As SPAC mania plays out and more and more SPACs take over private company targets to fulfill their mission, a handful of large law firms are emerging as SPAC M&A pros, with 20-plus deals under their belts. The number and volume of deals advised by these firms are impressive, considering that SPAC M&A transactions only started showing up in noticeable numbers in the second half of 2020.
The Law Firms to Watch
We looked at law firms that have served as legal advisers on takeover deals involving U.S.-listed SPAC acquirers announced between Jan. 1, 2019, and March 31, 2021, that are either completed or currently pending and that involve SPACs that have gone public since Jan. 1, 2019. We identified four law firms that have advised on more than 20 of these deals: Latham & Watkins LLP (34 deals); Kirkland & Ellis (30 deals); Skadden Arps Slate Meagher & Flom LLP (23 deals); and White & Case LLP (21 deals).
Overall, since 2019, Kirkland & Ellis and Latham & Watkins are leaders, by both aggregate deal volume and total deal count. As of the close of the first quarter yesterday, Kirkland & Ellis, with $29 billion in pending and completed SPAC deals, has the No. 1 spot when ranking by total deal volume and the second spot when ranking by deal count. Latham & Watkins, with $28.3 billion in pending and completed SPAC deals, takes second place when ranking by deal volume but takes the No. 1 spot when ranking by deal count. Weil Gotshal & Manges LLP, Skadden Arps Slate Meagher & Flom LLP, and Davis Polk & Wardwell take the third, fourth, and fifth spots, respectively, when ranking by deal volume.
The same five firms come out on top when considering only pending and completed deals announced in the first quarter of 2021, although with some shifts in rankings among them. If we limit the rankings to deals announced in the first quarter of 2021, by deal volume, Latham & Watkins comes in first, Davis Polk & Wardwell takes second place, Kirkland & Ellis takes third place, Skadden Arps Slate Meagher & Flom LLP takes fourth, and Weil Gotshal & Manges LLP takes fifth place.
It is important to note that several of these top-ranked SPAC M&A firms also make it into the top rankings of SPAC IPO advisers. In other words, they’ve made a mark in handling both SPAC IPOs and the M&A deals that follow, when the SPACs find the private targets they’ve been searching for.
When ranked by IPO deal count, and considering U.S. SPAC IPOs since Jan. 1, 2019, Kirkland & Ellis (142 SPAC IPOs) is ranked third among SPAC IPO legal advisers, following Ellenoff Grossman Schole & Cyruli LLP (177 SPAC IPOs) and Maples & Calder (177 SPAC IPOs), both tied for first place. Skadden (115 SPAC IPOs) and White & Case (100 SPAC IPOs) take fourth and fifth, respectively. Latham (30 SPAC IPOs), on the other hand, ranks 12th for SPAC IPO deals.
Doubling Deal Counts
The SPAC M&A market continues to break records. An unprecedented number of publicly traded special purpose acquisition companies entered into definitive agreements to take over private targets in the first quarter of 2021. The 78 SPAC takeover deals announced last quarter represent more than double the number of these SPAC M&A deals announced in the fourth quarter of 2020—and more than four times the number announced in the third quarter of 2020. Hypothetically, if this quarter-to-quarter deal count doubling were to continue, we would be looking at around 150 SPAC M&A deals being inked in the second quarter.
The first quarter’s aggregate SPAC M&A deal volume of $62 billion is also remarkable and is more than double that of the prior quarter, representing 9.5% of all pending and completed global company takeover volume for the same period.
If the upward trend continues, will the same law firms keep grabbing more deals? Or will this mean there will be many more opportunities for new firms to join the club of SPAC M&A pros? There are plenty of firms out there that have handled more than one but less than 10 of these SPAC deals, and could potentially work their way up in the rankings if the flood of SPAC M&A deals continues.
Sectors and Regions
In the last two years, technology sector companies have been the most frequent takeover targets of public SPACs, with consumer, non-cyclical and consumer, cyclical targets coming in second and third place. Latham & Watkins has a clear tech focus when it comes to SPAC M&A: The firm has advised on 14 of these tech deals so far and is the No. 1 adviser on tech-sector SPAC takeovers when ranked by deal count. To date, the largest tech SPAC takeover handled by Latham is the currently pending $2.3 billion ironSource Ltd – Thoma Bravo Advantage deal, through which a private equity-backed SPAC will take the app software company public.
Of the 137 pending and completed SPAC company takeover deals announced since Jan. 1, 2019, 117 involved U.S. targets. While SPACs are now largely a U.S. phenomenon, there is emerging interest elsewhere. The impact of SPAC popularity has spread internationally, with London and Hong Kong already paving the way for SPAC-equivalent listing options on their exchanges and the number of European SPACs climbing. This, of course, means more global SPAC M&A activity is on the horizon, which may push different global law firms higher in the rankings in the future. It may also mean that SPACs won’t go away until they’ve done their world tour.
With assistance from Nageen Qasim and Mohamed Bah, Bloomberg L.P.
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