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The Intricacies Of Financial And Legal Relationships In M&A
October, 17th 2016

The Intricacies Of Financial And Legal Relationships In Mergers & Acquisitions by Bryan Adams FactSet

Everyone knows that relationships matter in mergers & acquisitions. Most commonly this is between the financial advisor and the client company, but looking at FactSet mergers & acquisitions data from a different angle, we can extract additional layers of relationship information that are worth a closer look.

It’s common for deal participants to hire a financial and legal advisor, but in a few cases the financial advisor will also hire its own outside legal counsel on the deal, presumably to ensure it is giving correct advice as well as ensuring it has enough controls in place.

In looking at all the data, what we find over the last five years is that the relationship between Goldman Sachs and Sullivan & Cromwell is clearly unique (and profitable). They’ve worked together 427 times on deals worth $1.6 trillion, meaning roughly 40% of the time Goldman Sachs hires lawyers it hires Sullivan & Cromwell, and 67% of the time Sullivan & Cromwell is hired by a bank, Goldman Sachs is its client.

Related: M&A Activity Down in July

For perspective, the next most common advisory partnership during that time frame (between Bank of America Merrill Lynch and Shearman & Sterling) handled 191 deals worth only $730 billion (24% of the mergers & acquisitions deals involving Bank of America Merrill Lynch and 38% of those involving Shearman & Sterling, respectively).

The Most Common (and Lucrative) Legal/Financial Partnerships

As a regular on the financial advisor league tables, it isn’t a surprise to see Goldman Sachs have strong relationships with other law firms also. What is a surprise though, is that Sullivan & Cromwell is only featured at the top in its relationship to Goldman Sachs; the firm is not present anywhere else in the top 20 Legal/Financial pairings.

Other law firms on the list appear multiple times, paired with multiple financial advisors. Interestingly, two other firms that Goldman uses only appear in the top 20 list for their relationship to Goldman; Fried, Frank, Harris, Shrive & Jacobson and Skadden, Arps, Slate, Meagher & Flom.

Top Legal/Financial Advisor Combinations Number of Deals Value ($ Million)
Sullivan & Cromwell <–> Goldman Sachs & Co 427 $1,609,279.0
Shearman & Sterling <–> Bank of America Merrill Lynch 191 $730,192.6
Dewey & LeBoeuf <–> Citigroup 182 $281,373.7
Fried, Frank, Harris, Shriver & Jacobson <–> Goldman Sachs & Co 167 $945,352.2
Dewey & LeBoeuf <–> Credit Suisse 153 $434,170.2
Dewey & LeBoeuf <–> UBS Group 151 $357,338.1
Simpson Thacher & Bartlett <–> JPMorgan Chase & Co 139 $620,261.6
Dewey & LeBoeuf <–> Bank of America Merrill Lynch 122 $184,982.0
Davis Polk & Wardwell <–> JPMorgan Chase & Co 113 $574,540.1
Cleary Gottlieb Steen & Hamilton <–> Citigroup 96 $246,476.2
Shearman & Sterling <–> Credit Suisse 93 $294,737.3
Cleary Gottlieb Steen & Hamilton <–> Goldman Sachs & Co 87 $639,689.5
Skadden, Arps, Slate, Meagher & Flom <–> Goldman Sachs & Co 87 $627,343.7
Gibson, Dunn & Crutcher <–> Lazard 66 $193,113.4
Simpson Thacher & Bartlett <–> Goldman Sachs & Co 65 $219,421.9
Debevoise & Plimpton <–> Deutsche Bank 65 $114,151.0
Latham & Watkins <–> Bank of America Merrill Lynch 62 $104,081.3
Alston & Bird <–> Houlihan Lokey 60 $33,492.0
Latham & Watkins <–> JPMorgan Chase & Co 56 $151,951.4
Alston & Bird <–> Credit Suisse 55 $297,098.6
Of the top 20 legal advisors that are hired by financial advisors, based on deal volume, the two relationships that stand out the most are Sullivan & Cromwell/Goldman Sachs and Fried, Frank, Harris, Shriver & Jacobson/Goldman Sachs. This is mainly because the concentration ratios are so high – 67% and 62%, respectively. These law firms do the vast majority of their work with Goldman Sachs.

