Everyone knows that relationships matter in M&A. Most commonly this is between the financial advisor and the client company, but looking at FactSet M&A 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.
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 $730 billion (24% of the M&A deals involving Bank of America Merrill Lynch and 38% of those involving Shearman & Sterling, respectively).
As a regular on the financial advisor league tables, it isn’t a surprise to see Goldman Sachs have strong relationships with other law firms also. What is a surprise though, is that Sullivan & Cromwell is only featured at the top in its relationship to Goldman Sachs; the firm is not present anywhere else in the top 20 Legal/Financial pairings.
Other law firms on the list appear multiple times, paired with multiple financial advisors. Interestingly, two other firms that Goldman uses only appear in the top 20 list for their relationship to Goldman; Fried, Frank, Harris, Shrive & Jacobson and Skadden, Arps, Slate, Meagher & Flom.
| Top Legal/Financial Advisor Combinations | Number of Deals | Value ($ 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.
On the other hand, the top five financial advisors interact with 45 legal advisors. The relationships in place are clearly very solid.