United States > Mergers, acquisitions and buyouts > Overview
Firms within the M&A section are generally divided up into four areas according to the type of deal that a practice typically draws in. The range is based on mega, large, and upper and low mid-market values. Mega deals means transactions in excess of $5bn, with large deals falling within the $1bn-5bn space. The middle market is split between the high-end range of $500m-$999m and the sub-$500m mark. Of course, several of the largest national practices also carry out chunks of mid-market work, more so in recent times with less of the multibillion-dollar mandates up for grabs. Consequently, the largest firms have also been chasing mid-market work they might once have turned down, while there are practices whose sweet spot may be the $25m-$500m levels, but they are occasionally mandated on billion-dollar transactions.
In ranking firms and in the narrative, we give credit to those firms with broad practices that also demonstrate particular industry strengths and complementary firm-wide skills in other disciplines such as regulatory law, tax, antitrust and litigation. Additionally, when talking to clients, particular attention is paid to the value for money offered by M&A teams, individual attorneys’ negotiating and drafting skills, responsiveness levels and ability of partners to staff transactions appropriately. Furthermore, because this is a national M&A section, the firms headquartered outside of New York and Washington, DC are carefully considered, which can nonetheless show seamlessly integrated national, and often international, M&A teams, whether handling an energy deal run nationwide from Texas or a technology acquisition led out of California.
With the US economy clearly on the rebound in 2010, M&A lawyers are delighted to report the return of the strategic deal, with distressed asset matters less dominant. Private equity practices have also been celebrating a new lease of life. Specific industries that showed healthy activity levels during the year and that are expected to remain buoyant in 2011 include healthcare, financial institutions, energy, consumer goods, manufacturing, media, life sciences and technology.
Looking ahead, 2011 is expected to be a busier year for mergers with more private equity available and also an uptick in strategic transactions as companies buy up more than one other business in the same market, thereby raising market share and triggering greater agency scrutiny.
The intense focus on the private equity sector amongst America’s leading law firms remains relatively undimmed. The huge leveraged buyouts of four or five years ago have yet to return, but general activity levels are reasonably robust. Middle-market activity remains in good health and acquisitions out of bankruptcy or restructuring related deals have been particularly prevalent.
Despite Silicon Valley being the hottest area of activity for the venture capital and emerging company sector, law firms have built successful practices in other key locations such as Boston, San Diego, Austin (Texas) and Northern Virginia. It means firms that are closely associated with this area are becoming more and more national in approach. Notably, top tier firm Cooley LLP has offices in Palo Alto, San Diego, San Francisco, Broomfield (Colorado), Washington DC, Boston, New York, Reston (Virginia) and Seattle. With the growth of new industries such as clean technology, the emerging company and venture capital community is in fine health.
In 2010, a clearer picture began to emerge as to how the Obama administration and antitrust agencies intended to implement their antitrust enforcement agenda. With Christine Varney settling in as the new Assistant Attorney General at the DOJ, business and legal communities started to witness an increase in merger activity and investigations. For example, the number of second requests almost doubled, with the antitrust agencies focusing not just on blockbuster mergers but also looking back over consummated mergers and those that were not reportable under the Hart-Scott-Rodino Act (HSR).
Gradually a number of other trends also began to materialize such as the amount of class action cases getting beyond the motion to dismiss stage, thanks to the effect of the Twombley ruling which has led to more onerous pleading standards and greater discovery burdens. Meanwhile, in abuse of dominance cases, the agencies also appeared to be testing the limits of their authority. Although the increase in activity and evolving legal landscape undoubtedly presented lawyers and clients with a raft of new challenges, there was also relief for some clients on the remedies side, where the DOJ seemed to be taking a more flexible approach, imposing more conduct rather than structural remedies. Another positive development for clients in the pharmaceutical sector has been the development in “reverse payments” cases where, against the FTC’s wishes, the courts have refused to rule that the relevant settlement agreements constitute antitrust violations. Other industries of particular interest to the agencies include healthcare, due to substantial reforms, and agriculture.
It is also worth mentioning the new Horizontal Merger Guidelines, issued in August 2010, which have attracted conflicting feedback from lawyers. Some contend that the amendments will make merger analysis more labor intensive and less transparent, while others argue that the guidelines have simply been updated to reflect the approach that has always been taken by the agencies.
The dissolution of Howrey LLP in March 2011, following the departure of more than 100 partners during the course of the preceding year, saw the break-up of a formerly leading antitrust practice. Beneficiaries of the fallout included Baker Botts L.L.P., which recruited a nine-partner antitrust team to its Washington DC office, and Covington & Burling LLP, which added a four-partner antitrust litigation team, also in Washington DC.
Higher-ranked firms in antitrust are those that can demonstrate a well-rounded practice, showing excellence across all areas from the ability to handle large and complex merger transactions through to litigation and government investigations. Cross-border and multi-jurisdictional capability is also an important factor to consider in the team’s ability to represent the largest clients.
California, New York and Washington DC remain the centers of antitrust activity in the US, with Washington DC being particularly important for agency investigations and regulatory matters, and California attracting the big-ticket mandates from hi-tech clients.