Skadden, Goodwin led M&A pack in Q1 as dealmaking cooled

Signage is seen outside of the law firm Skadden, Arps, Slate, Meagher & Flom LLP in Washington, D.C., U.S., August 30, 2020. REUTERS/Andrew Kelly

Law firms Skadden, Arps, Slate, Meagher & Flom and Goodwin Procter emerged as top deal advisers in the first quarter of 2022, even as global dealmaking took a tumble.

With Russia’s invasion of Ukraine helping fuel market volatility, the combined value of global deals fell to $1 trillion from $1.3 trillion in the first quarter of 2021, a 23% year-over-year drop, according to data from Refinitiv.

Skadden advised on 49 deals worth more than $145.6 billion in the past quarter, including transactions for DuPont de Nemours Inc and Spotify Inc, placing the New York-based firm atop Refinitiv’s league tables by deal value.

The firm is guiding “Call of Duty” maker Activision Blizzard Inc in its $68.7 billion acquisition by Xbox maker Microsoft Corp. Simpson Thacher & Bartlett, which is advising Microsoft in that same deal, is ranked second by deal value, having worked on 53 announced deals worth $144.9 billion, according to Refinitiv.

New York-based Sullivan & Cromwell advised on $662.5 billion in deals last year, the most of any firm. In the first quarter, it was ranked sixth overall, with $93.3 billion in global deals.

Goodwin Procter was the top firm by the number of global M&A transactions it shepherded last quarter, having advised on 294 announced deals worth $51.8 billion. The Boston-founded firm was also the top-ranking law firm by deal volume in 2021, working on 1,083 deals.

Goodwin’s work this past quarter included representing software maker Citrix Systems Inc in its $16.5 billion acquisition by affiliates of Elliott Investment Management LP and Vista Equity Partners.

Kirkland & Ellis, which is advising Vista in that transaction, worked on 207 announced deals worth $119 billion last quarter, second only to Goodwin by deal volume.

Total M&A activity reached more than $5.9 trillion in 2021, according to year-end data from Refinitiv, the strongest showing since tracking began in 1980.

Last year’s boom in M&A fueled a hiring boom for law firm associates, and many leading corporate firms offered multiple rounds of bonuses and raised salaries to keep lawyers from jumping ship.

A slowdown in deal volume will squeeze law firm profits, said Marcie Borgal Shunk, a law firm consultant at The Tilt Institute. Other consultants have warned that some firms might let some lawyers go if M&A work dries up.

But it’s too soon for dire predictions about the effects of an M&A slowdown, consultants said. It can take law firms “several quarters” to make a hard decision like laying off lawyers, said Kristin Stark, a principal at law firm consultancy Tilt Institute.

Matt Toole, director of deals intelligence at Refinitiv, pointed in a statement to market bright spots, singling out technology, private equity buyouts and mega deals. He suggested low interest rates and healthy corporate coffers would continue to fuel deal activity.

“Despite the headlines, the fundamental drivers of deal making are still the same,” Toole said.

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