M&A today

After a year of economic turmoil, who managed to hold their own and who suffered the most? Caroline Davies reports on how the top firms performed in 2001's M&A tables

Most investment bankers are desperately trying to erase 2001 from their memories. Unfortunately for them, it is league table time. Bankers cannot help but eye them with interest (the global tables at least), and law firms follow suit, despite some expressing indignation at their ultimate ranking. So which firms held their own in last year's slower market?
Freshfields Bruckhaus Deringer
It was a good year for Freshfields as the highest ranking UK firm on the 2001 global announced M&A deals table, published by Thomson Financial Securities. According to MergerMarket's figures for 2001 European announced deals, it was top again, completing 164 deals, valuing £132bn – although Freshfields says it did deals valuing £150bn.
Compare this with the previous year, when, according to MergerMarket, it did 214 deals with a total value of £258.9bn. Barry O'Brien, head of corporate, acknowledges that both value and the number of deals fell in 2001 but adds that size, at least, is not important. “Lawyers,” he claims, “are not as concerned about value as the bankers are because we have different fee structures.”
Admittedly, the department did more work for private companies than the headline-grabbing, public M&A work of 2000. There were still fairly chunky deals in 2001, but more in the £100m bracket and fewer of the £50bn transactions that Freshfields was pulling in previously. Meanwhile, the conflicts that plagued the firm last year have mostly dissipated, the biggest being the Powergen and Eon deal where the London office was Powergen's only magic circle firm and the Bruckhaus side was Eon's adviser, a conflict which let Slaughter and May sneak in.
In the top 10 European deals for 2001, Freshfields acted on three, although one was not as main M&A corporate adviser. Perhaps most pleasing for the firm, given its aim to become pre-eminent in pan-European M&A, it was the Bruckhaus side that acted for Dresdner Bank on the largest deal of last year – Allianz's agreed takeover bid of the bank, which was worth $19.7bn (£13.69bn). Despite the firm's triumph in Frankfurt, London more than held its own; it won the plum client of Mm02 following the $11bn (£7.64bn) BT Wireless demerger. Although it sneaked on to the roster for the year's seventh-largest deal – the Lafarge takeover of Blue Circle Industries (UK) – it was not the main adviser.
Otherwise, Freshfields had a good year with financial institution clients, cementing its relationship with the Royal Bank of Scotland on its £1.5bn acquisition of Mellon's retail banking business. And Compass Group continued to keep the firm busy with meaty disposals such as the entire Forte Hotel division and a deal with Selecta Group.
Linklaters' deal flow remained relatively strong over the past year. Despite the economic setbacks, the firm announced 210 European deals in 2001, valued at £131bn. This compares with 241 deals (31 more) in 2000, valued at £269bn. Head of corporate David Cheyne says: “In Europe we've got a good market share among smaller companies. Our smaller clients will always do the deals whatever the climate. They like to 'tidy up'.” The deals list bears this out: Linklaters is not afraid to act on smaller-value transactions, such as Morse's £9m acquisition of Integracion de Sistemas Abiertos, and ebookers' £1.6m acquisition of MrJet.com.
But Linklaters still has a grip on the heavyweight transactions. Out of the top 10 deals for 2001, it acted on no fewer than four deals as main M&A adviser. One of them was the rerun of the Blue Circle-Lafarge deal the previous year; after being rebuffed by a share buyback, Linklaters finally battered down the Blue Circle/Slaughters defence team. Utilities and mining also yielded juicy mandates – it acted on the BHP-Billiton deal, the second-largest deal of last year.
As might be expected, blue-chip clients continued to turn to the Silk Street firm. The Halifax tapped it on the third-largest deal of last year, its merger with the Bank of Scotland; Macquarie Bank used it on the Birmingham Airport Holdings transaction; and Credit Suisse Group brought the firm in on its deal with SLC Asset Management Group.
Clifford Chance
Clifford Chance announced last year in Europe 177 M&A deals at a value of $119bn (£82.4bn). David Childs, head of corporate, says that for the first six months the firm was doing well, but was then hit badly by the lull in the second half of the year, which saw far fewer deals starting up in Europe – and most of its deals in 2001 were under £500m.
Compare these figures with the previous year's, when it had 228 deals announced in Europe at a value of $430.5bn (£298.2bn). In other words, Clifford Chance slumped in value terms by $311.5bn (£215.75bn) from the previous year, according to the Thomson data. A figure presumably accounted for by 2000's Lloyds-Abbey mega-deal.
