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Mergers & Acquisitions

U.S. Public M&A Activity – 3rd Quarter Review

According to research compiled by Deal Point Data, $227.7 billion in M&A deals involving publicly traded U.S. targets closed in the third quarter of 2017. This represents a 20% increase compared to the same period last year. This total included the completion of The Dow Chemical Company and E.I. du Pont de Nemours and Company’s $61.69 billion merger of equals which generated $177.5 million in investment banking fees. The solid third quarter performance was not enough to match last year’s nine-month activity. During the first nine months of 2017, $512.3 billion in deal volume closed, a decline of 11.5% from the same period last year. On the new deal side, there were $94.7 billion in new M&A deals involving publicly traded U.S. targets announced in the third quarter. This represents a 32.1% decline in dollar volume compared to the third quarter of 2016. The decline in dollar volume was driven by both the number of deals as well as the size of the average deal. During the third quarter, the number of new deals announced declined by 17% along with the average deal size falling by 18% to $1.9 billion. As of September 30, $355.8 billion in U.S. public deals with definitive agreements were working to close.

Industry Leaders - Top Law Firms for U.S. Public M&A
Industry Sector Top Ranked Firm ($ bil)
Technology Simpson Thatcher 3.768
Healthcare Skadden 33.265
Industrials Skadden 22.872
Financial Services Hogan Lovells 10.841
Energy Vinson & Elkins 11.775
Consumer Goods Davis Polk 19.770
Retail Sullivan Cromwell 20.580
Deals announced Jan 1, 2017 to Sept 30, 2017

Market Leaders - U.S. Public Mergers

In the first nine months of 2017, Skadden, Arps, Slate, Meagher & Flom LLP led the market for U.S. public M&A deals with definitive agreements. Skadden also earned the top ranking based on overall U.S. public announced deals. Kirkland & Ellis LLP took top honors in the closed deals category through September.

Category Top Ranked Firm ($ bil)
Definitive Agreement Skadden 96.442
Announced Skadden 94.580
Closed Kirkland & Ellis 37.300

M&A Adviser Fee Watch

M&A advisory fees of $2.4 billion have been disclosed year-to-date through September 30 compared to $2.7 billion at this point last year. This represents a 11.1% decline in fee revenue compared to disclosure at this time last year. Goldman, Sachs & Co. led the market with $333 mil in fees disclosed. JP Morgan took second place among financial advisers in disclosed fees. Morgan Stanley rounded out the top three.

High-Yield Bond News

New Issue Volume

The pace of new issuance increased in the third quarter of 2017 by 10% compared to the second quarter with $10.7 billion in new high yield offers pricing. However, the volume of new issues of S.E.C. registered high-yield bonds declined 17.3% to $41.2 billion compared to the first nine months of 2016.

High-Yield Bond Covenants

During the third quarter, the level of covenant protection generally increased. We evaluated the covenants in S.E.C. registered new issues and found that 50% contained limitation on restricted payments provisions up from 43% for deals priced in the last twelve months. However, limitations of indebtedness covenants were present in 38% of new issues compared to 44% of all deals priced in the last twelve months. Poison pill puts were included in 94% of new issues up from 84% over the last twelve months.