Skadden Leads Big Law M&A as Energy, Health Deals Drive Activity

Skadden Arps Slate Meagher & Flom is Big Law’s top mergers and acquisitions legal adviser in the first half of this year, as deals in energy and health care boosted volumes.

Skadden lawyers advised on $212.5 billion worth of deals, according to Bloomberg data. Latham & Watkins followed with transactions valued at nearly $192.7 billion. Kirkland & Ellis, which led the rankings last year, took third with $172.8 billion, the data show.

“There’s momentum in the M&A market right now and our teams are busy,” Allison Schneirov, M&A partner and global head of Skadden’s transactions practice, said in an email. “We’ve also seen a sizable number of companies consider and pursue carve-out or spin-off transactions, which offer creative ways to unlock value.”

The results speak to an optimism among lawyers that M&A work is turning a corner to sustained higher levels after being in a rut caused by inflation, tight credit and rising interest rates. Global M&A transactions volume rose nearly 13% to more than $1 trillion in the first six months of 2024 compared with the same time last year.

“The deals market and the pipeline is, from my vantage point, the strongest it’s been in a couple years,” said David Klein, a corporate partner at Kirkland.

Still, deal volumes at the year’s midpoint were more than $300 billion below the 10-year average, Bloomberg News reported June 28, citing Bloomberg data.

Several Big Law firms boosted their positions by guiding deals larger than $10 billion. Wachtell, Lipton, Rosen & Katz, which ranked fourth in Bloomberg’s league tables, aided ConocoPhillips in a $17 billion all-stock deal with Marathon Oil Corp. announced in May. Kirkland & Ellis advised Marathon.

Wachtell also served as legal adviser to Capital One Financial Corp. for the company’s plan to buy Discover Financial Services in a $35 billion all-stock deal announced in February. Sullivan & Cromwell, which came in tenth, served as legal adviser to Discover.

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

Three firms, Skadden, Cleary Gottlieb Steen & Hamilton and Goodwin Procter, worked on a $35 billion deal with software company Synopsys agreeing to buy Ansys. That agreement was announced in January.

Energy, Health

Large transactions helped push energy, which only makes up a small sliver of the S&P 500, to outperform other industries. However, energy deals face both antitrust and environmental regulatory roadblocks, said Vincent Piazza, a senior analyst at Bloomberg Intelligence.

“There’s a degree of challenge here, because the desire to build infrastructure is running up against considerable backlash to build that infrastructure, whether it be civic or regulatory pressure,” Piazza said. It is possible scrutiny will ease with a different administration in the White House, he added.

Healthcare also surpassed most sectors in the size of deals, including Johnson & Johnson’s acquisition of Shockwave Medical Inc. for about $13.1 billion, which closed in May.

Still, the positive trend in M&A goes beyond any specific sector, said Paul Kukish, chair of Latham’s private equity & investment funds group.

“The level of activity that we’re seeing is becoming a bit more industry agnostic,” Kukish said. “We’re well positioned across the range.”

High Rates

Still, given the rise in interest rates, many private equity clients are making minority deals and structured investments rather than engineering full company takeovers, Kukish said.

“Interest rates have been a constraining factor,” he said, “particularly in light of how quickly the interest rate environment changed.”

Portfolio companies bought when interest rates were lower are now difficult to sell with rates higher, said Damien Zoubek, a partner and co-head of US corporate and M&A at Freshfields. “That just puts a disconnect between valuations,” he said.

Private equity fundraising has also been slow, though some firms have been able to buck the trend through a track record of past success, said Kirkland’s Klein.

“You have to return capital to your investor base in order to raise the next fund,” he said. “Those who have effectively done that have done very well in this market.”