Mergermarket Q3 M&A stats show global deal volume falling to lowest level since 2003

Linklaters and Freshfields Bruckhaus Deringer have dominated the battered European M&A markets over the first three quarters of 2009.

Research from Mergermarket exclusively provided to Legal Week shows Freshfields topping the European rankings by value after working on 105 deals worth $127.9bn (£80bn). Linklaters tops the volume rankings and comes second by value, with roles on 116 deals worth $111.4bn (£70bn) in Europe.

Both firms were separated from their nearest rivals by more than 10 deals and $25bn (£15.7bn). However, all of the tallies are significantly lower than during the same period in 2008, owing to the sharp drop in M&A activity. Linklaters, for example, topped both the value and volume rankings for the first three quarters of 2008 after advising on 191 deals worth $500.4bn (£314bn) – representing a 77% drop in value and a 39% dip in volume between the years.

The rankings for this year show magic circle firm Allen & Overy in third place by volume, with roles on 92 deals worth $29bn (£18bn), followed by Clifford Chance (CC) on 87 deals worth $71.1bn (£44bn).

US firms rank highly, with Sullivan & Cromwell and Latham & Watkins finishing the third quarter in third and fourth place by value in Europe. Skadden Arps Slate Meagher & Flom, Cravath Swaine & Moore, Davis Polk & Wardwell and Wilson Sonsini Goodrich & Rosati also feature in the top 10 by value.

Although M&A activity has shown signs of picking up in recent weeks, the Mergermarket data shows significant underlying falls in both value and volume compared with last year. The third quarter of 2009 yielded the lowest volume of European deal activity since the beginning of 2003 with just 696 transactions.

In total the first three quarters of 2008 saw 4,421 announced European M&A deals worth $824.6bn (£519bn), whereas the same period in 2009 saw 2,368 deals with a combined value of $252.2bn (£158bn).

David Barnes (pictured), global head of corporate at Linklaters, commented: "The current positivity is encouraging but it is rather fragile. Could it all fall over again? Yes. The possibility of another financial crisis is still very much in the back of peoples' minds. However, we do feel that the London, the US and emerging markets are pretty solid."

Matthew Layton, corporate head at CC, said: "We are cautiously optimistic that we will see a continuation in the increase of activity levels, but the market remains quite fragile. We are not anticipating a sudden hockey stick type recovery, it will be more gradual than that."