First-half M&A surge fuels record race for elite law firms


Transaction activity reached record levels in the first half of 2021, a giant leap from the first six months of 2020 which this year is expected to be one of the busiest periods of memory for transaction practices in firms. of high-end avocados from the country

Buyers have announced $ 2.5 trillion in deals so far this year, propelled by renewed business and consumer confidence, along with mega-deals and growth in private equity work. That’s more than double the $ 1.2 trillion announced in the first half of 2020, according to Bloomberg’s new mergers and acquisitions legal advisory tables.

The activity marks a major rebound from the slump in agreements in the first months of the global coronavirus pandemic. The increase in work has allowed Big Law’s partners and associates in transaction practices to work harder than ever before and has impressed even seasoned negotiators.

“What happened in the M&A market last year is nothing short of extraordinary,” said Andrew Nussbaum, Business Partner at Wachtell Lipton Rosen & Katz.

Long-term lead trader Wachtell, who achieved the highest volume of transactions globally as senior advisor in the first quarter of 2021, again came out on top for the first half of the year.

As principal, the company worked on 53 transactions worth $ 257.3 billion, including Discovery Inc.’s $ 43 million combination with AT&T Inc.’s subsidiary Warner Media LLC, the $ 34 million sale of medical supplies company Medline Industries Inc. GIC Pte Ltd., Abu Dhabi Investment Authority and Carlyle Group Inc, as well as Kansas City Southern’s proposed merger with Canadian Pacific Railway, worth about $ 29 billion.

Simpson Thacher & Bartlett came in second in terms of deal volume per principal, with 117 deals worth $ 257 billion. Sullivan & Cromwell, Cravath Swaine & Moore and Latham & Watkins round out the top five.

In terms of number of deals by principal, Kirkland & Ellis again took the top spot, advising 425 deals worth $ 202.3 billion. Latham & Watkins, Goodwin Procter, Jones Day and Sidley Austin were directly behind Kirkland, the country’s largest law firm in terms of gross revenue.

The return of mega-offers

Nussbaum said the signing of deals does not appear to have slowed from the feverish pace of the second half of 2020, driven by pent-up demand as companies waited to see the business implications of the pandemic.

“A lot of these deals grew out of what businesses saw in the year 2020, when businesses had to re-evaluate what their priorities were and, in some cases, what their core businesses were. And so there’s a lot, if you will, of tweaking going on, ”said Frank Aquila, M&A partner at Sullivan & Cromwell.

Sullivan & Cromwell completed 75 deals in H1 2021 worth $ 218.3 billion, including representing AT&T Inc. in its deal for Warner Media and German real estate firm Duetsche Wohnen in its $ 23 billion sale to rival German residential real estate company Vonovia SE.

Aquila said clients have divested some businesses and divisions that weren’t as essential as they once thought, or made acquisitions in areas they saw to be weak during the pandemic.

This market confidence may also have contributed to the resurgence of mega-deals in 2021. In the past six months, there are currently 21 ongoing or completed M&A deals valued at $ 10 billion or more, according to the reports. Bloomberg data.

“You always see bigger strategic deals, the difference is that some years you see one per quarter,” Aquila said. “In times like this, you might see two or three a week.” He cited the abundance of liquidity on balance sheets and low interest rates as additional incentives.

Nussbaum said there could be a slight divergence in mega-deals between strategic mergers and acquisitions and private equity, as the more complex regulatory environment may make some of these mega-deals riskier, du less in some industries like pharmaceuticals or technology.

“Considering that on the private equity side, given the availability of private equity financing and the availability of debt financing, it appears that the reluctance of private equity firms to pursue these mega-deals goes back one to one. three years are totally gone and the mandate seems to be putting money to work, ”he said.

Power of private equity

According to Bloomberg data, the volume of global pending and completed private equity deals reached $ 965 billion in the first half of 2021, accounting for 38.6% of all global M&A deals completed so far this year. year.

“There were over $ 500 billion more in private equity transactions in the first half of 2021 compared to the first half of 2020,” said Grace Maral Burnett, legal analyst at Bloomberg Law. The volume of private equity transactions was only $ 414.9 billion in the first two quarters of last year, the data showed.

“That’s a lot of deals to grab hold of,” Burnett said. It’s no surprise, then, that top private equity advisor Simpson Thacher also rose to the top of the global ranking of total advertised deals by volume with 126 deals worth $ 317.4 billion.

Private equity deals accounted for nearly a third of Simpson Thacher’s total deal volume in the first half of 2021, with the Wall Street firm working on 79 private equity deals worth $ 132 billion , with an average transaction size of around $ 1.67 billion.

Latham & Watkins came in second, working on 194 deals worth $ 126 billion, and Kirkland followed, working on 266 deals worth $ 124 billion. Paul Weiss, Skadden and Sidley Austin complete the standings.

Simpson has a large base of both mid-market and large-scale capital sponsors as clients in the private equity space and during the first half of the year there has been “a number of ‘Fairly constant activity,’ particularly in the upper middle market, said Simpson Thacher corporate partner Anthony Vernace.

Given the existing pipeline, Vernace said he didn’t anticipate a slowdown in private equity activity in the third quarter, but didn’t know what that would look like by year-end.

Marni Lerner, co-head of Simpson’s private equity mergers and acquisitions practice, said that at some point private equity firms might see the “need to step back as well” and manage their business. acquisitions, although this need varies among groups and sectors.

Looking ahead to the remainder of 2021, questions remain as to what the Biden administration’s proposed changes to antitrust enforcement and capital gains tax might mean for businesses. But most negotiators agreed that this was unlikely to stymie the M&A boom.

“It feels like it’s just the beginning,” Aquila said.


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