Think of last year's dealmaking environment as one of those TV doctor shows -- "Grey's Anatomy," say, or "House." The patient -- in this case, the economy -- stumbles into the emergency room with body aches and bad fever in the first act, rallies a little in the second, and then, all of a sudden, Lehman Brothers collapses and Dr. Paulson is standing over the patient with cardiac paddles and a crash cart.
It was a lousy year all along, and then it got a whole lot worse. The American Lawyer's Corporate Scorecard shows just how bad it was, and which firms got hit the hardest, in nine major practice areas. (For complete Corporate Scorecard league tables and analysis, see americanlawyer.com/corporatescorecard; subscription only.)
Among the highlights:
M&A tanked. Total U.S. deal value dropped by more than half, to $868 billion in 2008 from $1.8 trillion in 2007. Another $202 million in deals fell apart. Just $102 billion in M&A work was announced in the fourth quarter of 2008, $15 billion of which was attributable to Wells Fargo & Co.'s acquisition of terminally ill Wachovia Corp.
Skadden, Arps, Slate, Meagher & Flom led our M&A league table; its deal value declined 2 percent from 2007. But the next four firms -- Wachtell, Lipton, Rosen & Katz; Sullivan & Cromwell; Cravath, Swaine & Moore; and Simpson Thacher & Bartlett each saw year-to-year drops of about 40 percent.
Private equity took an even bigger hit. Overall deal value fell 88 percent, to $71 billion from $568 billion. Simpson Thacher, our top-ranked private equity firm, went from completing $159 billion in deals in 2007 to $13 billion in 2008.
Capital markets froze. Just 43 initial public offerings, with total proceeds of $28 billion, priced in 2008, compared to 272 issues, with proceeds of $59.7 billion, in 2007. And 30 percent of 2008's proceeds were attributable to the year's only truly noteworthy IPO, the $17.9 billion debut of Visa Inc. (The offering was handled by White & Case on the issuers side and Davis Polk & Wardwell on the underwriters side.)
Debt issuance was similarly anemic. The number of investment-grade offerings fell 60 percent, and their total value was off 42 percent, while high-yield volume dropped 67 percent, and their value plunged 72 percent.
The most dramatic collapse, however, was in structured debt, especially mortgage-backed securities. Only 106 mortgage-backed issues made it through the pipeline in 2008, a decrease of almost 88 percent from 2007. Proceeds fell to $49 billion from $769 billion.
Bankruptcy flourished. The year's largest filing -- handled by Weil, Gotshal & Manges -- was that of Lehman Brothers Holdings Inc., with $691 billion in assets. That sum alone is more than 10 times the $66.9 billion in combined assets of the ten largest filings of 2007. All told, the 10 largest filers of 2008 had combined assets of more than $1.1 trillion. That top-10 list doesn't include the high-profile filings of Circuit City Stores Inc. (number 13), TOUSA Inc. (number 15), and Linens 'n Things Inc. (number 17).
Even this thriving area has been complicated by the credit crunch, though. The dearth of lenders has left debtors scrambling for both debtor-in-possession loans and exit financing, and sometimes led to litigation.
As Washington struggles with its response to the economic crisis, initial signs are that The Am Law 200's dealmakers can expect more of the same in 2009. Did we mention that this episode is a two-parter?
For complete Corporate Scorecard league tables and analysis, see americanlawyer.com/corporatescorecard; subscription only.