Skadden leads strong M&A activity at law firm as energy, healthcare deals boost activity

Top M&A Legal AdvisorsTop M&A Legal Advisors Skadden Arps Slate Meagher & Flom led large law firms as lead M&A counsel in the first half of 2024. This was attributed to significant deals in the energy and healthcare sectors. Skadden advised on $212.5 billion in deals, followed by Latham & Watkins with $192.7 billion and Kirkland & Ellis with $172.8 billion. Allison Schneirov, M&A partner and global head of Skadden’s transactions practice, attributed the momentum in the M&A market to attorney optimism and an increase in spin-offs and divestitures. Despite the positive outlook, deal volumes were still below their 10-year average through midyear. Big transactions Several law firms have strengthened their positions by handling large transactions valued at more than $10 billion. * Wachtell, Lipton, Rosen & Katz advised ConocoPhillips in its $17 billion transaction with Marathon Oil Corp. * Wachtell advised Capital One Financial Corp. in its $35 billion acquisition of Discover Financial Services. * Wachtell, Skadden, Paul Weiss and Vinson & Elkins advised Diamondback Energy Inc. in its $26 billion purchase of Endeavor Energy Resources LP. * Skadden, Cleary Gottlieb Steen & Hamilton and Goodwin Procter advised Synopsys in its $35 billion acquisition of Ansys. Energy and healthcare The most popular transactions were in the energy and healthcare sectors, driven by the need for infrastructure development and acquisitions of innovative companies, respectively. Private Equity Challenges Rising interest rates pose a challenge for private equity clients who are opting for minority deals and structured investments rather than comprehensive acquisitions. Perspectives Despite the headwinds from interest rates, lawyers remain optimistic about the M&A market, expecting continued activity across sectors.

Skadden Arps Slate Meagher & Flom is the top M&A law firm among major law firms in the first half of the year, as deal activity in the energy and healthcare sectors surged.

Skadden lawyers advised on $212.5 billion in deals, according to Bloomberg data. Latham & Watkins came in second with nearly $192.7 billion in deals. Kirkland & Ellis, which topped last year’s ranking, came in third with $172.8 billion, the data show.

“The M&A landscape is dynamic right now, and our teams are busy,” Allison Schneirov, M&A partner and global head of Skadden’s transaction practice, said in an email. “We’ve also seen a significant number of companies considering and pursuing spin-offs or divestitures, which provide creative ways to unlock value.”

The results reflect optimism among lawyers that M&A work is recovering and performing well after a downturn driven by inflation, tight credit and rising interest rates. Global M&A transaction volume rose nearly 13% to more than $1 trillion in the first six months of 2024 compared with the same period last year.

“I think the deal landscape and potential are stronger than they have been in several years,” said David Klein, corporate partner at Kirkland.

However, as Bloomberg News reported on June 28, citing Bloomberg data, at mid-year the transaction volume was more than $300 billion lower than the 10-year average.

Several major law firms have strengthened their positions by overseeing deals worth more than $10 billion. Wachtell, Lipton, Rosen & Katz, ranked fourth by Bloomberg, helped ConocoPhillips with its $17 billion all-stock deal with Marathon Oil Corp., which was announced in May. Kirkland & Ellis advised Marathon.

Wachtell also served as legal counsel to Capital One Financial Corp. on the company’s plan to buy Discover Financial Services in a $35 billion all-stock deal announced in February. Sullivan & Cromwell, ranked 10th, served as legal counsel to Discover.

Also in February, four firms — Wachtell, Skadden, Paul Weiss and Vinson & Elkins — helped facilitate Diamondback Energy Inc.’s $26 billion acquisition of Endeavor Energy Resources LP.

Three companies, Skadden, Cleary Gottlieb Steen & Hamilton and Goodwin Procter, were working on a $35 billion deal with software company Synopsys to buy Ansys. The deal was announced in January.

Energy, Health

Big deals have helped the energy sector, which makes up a small portion of the S&P 500, outperform other sectors. But energy deals face hurdles from both antitrust and environmental regulations, said Vincent Piazza, a senior analyst at Bloomberg Intelligence.

“There’s a challenge here because the desire to build infrastructure is met with significant resistance to building that infrastructure, whether it’s civilian pressure or regulatory pressure,” Piazza said. It’s possible that oversight could be reduced under a different administration in the White House, he added.

The health care industry also topped the list of largest deals, including Johnson & Johnson’s acquisition of Shockwave Medical Inc. for about $13.1 billion, which closed in May.

But the positive trend in M&A activity goes beyond any particular sector, said Paul Kukish, chairman of Latham’s investment funds and private equity group.

“The level of activity we’re seeing is becoming more and more agnostic to the industry,” Kukish said. “We’re well-positioned across the board.”

High marks

Still, given rising interest rates, many private equity clients are opting for minority deals and structured investments rather than making outright corporate acquisitions, Kukish said.

“Interest rates have been a limiting factor,” he said, “especially given how quickly interest rates have moved.”

Portfolio companies that were bought when interest rates were lower are now hard to sell at higher rates, said Damien Zoubek, partner and co-head of US corporate and M&A at Freshfields. “It just creates a gap in valuations,” he said.

Fundraising from private equity has also been slow, says Kirkland’s Klein, but some firms have bucked the trend with successful results.

“You have to return capital to your investor base to raise another fund,” he said. “Those who have done that effectively have been very successful in this market.”