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08 April 2020

Europe sees rise in M&A activity in Q1 ahead of expected Covid-19 slowdown

Freshfields, Latham & Watkins and Cleary Gottlieb top rankings as deal value soars by 30%

By Ben Edwards

Pic of Aon

Freshfields is advising Aon on its mega-deal to purchase Willis Towers Watson Shutterstock

Freshfields Bruckhaus Deringer led the European M&A advisory rankings in the first quarter after a bumper start to the year that saw a record amount spent on private equity buyouts before the coronavirus pandemic intensified. 

European deal value jumped by almost a third to $199bn in the first three months of the year, around $50bn more than the same period a year earlier, according to Mergermarket’s 1Q20 M&A report. Financial sponsor deals clocked in at $57bn, the highest first quarter on record, the data show.

Jonathan Klonowski, research editor for EMEA at Mergermarket, said: “Sponsors have continued to deploy high levels of dry-powder, with several multi-billion dollar deals announced in the first quarter. While March was a particularly quiet month for sponsors, with just $6.4bn announced, private equity firms remain awash with cash.”

Freshfields topped the ranking (see table) having worked on $86bn of transactions—a fifth more than at this stage in 2019. A hefty chunk of that total was down to advising insurance company Aon on its roughly $30bn mega-deal to purchase Willis Towers Watson in March, a deal which also powered the magic circle firm up the global advisor rankings.

Latham & Watkins ranked second having advised on deals worth a combined $65bn, followed by Cleary Gottlieb Steen & Hamilton ($64bn), Weil, Gotshal & Manges ($51bn) and Linklaters ($49bn).

Freshfields’ 29 transactions was only enough for it to rank 8th by deal count — 38 deals behind first place DLA Piper with 67. Latham & Watkins also ranked second by deal count (49), followed by CMS (46), White & Case (38) and Hogan Lovells (35).

Despite the strong start to the year, Klonowski reckons a downturn in M&A activity is now inevitable given that a number of European countries are in lockdown and dealmaking has effectively ground to a halt.

He said: “Prior to the outbreak, many were worried the economy was already on the brink of a downturn and a widespread global recession is now all but inevitable. With the economy hit by volatile financial markets, rising unemployment and a lack of consumer spending, a sizeable downturn in M&A is on the horizon. Economic sentiment has fallen dramatically recently and firms are likely to pause any high-profile [deals] for the foreseeable future.”

Mergermarket: Europe Q1 2020 Deals by Value
1Q20 1Q19 Firm Value ($bn) Deals
1 1 Freshfields Bruckhaus Deringer 86.1 29
2 2 Latham & Watkins 65.1 49
3 9 Cleary Gottlieb Steen & Hamilton 64.1 17
4 15 Weil Gotshal & Manges 51.2 14
5 7 Linklaters 49.2 33
6 13 Allen & Overy 44.2 34
7 8 Skadden Arps Slate Meagher & Flom 41.1 10
8 12 Kirkland & Ellis 39.5 25
9 49 Herbert Smith Freehills 36.8 8
10 14 Sullivan & Cromwell 36.2 14

Mergermarket: Europe Q1 2020 Deals by Volume
1Q20 1Q19 Firm Value ($bn) Deals
1 1 DLA Piper 2.5 67
2 3 Latham & Watkins 65.1 49
3 2 CMS 2.2 46
4 5 White & Case 27.9 38
5 14 Hogan Lovells 7 35
6 4 Allen & Overy 44.2 34
7 10 Linklaters 49.2 33
8 8 Freshfields Bruckhaus Deringer 86.1 29
9 16 Jones Day 12.9 28
10 25 Kirkland & Ellis 39.5 25

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Further reading:

Q1 global M&A suffers sharp fall as Covid-19 bites

Wachtell tops US M&A advisory rankings as Covid-19 pandemic halves Q1 dealmaking

Political uncertainty weighs on Latin America M&A activity in first quarter

Asia Pacific M&A slowdown fails to derail region's top deal advisers

Wachtell, Sullivan and Kirkland top global M&A ranking after a near-record year for mega deals

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