course, where deal-making is on fire: Acquisitions of distressed or insolvent companies. Mergermarket counted 223 so-called insolvency deals, up from 90 over the first six months of 2008, while Dealogic says the value of distressed deals (about $167 billion) was higher than all but one six-month period on record. (That period? The second half of 2008. It's been an ugly couple of years.)

Of course, those deals are complicated and often inexpensive, considering one of the parties is in serious trouble, Jones Day M&A head Robert Profusek told The Wall Street Journal. Indeed, the WSJ story cites Citigroup data showing only 124 deals so far this year valued at $1 billion or more, down from 246 last year and 390 in the first half of 2007.

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This obsession with league tables is one of the symptoms of the disease that ails the legal industry.

Remember the good old days when lawyers thought of themselves as quiet confidants instead of major league ball players?

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