05 Oct 2020

Global M&A shrugs off Covid-19 crisis with massive bounce in third-quarter dealmaking

Latham & Watkins leads Mergermarket's global M&A advisory league table

The Charging Bull statue in New York's financial district

The Charging Bull by artist Arturo Di Modica wearing an American Flag face mask in New York's financial district Jennifer M. Mason; Shutterstock

Global M&A activity rebounded strongly in the third quarter after a miserable first half of the year that had seen dealmaking stall amid the coronavirus pandemic.

The value of deals in the third quarter more than doubled to $891bn from $372bn in the previous quarter, according to Mergermarket’s 3Q20 M&A Report. That total was 32% higher than the same period last year. The surge in deals was driven by an uptick in large deals—those valued at $5bn or higher—with 32 transactions crossing that threshold, Mergermarket data show.

Latham & Watkins topped the global M&A advisory rankings, working on 315 deals worth $303bn over the first nine months of the year—ranking first in the US and Europe. It held a comfortable lead over second place Freshfields Bruckhaus Deringer, which worked on 111 deals worth $219bn. Sullivan & Cromwell was third with 89 deals worth $218bn.

Demonstrating the depth of its M&A practice, Latham came in third in the global ranking by deal volume behind fellow global giant Kirkland & Ellis, which came first having worked on 336 deals worth $197bn, and second-placed DLA Piper, which advised on 323 transactions valued at a total of $28bn.

Despite the bumper third-quarter activity, year-to-date deal values were still down sharply on the same period in 2019, clocking in at $1.86tr compared to $2.58tr in the first nine months of last year. The number of deals have fallen by almost a third to 3,494 from 5,106 in 2019. 

Mark Druskoff, data-driven coordinator at Mergermarket, said: “The anaemic number of deals could be a sign that although dealmakers have forged ahead, plenty of uncertainty remains in the global economy. Pandemic infection numbers have declined in some regions while surging in others. [And] Brexit looms large on the horizon in Europe, which could have a deleterious impact on M&A.”

The US accounted for almost half of the deal value seen in the third quarter following a sharp drop off in US transactions in the second quarter. But Druskoff warns that the US election and continued social unrest create a number of question marks, including potential changes in tax laws that could spur some business owners to pursue sales processes.

The firms completing the top five in the global M&A advisory rankings by value after the first nine months of the year were fourth place Wachtell Lipton Rosen & Katz—which led the rankings at this stage in 2019—working this year on 46 deals worth $213bn and Kirkland & Ellis, which came in fifth, down from second place at the same point in 2019.

In terms of deal volume, White & Case is having a strong year relative to its rivals, climbing to fourth place from sixth in 2019, having advised on 228 deals valued at $192.9bn.  In fifth - the same position it achieved in 2019 - was Goodwin Procter, having advised on 214 deals worth a total of $46.9bn. Last week, the firm strengthened its London offering with the hire of a five-partner private equity team from Sidley Austin.

Further reading on deals

Global M&A slowest since financial crisis as deal appetite slumps amid Covid-19 pandemic — Latham & Watkins replaces Wachtell Lipton Rosen & Katz at top of global M&A advisory league table for first half of 2020

Latin America Covid-19 woes see region's M&A activity plunge to lowest on record — Deal value in first six months of the year falls below previous record low in 2003, Mergermarket report shows

Freshfields and DLA Piper top European H1 M&A tables for value and volume as deal activity plunges — Allen & Overy and Herbert Smith Freehills jump up rankings as Slaughter and May drops out of top 20

Covid-19 sees US M&A activity suffer bigger decline than during financial crisis — Wachtell Lipton and Kirkland & Ellis cling on to top league table positions despite slowdown

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