Skadden, recognised as Big Law’s foremost M&A adviser so far this year, has been a significant participant in a deals’ market that is beginning to wake up. Skadden Arps Slate Meagher & Flom lawyers took the lead role in advising on deals worth $118 billion in the first quarter, according to Bloomberg data. Wachtell Lipton Rosen & Katz took the second position, assisting on transactions nearing the $115 billion mark. Simpson Thacher & Bartlett clinched the third slot with $79 billion in deals.
The volume of worldwide M&A transactions increased by 37% to a sum of over $780 billion in Q1 of 2024 when compared to the same quarter in the previous year. This notable revival is driven by a resurgence in megadeals – transactions that clear the $10 billion mark, with some even crossing $20 billion, according to Krishna Veeraraghavan, global co-head of M&A at Paul, Weiss, Rifkind, Wharton & Garrison.
Several firms have capitalised on this revival of megadeals. Wachtell represented Capital One Financial Corp. in February’s announcement of its plan to acquire Discover Financial Services in an all-stock deal worth $35 billion. Discover, on the other hand, was represented by Sullivan & Cromwell in the transaction. Diamondback Energy’s $26 billion acquisition of Endeavor Energy Resources LP, another megadeal announced in February, saw advisement from four law firms: Wachtell, Skadden, Paul Weiss, and Vinson & Elkins.
However, the surge in deals hasn’t come without its hiccups. Firms like Davis Polk cite hurdles such as costly credit, investor uncertainty, valuation disparities, and mismatched expectations, which have reduced activities to historic lows last year. In addition, regulatory pressure has stretched deal timelines throughout Q1, according to William Aaronson, head of M&A at Davis Polk. Despite this, Aaronson doesn’t see much evidence to suggest that the regulatory environment is entirely stalling deals. A notable slowdown in private equity activity due to high interest rates has hit the optimistic forecasts for 2024, making borrowing for transactions a tougher proposition for sponsors.
Conversely, there are indications that more private equity deals could soon be realised. Several funds are holding onto capital they’ve raised but have yet to deploy – which leads to optimism for potential deals moving forward. “Successful PE sponsors can always raise money even in difficult times,” notes Brian Fahrney, global co-leader of Sidley’s M&A and private equity group, suggesting that more funds may soon join the action.