The US firms are certainly investing heavily in the London market and are getting a share of the work
London corporate partner Allan Taylor at White & Case says investment made by the firm into its UK team has paid off.
He says: “A lot of investment the firm has made over the last couple of last years has come to fruition. The private equity team within Americas has also been going full steam and getting through a lot of deals. You add that to the regeneration of the PE team in Europe, led by Ian Bagshaw and Richard Youle, and it reflects the advantages of the network effect.”
Freshfields Bruckhaus Deringer and Clifford Chance are the only magic circle firms to appear in the Mergermarket global top 10 firms by deal value.
Freshfields corporate head Simon Marchant says: “Clearly they’ve [US firms] done well in this quarter’s rankings, they have been on a few good deals that show up in these figures – usually with a US client. But it’s just one quarter so I wouldn’t read too much into it.”
CC’s London corporate head, Mark Poulton, adds: “The US firms are certainly investing heavily in the London market and are getting a share of the work, but time will tell whether they will be able to bring to bear the breadth and strength of expertise across all sorts of areas and which clients need in challenging markets like this.”
Brexit brakes
Marchant says that in contrast to 2015, which saw a frenzy of mega deals including Shell’s acquisition of BG for $81bn, EE’s $19bn sale to BT and Charter Communications’ $77bn acquisition of Time Warner Cable, 2016 may involve smaller mandates.
He comment: “One thing we may not see this year is the same number of very large deals as we saw last year – but it’s still early in the year.
Partners highlight a number of macro socio, political, georaphic and economic reasons for the drop off in global and European deal activity.
Global head of M&A at Herbert Smith Freehills, Stephen Wilkinson, says: “There have been a number of macro-economic headwinds which have caused people to hold fire. We’ve seen equity markets wobbling at the start of 2016, concerns over the Eurozone and some geo-political issues in the Middle East. In the UK, Brexit is looming. As we saw in the period before the general election there is likely to be a pause as people take stock before the vote.”
Poulton concurs. He says: “I think Brexit is giving some dealmakers some pause for thought, but others are bucking the trend – for example Sainsbury’s bid for Home Retail and Deutsche Boerse for LSE. Brexit is dampening the UK market to an extent but there’s still quite a bit of activity and once we’ve got the referendum behind us, I think we will see stronger volumes.”
We are not seeing many clients saying they are holding off doing deals or are waiting for the outcome
Marchant does not believe Brexit has so far had a dramatic effect. He says: “I don’t think it is actually having a major tangible impact at the moment. We are not seeing many clients saying they are holding off doing deals or are waiting for the outcome.”
Looking forward to the rest of this year, Wilkinson believes that the first half of 2016 will continue in the same vein.
He said: “There has to be some kind of knock-on effect from this market turbulence and the pipeline of deals for the rest of the first half of the year is likely to be less full than we saw in the same period of 2015.”
Poulton agrees: “I think it will be patchier in the first half of this year. I think that the fundamentals though remain quite strong and that activity will pick up. I think we should have a stronger second half.”