Sullivan & Cromwell’s next highest relationship is with Wells Fargo where it has worked on only 32 deals (5%). Fried, Frank, Harris, Shriver & Jacobson’s next highest relationship is with Bank of America Merrill Lynch where it has worked on 38 deals (14%). Of all 61 legal advisors that have worked on at least ten deals, only five have a higher concentration with a single financial advisor.



Legal Advisor Deals Financial Advisor
Relationships Top Financial
Advisor Relationship Deals Concentration
Dewey & LeBoeuf 814 32 Citigroup 182 22%
Sullivan & Cromwell 642 43 Goldman Sachs & Co 427 67%
Shearman & Sterling 509 38 Bank of America Merrill Lynch 191 38%
Skadden, Arps, Slate, Meagher & Flom 416 45 Goldman Sachs & Co 87 21%
Latham & Watkins 415 53 Bank of America Merrill Lynch 62 15%
Simpson Thacher & Bartlett 381 27 JPMorgan Chase & Co 139 36%
Davis Polk & Wardwell 330 23 JPMorgan Chase & Co 113 34%
Gibson, Dunn & Crutcher 273 34 Lazard 66 24%
Fried, Frank, Harris, Shriver & Jacobson 269 19 Goldman Sachs & Co 167 62%
Cleary Gottlieb Steen & Hamilton 250 20 Citigroup 96 38%
Cravath, Swaine & Moore 232 21 Citigroup 49 21%
Alston & Bird 200 25 Houlihan Lokey 60 30%
Weil, Gotshal & Manges 171 25 Citigroup 37 22%
Linklaters 169 34 Citigroup 19 11%
Debevoise & Plimpton 165 24 Deutsche Bank 65 39%
Clifford Chance 160 42 JPMorgan Chase & Co 17 11%
Jones Day 160 57 Jefferies LLC 35 22%
Allen & Overy 127 31 JPMorgan Chase & Co 15 12%
White & Case 126 33 Deutsche Bank 16 13%
O’Melveny & Myers 109 26 Houlihan Lokey 35 32%
Conversely, looking at the top 20 financial advisors based on deal volume, by far the highest concentration is found in the Oppenheimer & Co/Dewey & LeBoeuf partnership, where the firm has been hired in 75% of the deals. Dewey & LeBoeuf appears in the top 20 list as the favorite legal advisor for four different financial advisors, but Oppenheimer is the most heavily reliant on it; the next highest concentration in the top 20 is UBS with Dewey & LeBoeuf at 65%.

Financial Advisor Deals Legal Advisor
Relationships Top Legal
Advisor Deals Concentration
Goldman Sachs & Co 1,082 35 Sullivan & Cromwell 427 39%
Bank of America Merrill Lynch 802 56 Shearman & Sterling 191 24%
JPMorgan Chase & Co 655 52 Simpson Thacher & Bartlett 139 21%
Citigroup 588 37 Dewey & LeBoeuf 182 31%
Credit Suisse 529 41 Dewey & LeBoeuf 153 29%
UBS Group 387 39 Dewey & LeBoeuf 151 39%
Deutsche Bank 310 39 Debevoise & Plimpton 65 21%
Morgan Stanley 292 42 Shearman & Sterling 43 15%
Lazard 233 34 Gibson, Dunn & Crutcher 66 28%
Houlihan Lokey 180 26 Alston & Bird 60 33%
Evercore Partners 143 26 Simpson Thacher & Bartlett 27 19%
Barclays 131 34 Shearman & Sterling 12 9%
Jefferies 95 17 Jones Day 35 37%
Wells Fargo & Co 90 15 Sullivan & Cromwell 32 36%
Greenhill & Co 71 15 Davis Polk & Wardwell 26 37%
Stifel, Nicolaus & Co 71 22 Skadden, Arps, Slate, Meagher & Flom 14 20%
Centerview Partners 62 18 Paul, Weiss, Rifkind, Wharton & Garrison 9 15%
RBC Capital Markets 62 25 DLA Piper Group 8 13%
Oppenheimer & Co 56 8 Dewey & LeBoeuf 42 75%
Rothschild 55 21 Allen & Overy 7 13%
Finally, though there are more financial advisors (298) than there are legal advisors (205), the concentration at the top of financial advisors is much greater, with only six financial advisor firms (2%) making up more than 50% of the volume, compared to eight law firms (4%) reaching 50%.

Looking at the full network for the top five financial and legal advisors since 2011, the top five law firms interact with 52 different financial advisors.

 
 
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