Half-yearly league tables reveal some stories of M&A success among Australia's largest law firms - depending on how they are examined - but even more telling could be the optimistic suggestion that M&A has experienced a slight uptick in activity, writes Angela Priestley

It's that time of year again, when firms are pitted against each other for their transactional performances through various league tables.

It's also a time when, in general, regions are assigned a scoreboard meriting their M&A worth in accordance with just how many deals they did and how much the transactions were worth.

This year, though, the league tables from Thomson Reuters and Bloomberg tell a distinct story. First, there were the expectations that no startlingly excellent results were likely to shine through in the total deal numbers and deal volumes of various regions.

But such low expectations delivered a slight story of hope, at least in the Asia-Pacific region. Compared with other regions, M&A activity in the Asia-Pacific region performed relatively better. Bloomberg found that although total deal volume was down by 54 per cent in the first half of 2009 compared with the first half of 2008 - which was to be expected - the second quarter of 2009 has shown some optimistic results, with deal volume up by 37 per cent, compared to the first quarter of 2009.

Similar tables released by Thomson Reuters, meanwhile, found that overall Australian M&A volume in the first half of 2009 posted an increase of 34.2 per cent to reach US$89.8 billion ($113 billion) from the first half of 2008 - largely due to the announcement of the $US58 billion joint venture partnership between Rio Tinto and BHP Billiton.

The story in the rankings

The tables might be able to offer a sense of optimism for M&A teams around the country in that they deliver news of a slight increase in activity in 2009, but the good news rests with the firms that came up trumps when pitted against their competition. Just who gets the accolades, though, depends on which table is being examined.

The 2009 half-yearly Bloomberg M&A Legal Advisory League Tables ranks Freehills as number one for their overall deal count of 45 deals for Australian and New Zealand announced deals. Clayton Utz came in at second place with a total of 25 deals, followed by Blake Dawson and Allens on 20 deals and Mallesons and Minter Ellison on 18 deals.

But the figures shake the firms up extensively in considering the volume of work undertaken. Mallesons comes out in the top spot, followed by Freehills, then Blake Dawson, Allens and Baker & McKenzie.

However, in the worldwide announced M&A activity for the first half of 2009, as reported by Thomson Reuters, Allens is ranked in the top five, among global firms including Linklaters, Skadens, Freshfields and Sullivan & Cromwell. On this list, Freehills ranked 15th, Blake Dawson 20th and Mallesons 23rd.

When Thomson Reuters breaks down its figures to any Australia or New Zealand involvement in announced deals, the results begin to vary fairly significantly to those of Bloomberg. Freehills ranks number one in deal numbers and volume, with the volume chart then placing Allens next, followed by Blake Dawson, Linklaters, Baker & McKenzie, Torys, and then, well behind, Mallesons.

Disrupters in the ranks

While top-tier firms jostle for pole position at the top of league tables, the appearance of mid-tier players rising up the ranks presents a very different story.

Johnson Winter & Slattery (JWS) is a notable mention, appearing in 13th place in any involvement in Australia and New Zealand deals on the Thomson Reuters table, and, by volume, 15th on the Bloomberg table. So is a firm such as JWS likely to interrupt the strong run of Australia's largest firms in the coming years?

Damian Reichel, head of M&A at JWS, says its ranking in these tables simply comes down to the size of the deals it happens to be working on within a particular year. "As a smaller firm we're not going to have the same number of M&A transactions as the larger firms - but we do tend to be on some of the bigger transactions," he says. "If they're really big, then, of course, we'll get a higher ranking. It all depends on what our clients do."

Stephen Minns, co-head of M&A at Mallesons, thinks mid-tier firms such as JWS will continue to grab some big deals, but still have a fair way to go to make it up the list. "JWS are a great firm but they are not really competing with Mallesons, Freehills or Allens, or, for that matter, Blakes and Clayton Utz," says Minns, who adds that his firm, alongside Freehills and Allens, is very much in a league of its own when it comes to M&A volume.

"We think it's very clear that there are those three firms and then the rest," he says. "Which one comes out on top? Well there's always a degree of cyclicality - it changes depending on the deals."

An even more telling period

The Bloomberg M&A results found the second quarter of 2009 was particularly optimistic, but Minns believes that an uptick in work can be seen more particularly in the last six weeks.

Much of the change, believes Minns, comes down to a consensus that purchasers are cautiously believing we've hit rock bottom and the way up is now in sight.

"If you were a purchaser with money, there was always the belief that next month, prices would be lower, so there was no urgency," says Minns. "I think what's happened in the last four to five weeks is perceptively, that [lack of urgency] has changed - I think there is a belief that we've seen the bottom, so just hanging around is not a good a thing."

Based on the Thomson Reuters results, Allens chairman Ewen Crouch said in a statement, the 40 per cent plunge in global M&A activity for the first half of the year was to be expected, and the debate should no longer centre around the drop-off in work, but rather around when M&A will again pick up.

Crouch agrees that the next financial year should see a turnaround in deal activity, but notes it could be a slow, rather than a steady increase. "We expect a pick-up in M&A activity in the next six months as companies with strong balance sheets target those that continue to struggle because of the downturn," he says.

Freehills M&A partner Rebecca Maslen-Stannage says that while the firm has seen a lot of capital raisings over the past six months with the intention of strengthening balance sheets, more recently they have been seeing companies raising capital with an eye for growth or acquisition. Meanwhile, she says, cornerstone investments are also contributing, along with an overall strong interest in Australia assets from offshore buyers.

At JWS, Reichel says the firm hasn't seen much of a downturn, but has, instead, seen many clients take a wait-and-see approach. "So [they were] looking at things, but not feeling any sense of urgency - either because they themselves may not have been entirely confident about their situation, or the vendor was asking too much and they thought they would wait and demonstrate that the vendor wouldn't be able to get a better price elsewhere," he says.

That approach, says Reichel, has changed in the second quarter of 2009, with a growing sense of confidence emerging. "We've still got the same bumpy water now, but people have put their toes in and thought 'We can still swim'."

Will M&A still experience a bumpy ride over the course of the next financial year? Probably, but if trends revealed in the Thomson Reuters and Bloomberg results continue, then their future reports should see even more optimism within the ranks.