Freshfields tops UK M&A ranking by value as Brexit sends global deal activity plummeting

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Freshfields Bruckhaus Deringer has topped the UK M&A deal rankings by value in the first half (H1) of 2016, amid a global transaction slowdown that has hit the UK particularly hard.

Data from Mergermarket shows that the magic circle firm advised on 39 deals worth $38.8bn to head the UK value table, a position it has regularly held for European M&A in the past but on this occasion lost to White & Case.

Top ten UK legal advisers by value: H1 2016Mergermarket’s data shows the impact Brexit and other economic challenges had on M&A activity around the world. 

UK deal values dropped by nearly 70% in H1 compared to the equivalent period last year, falling from $185.3bn last year to $59.6bn this year, while UK deal count fell by around 6% to 657 transactions during the six-month period.

Global M&A activity since 2007Global deal value fell by 27% to $1,321bn, while worldwide deal volumes dropped by 10% to 7,794. The picture was inevitably the same in Europe, where value plunged by 19% against a 5% dip in volume.

A London corporate partner at a US firm says: “You can’t have been in the market without noticing that it has been slow.”

They added: “It’s pretty hard to avoid the conclusion that there will be an impact from Brexit on the M&A market.”

Freshfields London corporate head Simon Marchant said deal volumes were down in the first half because of a “more cautious macro backdrop”, the impending Brexit vote and  US elections.

He added: “Things have not got easier since the Brexit result but our initial experience is that this has actually reduced the range of uncertainty – we all know the UK will exit the EU whereas before there was a much wider Remain/Leave delta. Few of our M&A deals have fallen over and we have seen some very exciting new mandates over the last two weeks.

“Unlike 2008, Brexit is a local issue at this stage.  It doesn’t prevent most of the world from continuing to evolve their businesses – including through M&A.  And that means that European companies will need to continue to respond.  They can’t sit out the next 3 to 5 years.  So it’s interesting times, but actually we are pretty optimistic.”

Despite the doom and gloom of H1, White & Case had a stellar first half, topping the league tables by value globally, in Europe, the US and in Asia-Pacific, as well as climbing to fourth place in the UK tables.

Top 10 advisers by value
The US firm led the global deal table by value with roles on mandates worth $291bn, pushing Simpson Thacher & Bartlett into a distant second place on $192.7bn.

Key deals for White & Case in H1 included acting for Chinese electronics company Qingdao Haier on its $4.5bn (£3.1bn) acquisition of General Electric’s appliance business, and advising US utility company Fortis on its $11.3bn (£8.59bn) acquisition of electricity transmission company ITC Holdings.

The firm’s global M&A head, John Reiss, says: “We have had several strong years but we have had a particularly strong first half of 2016.”

Reiss is confident the firm’s good run will continue, despite the market slowdown, citing the “abundant cash” held by companies and private equity firms, and low interest rates worldwide.

Freshfields’ haul of deals during the first six months of this year include acting for the London Stock Exchange on its merger with Deutsche Boerse and advising a Canadian-led consortium on its acquisition of London City Airport.

Linklaters, which also acted on the Deutsche Boerse and City Airport deals, came second behind Freshfields in the UK value rankings.

The firm advised on 31 UK deals valued at $23.3bn in H1 and also ranked eighth by European deal value, acting on 91 deals valued at $56.3bn.

Corporate partner Roger Barron, who has been leading on the Deutsche Boerse merger, in addition to advising on the sale of oil price reporting agency Argus Media, says: “League tables are snapshots and we are pleased we got more of our fair share of deals, but it will be more interesting to see what happens going forward.”

While the uncertainty ahead of the UK’s referendum on leaving the European Union (EU) has already had a significant impact on deal activity during the first half of this year, the situation could worsen as a result of the public’s decision to leave the EU.

Barron says: “At the moment there is a huge amount of, not necessarily uncertainty, but people pausing to see what the impact might be.”

However, he is confident that clients are still keen to continue with transactions.

Reiss is similarly confident, arguing that:  “Outside of London, we don’t believe Brexit is going to negatively impact our activity and even in London the impact will be more muted than commentators suggest.”

However, with UK activity falling so much in H1 the global rankings by value were dominated by US firms. Only three UK law firms feature in the top 20 global value rankings, with King & Wood Mallesons and Fangda Partners the only other non-US firms in the list. By volume, 11 firms formed in part through UK firms sit within the top 20.

Top 10 advisers by volume