By Mike Scott
Legal News
An independent mergers and acquisitions intelligence service has ranked the Detroit-based law firm of Honigman Miller Schwartz and Cohn sixth among national firms based on the value of Midwest transactions.
However, it is not the ranking itself, but what it represents that is the real story for the local firm.
Honigman has developed its M&A practice over the years as a provider of transactional legal work for clients in numerous industries. But the short-term growth opportunities in M&A may be particularly extensive for the law firm as more national and international companies are looking for value and competitive rates.
“I think there is a greater focus today on value than ever before as companies are shopping for legal services,” said Donald Kunz, a Honigman partner and chair of the firm’s Corporate and Securities Department. “In this type of economy, companies are closely scrutinizing their costs and are more willing to consider firms that may not be in such cities like New York, Los Angeles and Chicago than ever before.”
That corporate trend puts Honigman in a good position for further growth, as Kunz estimated the firm’s percentage of transactional and M&A work among all specialties is increasing. It is also true that the majority of the M&A work the firm handles is for companies headquartered outside of Michigan. Yet in recent years, changes in the automotive industry have made M&A work a particular need statewide.
“There has been a lot of activity in the last couple of years with restructuring troubled companies, particularly in the automotive sector,” Kunz said. “It’s unclear how much that work will continue to grow from (Michigan-based) companies, but like everyone, we want fewer troubled companies with restructuring needs. When the restructuring work slows down, that will be a good sign for our economy.”
Independent M&A intelligence service, mergermarket, also named Honigman 13th based on the value of transactions in the southern United States as part of its 2009 annual report “Americas: League Tables of Legal Advisors.” Honigman is the only Michigan firm on mergermarket’s Midwest and South lists. The majority of other firms named are primarily based in the larger metropolitan markets on the east and west coasts.
The transactions used to determine Honigman’s ranking included banking, biotechnology, energy and automotive industry matters, according to mergermarket. Honigman is the only Michigan-based law firm to receive a No. 1 ranking by Chambers USA for its Corporate/M&A practice each year since 2002.
The mergermarket report is based on announced transactions topping $5 million in the period from Jan. 1, 2009 to Dec. 31, 2009 and provides rankings of the number of deals and deal values for the North East, Midwest, South and West in the United States. Mergermarket is owned by the Financial Times Group, publisher of the Financial Times newspaper and FT.com.
However, such a ranking doesn’t drive the firm’s M&A goals, Kunz said. In many ways the ranking can be misleading because the value of transactional work is not necessarily a good measure of the quality or amount of work a particular transaction calls for, he added.
“It’s a national practice area for us and allows us to work outside of this region more than with some of our other practices,” Kunz said.
One of the keys to building the firm’s M&A practice, and national reputation, is recruiting skilled lawyers who will excel in this specialty, Kunz said. While many of the firm’s partners and associates have roots in metro Detroit, a large number have worked in the legal field in some of the country’s larger markets.
With that reputation, Honigman has been able to take advantage of corporate trends that allow for M&A work to be more readily available. The rise of private equity funds in particular has made such transactional work a requirement for many clients. The increase in the buying and selling of corporations and assets has accelerated the amount of M&A opportunities for law firms around the country.
Such work has included interest from foreign-based companies from areas such as China to invest in mergers and acquisitions of American-based firms, particularly in the automotive sector Kunz said. For this reason, Honigman has developed a strong relationship with Minneapolis-based Faegre & Benson, LLP in Shanghai. That partnership allows it to engage in more of that international work for large automotive companies under Honigman’s International Automotive Legal Team. Some of that international M&A work involves strategic cross-border transactions.
“Many of our clients are of the right size and type to couple transactions without the need of securing debt,” Kunz said. “In the last couple of years as the credit markets have largely frozen, many firms whose clients depend on debt have seen their M&A work dry up.”
That hasn’t been the case for Honigman largely because the firm has positioned itself to engage in more private equity work for clients.
Honigman’s Corporate division includes 37 lawyers, but attorneys in other specialties such as health care and real estate also have significant transactional experience, Kunz said. And given the firm’s recruiting strategy, it isn’t likely that an emphasis on M&A work will decrease any time soon.
“Our reputation helps us in recruiting but whether we’re recruiting law school graduates or experienced associates we’re going to look for transactional and corporate lawyers to add to our ranks,” Kunz said.
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