Clifford Chance is not displacing Freshfields or Linklaters on the biggest-value deals – in Thomson's top 10 it acted as main M&A adviser on only one transaction, for GKN. But deal flow is, on a relative basis, holding up (deals dropped by 51 from last year).
Inevitably, given the firm's client base, M&A work in the financial institution sector was strong, with deals such as the £368m acquisition of People's Bank's UK credit card operations for longstanding client Citigroup. And the private equity lawyers held their own; the firm managed to get a piece of the action on the £2.14bn buyout of Yell, even though its role in acting for the management is a rare occurrence nowadays.
Clifford Chance's most active offices were London, followed by Frankfurt and Düsseldorf.
Slaughter and May
Perhaps surprisingly, Slaughters suffered the largest loss in deal flow out of all the firms featured. It handled 123 deals, 95 fewer than the previous year, a drop from 218 deals in 2000. Head of corporate Nigel Boardman points out that Slaughters' decision not to enter the German or French domestic markets means that the firm's figures should be viewed differently. “For the other firms you include the German or other European aspects of their firm in the figures,” he says.
The volume may be down, but Slaughters is still getting its fair share of the market-moving transactions. It was kept busy by Abbey National with several deals, including the aborted merger with Lloyds TSB, as well as for Prudential on a deal with Credit Suisse First Boston which is still pending. Blue Circle also kept it busy with the US Concrete deal, as well as the seventh-largest deal of last year – Blue Circle's final surrender to Lafarge in a deal worth £4.5bn. With the Blue Circle deal in last year's top 10, Slaughters also made another appearance, acting for Billington on the second-largest deal of last year – the $15.6bn (£10.8bn) merger with BHP.
Herbert Smith/Gleiss Lutz
The Herbert Smith line is simple: that it should be counted with German best friend Gleiss Lutz. Unsurprising, considering that Gleiss Lutz acted on the largest European deal of last year – advising Munich Re on Dresdner-Allianz. The firm calculates that it advised on 171 European deals, with a total value of $202.5bn (£140.3bn). “We completed a range of interesting deals across a range of industry sectors,” says head of corporate Caroline Goodall. “From 11 September 2001, confidence shattered, but from October and November there was a raft of mid-sized deals that came through. On the larger deals, confidence returned for our clients towards the end of November and throughout December.”
For Herbert Smith, institutional clients buoyed its figures enormously. It crashed into the top 10 with its role on the third-largest deal of last year, advising the Bank of Scotland on its merger with Halifax. Equally, corporate insurance continued to be strong. Other headline transactions included acting for De Beers on the DB Investments deal, and for AOL Time Warner on the £1.15bn deal with IPC Group.
Allen & Overy
In 2000, Allen & Overy (A&O) announced 188 deals valuing £134.6bn. In 2001, this dropped by 42 deals to 146, with a value of £55bn. The number of deals held out fairly well, but as with the other firms, the value dropped significantly. “We didn't have any huge transactions,” admits head of corporate Richard Cranfield. The Paris office was active, with deals for the likes of Electricite de France, valued at £1.5bn. A&O did not act on any of the top 10 deals of 2001, although it did act for WPP Group on its bid for – and subsequent attempt to get out from – Tempus on one of the most gripping deals of last year.
Shearman & Sterling and Sullivan & Cromwell
Some UK firms continue to doubt the influence of US firms in Europe's M&A markets. But when it comes to Shearman & Sterling, they had better step out of dream world.
Shearmans has done exceptionally well in Europe and is set to do better still as the year unfolds. On the top 10 deals, Shearmans acted on three, although two were not as primary adviser. “We've cleaned up in Germany,” says UK managing partner Kenneth MacRitchie. “Most of our US competitors have not had that.” Indeed, the firm pulled off the biggest deal of last year with its client Allianz on the Dresdner deal. That transaction shows the strength of its influence in the German market alone.
For 2001, according to the firm's figures, it completed 71 deals, 54 of which were European. With its high-profile corporate push, expect more developments on the M&A front this year.
As for Sullivan & Cromwell, it always helps when you are cosy with the investment banks. Out of the top 10 deals, it featured on four, although not as main adviser. It may not be taking the primary spot, but Sullivan easily has a seat at the European top table.

