U.S. firms handled less U.K. M&A activity in 2018, as Magic Circle and other U.K. firms dominated for the first time since 2014.
Kirkland & Ellis, Davis Polk & Wardwell and Skadden, Arps, Slate, Meagher & Flom, which took the top three spots in league tables in 2017, all fell in the last 12 months. Kirkland plummeted to 12th, Davis Polk to seventh and Skadden to ninth, according to data compiled by Mergermarket.
Freshfields Bruckhaus Deringer topped the table for 2018, after advising on 60 deals worth a total of $144.4 billion. It was followed by Slaughter and May ($119.6 billion), Herbert Smith Freehills ($116.3 billion), Clifford Chance ($86.5 billion) and Allen & Overy ($83.1 billion). Linklaters ($70.9 billion) ranked sixth.
Davis Polk was the top U.S. firm, ranking seventh.
The rankings mark a significant change from the previous three years, in which at least two U.S.-based firms have been among the top five.
“Clients might look at using a different firm for big public deals than they would for private equity deals. Within different sectors, you see different firms having particular strengths. Big M&A continues to face more and more hurdles, including protectionist trends,” he said.
“Clients are incredibly sophisticated and want to choose firms that they believe are best placed to navigate these challenges; it may well be that circumstance fed more into the U.K.-headquartered skillset.”
U.K. M&A deal volume in the last quarter fell to its lowest point since Q1 of 2014, with the sector racking up 333 deals worth $34 billion.
However, the rest of 2018 was busier. Law firms worked on 1,519 deals across the full year worth $245.8 billion in the U.K.
Deal highlights for Freshfields included the second largest M&A deal of the year in Europe—Comcast’s purchase of Sky, a deal that also produced roles for Davis Polk, Allen & Overy, Skadden, Simpson Thacher & Bartlett, Herbert Smith Freehills and Slaughters.
Freshfields also advised opposite Linklaters and Allen & Overy on the third-biggest deal of the year, in which energy company E.ON acquired a controlling stake in renewable energy business Innogy from German rival RWE worth €43 billion ($49.19 billion).
DLA Piper did the most deals in the U.K. with 128 mandates, with CMS in second place on 125.
“We saw a very busy summer,” said Nigel Wellings, co-head of London corporate at Clifford Chance. “Our cycle is a bell curve where we usually expect to ramp up from September. That whole curve came forward and didn’t really stop.”
Gavin Davies, global M&A head at Herbert Smith Freehills, said key drivers of activity were corporations with cash seeking rationalization and growth, private equity with dry powder needing to invest, and cheap debt.
“These drivers prevailed over the headwinds of political and economic uncertainty, populist protectionist trends creating greater political interest in deals, and high-value expectations,” he said.
For activity across the whole of Europe, Freshfields topped the M&A tables for the third year in a row with deals worth $343.5 billion. Linklaters came second with $288.3 billion, and Allen & Overy jumped from 13th place to third place at $241.1billion.