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Skadden, Arps, Slate, Meagher & Flom LLP, the top-grossing U.S. law firm, overtook a U.K. competitor to advise on the highest amount of global mergers and acquisitions in 2009 — the least active deal market in six years.
The New York-based firm, which counts prominent national attorneys Paul Mitchard and Robert Bennett as partners, unseated 2008 leader Linklaters LLP.
Linklaters ranked fifth among legal advisers to buyers and sellers last year, according to data collected by Bloomberg. Total deal value fell about 32% to more than $1.7 trillion, the data shows. That's down from $2.5 trillion last year and a record $4 trillion in 2007.
Still, deal amount increased 54% in the fourth quarter from the third, signaling a possible recovery in the market. Announced deals rose to $557.1 billion, led by Exxon Mobil Corp.'s pending $41.4 billion purchase of XTO Energy Inc., Berkshire Hathaway Inc.'s takeover of Burlington Northern Santa Fe Corp. for $35.8 billion and Kraft Foods Inc.'s proposed hostile acquisition of Cadbury Plc.
“Nobody's viewing it as strong recovery, but it's a recovery nonetheless,” says Scott Barshay, managing partner of the corporate department at Cravath, Swaine & Moore LLP in New York, who is advising Burlington Northern in the Berkshire Hathaway transaction. “In the second half of the year and particularly in the last quarter, you had a real increase in M&A that I think has a good chance of sustaining itself in 2010.”
Sullivan & Cromwell LLP, which ranked first for four straight years through 2007 and was second last year, suffered the steepest fall from the top, dropping entirely out of the top 20.
Deal amounts reached a record high in 2007, boosted by private-equity firms and the availability of leveraged buyout financing. Most came in the first half that year. After the subprime crisis and the credit crunch grew, the amount of deals fell in the fourth quarter.
Then Lehman Brothers Holdings Inc.'s September 2008 collapse froze credit and debt markets, worsening the global economic crisis.
All of the top five law firms advised on lower amounts of transactions in 2009 than a year earlier. Skadden advised on $212.4 billion of deals, 25% less than in 2008.
The firm represented Schering-Plough Corp. in its $47.1 billion takeover by Merck & Co., the second-largest deal of the year, and BlackRock Inc. in its purchase of Barclays Plc's global investors unit for $12.5 billion.
“It was still a busy year for us, though we all wish we were at a more robust level of activity,” says Stephen Arcano, head of M&A in Skadden's New York office, who is advising XTO Energy in the Exxon Mobil deal, the fourth largest of the year.
Banks “are ready to write commitments, which they weren't willing to do at the beginning of the year, other than for very highly rated borrowers,” Arcano says.
Clifford Chance fared the best of the U.K. firms in the top 10, with only a 10% decline in volume of deals.
“We're still depressed and significantly down from the levels in 2006 and 2007,” says Matthew Layton, global head of the corporate practice at Clifford Chance LLP in London.
“It's nowhere near the levels of the previous years, and we don't see a very rapid return to significantly higher levels of M&A activity, but a general upward trend.”
London-based Linklaters advised on an amount of deals that was 55% lower than in 2008. Freshfields Bruckhaus Deringer, also London-based, ranked third overall. Freshfields' deal amount declined 44%.
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