Predictions and developments
Looking forward, there is no doubt that the market will pick up; it is just a question of when. Because of the hiatus caused by 11 September, there are obviously going to be fewer deals around in the first six months of 2002. Certain companies will restructure and consolidation will continue to an extent.
Developments have caused both angst and glee. The failure of the GE-Honeywell merger rammed home the importance of competition issues and reminded all lawyers that this is not an area to be complacent about. “When I was in my early stages it was tax that was the big concern,” says Slaughters' Nigel Boardman. “Now it's antitrust law.” The decision by the European Commission damaged confidence in the US and potential deals were frozen in the aftermath.
One silver lining are the tax reforms that have occurred in Germany. “There's much more scope there than in the UK,” says Barry O'Brien, co-head of corporate at Freshfields. “There are far more structural reforms and consolidations that must be done [there].”
It looks like Frankfurt will be hotter than ever this year. After all, what was the biggest European transaction of 2001? The Dresdner-Allianz deal – one made in Germany.

The European M&A market top 10 European completed deals

1. Allianz's (German) agreed takeover bid of Dresdner Bank (German), worth $19.7bn (£7.64bn). Dresdner's main M&A adviser was Freshfields Bruckhaus Deringer. Cleary Gottlieb Steen & Hamilton and Sullivan & Cromwell provided US advice. Allianz's main M&A adviser was Shearman & Sterling, with Hengeler Mueller Weitzel Wirtz, Sullivan & Cromwell and Blake Dawson Waldron also providing advice. Munich Re's adviser (which owned the shares in Dresdner) was Gleiss Lutz.

2. BHP's (Australia) takeover of Billiton (UK), worth $15.6bn (£10.8bn). Billiton's joint M&A advisers were Linklaters and Australian firm Freehill Hollingdale & Page, with Shearman & Sterling providing US advice. BHP's main M&A adviser was Slaughter and May. Sullivan & Cromwell and Allens Arthur Robinson Group were secondary advisers.

3. Halifax Group's (UK) takeover of Bank of Scotland (UK), worth $14.9bn (£10.3bn). Bank of Scotland's main M&A adviser was Herbert Smith, with Sullivan & Cromwell providing US advice. Halifax's main M&A adviser was Linklaters.

4. Fortis's (Belgium) merger with Fortis (Netherlands), worth $12.5bn (£8.7bn). Advisers not listed.

5. Shareholder takeover of BT Wireless (UK), worth $11bn (£7.64bn). Adviser to BT Wireless was Linklaters. The resulting company's (Mmo2) adviser was Freshfields Bruckhaus Deringer. Shearman & Sterling (UK) worked alongside Linklaters on behalf of BT Wireless.

6. Electrafina's (Belgium) takeover of Groupe Bruxelles Lambert (Belgium), worth $6.5bn (£4.5bn). Advisers not listed.

7. Lafarge's (France) takeover of Blue Circle Industries (UK), worth $6.5bn (£4.5bn). Blue Circle's main M&A adviser was Slaughter and May. Larfarge's main adviser was Linklaters. Freshfields Bruckhaus Deringer was the secondary adviser, along with Cleary Gottlieb Steen & Hamilton.

8. Brambles Industries' (Australia) takeover of GKN's support services (UK), worth $5.8bn (£4bn). GKN's main adviser was Clifford Chance. Brambles' main advisers were Freshfields Bruckhaus Deringer and Allen Allen & Hemsley in Australia. Sullivan & Cromwell and Atanaskovic Hartnell also provided advice.

9. Schneider Electric's (France) takeover of Legrand (France), worth $5.5bn (£3.8bn). Legrand's adviser was Bredin Prat and Schneider's adviser was Darrios Villey Millot Brochier.

10. DG Bank's (Germany) takeover of GZ-Bank (Germany), worth $5.3bn (£3.7bn). Advisers not listed.

Source:Thomson Financial Securities Data

US-announced mergers and acquisitions
  Full year 2001 Full year 2000
$bn (£bn)
Market share
No of deals
Value $bn (£bn)
Change in value (%)
Sullivan & Cromwell
303.59 (210.46)
937.78 (650.11)
Shearman & Sterling
275.25 (190.82)
452.98 (314.02)
Wachtell Lipton Rosen & Katz
261.95 (181.60)
442.54 (306.79)
Simpson Thacher & Bartlett
232.10 (160.90)
645.78 (447.68)
Dewey Ballantine
230.19 (159.57)
445.08 (308.55)
Skadden Arps Slate Meagher & Flom
216.34 (149.97)
488.67 (338.77)
Freshfields Bruckhaus Deringer
208.02 (144.21)
374.72 (259.77)
Cleary Gottlieb Steen & Hamilton
202.96 (140.70)
581.10 (402.84)
169.87 (117.86)
442.13 (306.50)
Davis Polk & Wardwell
160.59 (111.33)
321.85 (223.12)
Debevoise & Plimpton
150.34 (104.22)
113.28 (78.53)
Cravath Swaine & Moore
149.06 (103.06)
462.95 (320.93)
Clifford Chance
141.32 (97.97)
225.98 (156.66)
Weil Gotshal & Manges
128.32 (88.96)
169.94 (117.81)
Latham & Watkins
115.47 (80.47)
91.71 (63.58)
Herbert Smith Gleiss Lutz
113.37 (78.60)
384.16 (226.32)
Jones Day Reavis & Pogue
101.01 (70.02)
353.64 (245.15)
Slaughter and May
85.66 (59.38)
345.69 (239.65)
Fried Frank Harris Shriver & Jacobson
83.23 (57.70)
326.41 (226.28)
Allen & Overy
82.61 (57.27)
171.57 (118.94)

Source: Thomson Financial Securities Data