Q3 M&A: better late than never
As Continental buyers drive a resurgent M&A market, the strength-in-depth mob's time has finally come
October 12, 2005 at 08:03 PM
3 minute read
The sense among City lawyers is that this is the way it was supposed to be all along. After spending the late 1990s building up pan-European deal teams, only to see cross-border M&A largely dry up, the big firms finally have a market they can get their teeth into.
The third-quarter deal figures confirm the scale of that revival, with the last three months registering as the most active quarter for five years, accelerating the substantial pre-summer recovery. Deal value is now roughly twice that of the same period in 2004, reflecting much larger strategic public deals, though volume is little changed.
And while private equity remains strong, Continental plcs are now firmly in the driving seat in sectors such as energy, utilities and financial services, which have seen a string of strategic acquisitions.
In contrast to the last M&A boom (and three years of private equity bargain-hunting) these are typically cash-rich companies making measured acquisitions after four years of paying down debt. In short, exactly the kind of deals that encouraged legal consolidation in the first place.
So it is little surprise to see the advisers with a real breadth of coverage (such as Freshfields Bruckhaus Deringer and Linklaters) benefiting, but also Clifford Chance (CC).
It hardly needs saying that Freshfields and Linklaters have had robust quarters, but CC deserves certain credit. Sure, its rankings are inflated by bank roles and sheer mass, but market conditions in the third quarter have given CC the chance to really show off what it has built in Europe.
Recent highlights include the firm's respected Spanish practice leading Endesa's defence against Gas Natural's £15bn hostile bid, advising BPB on the Saint Gobain bid and advising on Oger Telecom's stake in Turk Telekomunikasyon. Rivals still snipe that the firm's public M&A team lacks the class of the very top players in the UK and Germany but, as a marriage of quality and quantity, it has few peers.
This trio of UK firms riding the current market is neatly mirrored by Shearman & Sterling, Skadden Arps Slate Meagher & Flom and Cleary Gottlieb Steen & Hamilton, which are all continuing to establish themselves as real forces in European M&A.
Below that, the chasm opens. Having soaked up much of the premium work on offer last year, Slaughter and May has perhaps inevitably faded slightly from view. Likewise, Allen & Overy's current high deal rankings have to be considered alongside bank roles on the bids for Endesa and BPB. The challenge for both firms will be to show they can prosper in a market driven by large continental acquirers and continued robust levels of private equity.
Firms like Herbert Smith, Ashurst and Lovells meanwhile, have generally seen some upturn in deal activity but there is little sign yet that they are really benefiting from conflict roles.
With European corporates sitting on plenty of cash and investors once against favouring major acquisitions, that time will presumably soon come. In the meantime, the chasing pack will have to sit back and watch as the already-theres grab the limelight.
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