To the surprise of few, global M&A activity for the first quarter of 2020 is down significantly year over year, showing an overall decline of 28% from the same point in 2019, according to new league tables from global financial data company Refinitiv. The number of deals dropped 16% year over year, and the top five law firms for deal value also saw a shake-up.

Kirkland & Ellis, a perennial presence in the legal adviser rankings for top M&A deal value, fell from the No. 1 spot at the end of Q1 in 2019 to No. 7 so far this year for global deals, watching its deal value totals plummet from over $210 billion in Q1 of 2019 to just over $55 billion in 2020, a 74% reduction year over year. 

Kirkland also saw a drop in the number of deals it worked, going from 173 in Q1 of 2019 to 95 in Q1 of 2020, according to Refinitiv. That number, however, was still the highest among the top 15 firms for deal volume in Q1 of 2020. The report did not specify if any firms further down the list for deal value had more.

Taking over the top spot for announced deal value for the quarter was Freshfields Bruckhaus Deringer, announcing $99.6 billion worth of deals in Q1 of 2020 compared to $35.1 billion in Q1 of 2019, when the firm ranked No. 37.

Only two of the firms that were on the top five list in Q1 of 2019 are on it in 2020. After Freshfields, Latham & Watkins came in at number two with $89.4 billion in announced deals. The firm was ranked No. 20 at this point last year. 

Skadden, Arps, Slate, Meagher and Flom came in at No. 3 with $74.3 billion announced, with Cleary Gottlieb Steen & Hamilton at No. 4 with $65.7 billion and Wachtell, Lipton, Rosen & Katz at No. 5 with $63.1 billion. Only Skadden (No. 2) and Wachtell (No. 5) were in the top five at this point in 2019. 

The first quarter of 2019 saw about $968 billion in announced deals, close to 25% of the $3.9 trillion total for the year, according to Refinitiv. If Q1 of 2020 ends up being roughly 25% of the global volume for the year, the industry is looking at massive declines year over year. 

While deal volume and deal value are both used to evaluate the M&A landscape, volume tends to be less volatile over time, and, according to some M&A attorneys, can better reflect a firm's market share. According to Mergermarket data for the first quarter this year, DLA Piper (with 106 transactions), Kirkland (103) and Latham & Watkins (97) were the top three in deal volume for global M&A, just as they were in Q1 of 2019. Jones Day (74) and Goodwin Procter (65) were fourth and fifth in the 2020 rankings, switching slots from 2019.

A more acute view shows how impactful COVID-19 has been since it took hold in the United States and Europe. 

Data from Dealogic published in The Wall Street Journal showed January M&A deal value at about $151 billion. February saw $230 billion in deals. The first two of five fiscal weeks in March saw $131 billion in activity, on pace to surpass February by a wide margin. But the last three fiscal weeks of March saw only a fraction of that activity, contributing just $49 billion to the month, according to Dealogic. 

The Journal cited several examples of how COVID-19 is directly affecting deals. Increased difficulty in securing debt financing from banks that are dealing with more pressing immediate concerns, violent swings in the stock market that make valuations difficult and an inability to meet face to face for negotiations were cited as three primary reasons deals have gone south. 

Tangible examples of COVID-19′s effects are beginning to surface. Xerox, which had been in negotiations for a hostile takeover of PC and tech equipment manufacturer Hewlett-Packard, said on Wednesday that it was walking away from the potential $35 billion deal, citing the pandemic as a driving force behind the decision. King & Spalding represented Xerox on the matter.

While the deal market has stalled in recent weeks, overall numbers for Europe are up 118% year over year, according to Refinitiv. More often than not the second-largest market for deals, after the Americas, Europe went from $106 billion in announced deals in Q1 of 2019 to $232 billion in Q1 of 2020. 

That increase, however, along with a 64% increase in deals from Japan, was not nearly enough to level out the 88% drop in deal value in the African region, an 18% decline in value for Asia-Pacific and a 49% decrease from the Americas region. 

Francis Aquila, partner and global head of M&A in Sullivan & Cromwell's New York office, said he expects deals that have already been signed but not closed to continue, even if they are delayed somewhat. 

"By and large those transactions are either waiting for regulatory or shareholder approval," Aquila said. "Most of those deals will happen, although it may take a bit longer."

Aquila said pipeline deals—those that are in negotiation but not ready to sign—could see more of a delay for many of the same reasons mentioned above. 

"Even in peak periods, there are a certain number of transactions you work on that do not happen," Aquila said. "That number may be higher now that companies are delaying some transactions. You tend to rethink the transaction when you pull back from it."

Aquila, who has closed more than $1 trillion in transactions in his career, said while things may be slow right now, the underlying reasons for doing deals still exist. 

"I have a high degree of hope that we will see a second half of 2020 that is very active and very robust," Aquila said. "The drivers for M&A will still be there. Whether it is the second half of 2020 or the first quarter of 2021, I don't know, but we will see an increase."

He emphasized that his optimistic prediction is not simply "magical thinking."

"There are real economic, strategic and competitive forces that drive the M&A market," he said. "While those forces may take a back seat in a health crisis, they don't simply go away. When the crisis passes, you then go back to doing the things that you would normally do."