As more and more emphasis is being put by investment banks and their clients on where a particular firm is in the global league tables, the M&A industry is wondering whether the current rankings, based mainly on deal size, is the right measure of success.
As Reuters points out, the year's biggest deal was JP Morgan's $58bn takeover of Bank One. JP Morgan was credited as an a adviser on the deal - was that really on and should it have counted ? Unlike Dealogic, Thomson Financial includes corporate restructuring work as M&A advisory. Some say that this is wrong. And finally, some firms appear to be being credited for M&A deals when it remains unclear whether they had much to do with them. Both Thomson Financial and Dealogic have now excluded Citigroup as adviser from the recent $11bn Kmart takeover of Sears, Roebuck. Rivals had protested that Citigroup wasn't actually engaged by Kmart until after the deal was announced!
So, perhaps a fairer measure of success is actual revenue generated from M&A deals. And, it appears, this is the way that the likes of Thomson Financial may be going. But cynics also suggest that there should be some built-in measure of how successful deals were after completion. The argument is that there's no point viewing, in a positive light, a firm near the top of the league table if most of the deals that firm executed turned out to be duffers. Quite how this would be measured, however, is difficult to see.
In the meantime, we are likely to see more league tables moving away from deal size and geared towards the amount of M&A revenue received.
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