The curious case of M&A league tables

Four tables give varied pictures of investment bankers' positions in the market

Globally, mergers and acquisition (M&A) league tables have been an unseemly scramble, with rivals claiming to be on top by quoting the ranking that suits them best. In India, the case is even more bizarre, with the ranking of investment banks changing dramatically from one arbiter to another.

Bloomberg and The Mergermarket Group have put global advisory firm EY on top of the league table for financial advisors last year, according to the value of deals. The two firms have given credit to EY for their advisory service to 33 and 29 deals, worth $8.49 billion and $8.57 billion, respectively. Both rank Citi second, with five deals, worth $8.4 billion and $8.21 billion, respectively.

The rankings change in the case of Thomson Reuters, which has put Citi on top, with seven deals worth $7.05 billion, while EY is second (41 deals worth $6.41 billion).

While this mild variation is understandable, consider the Dealogic ranking, which puts EY in the 14th position with 34 deals ($2.9 billion) and Citi on top, with six deals worth $8.29 billion.

Responding to queries in this regard, a Dealogic spokesperson said, “We also do monthly/quarterly recon (reconnaissance) from EY, too. So, if they have any issues with their numbers, they can reach our M&A research team directly.”

The rankings are more difficult to understand when one considers the deals for which the credits are provided. Bloomberg has given credit to EY for Sun Pharma’s $4-billion merger with Ranbaxy, the most valued deal of the year. But Sun Pharma denied EY had any financial advisory role in the deal. In response to a query, the company said, “An EY member firm, S R Batliboi & Co LLP (and not EY) did the valuation of Ranbaxy on behalf of Sun Pharma, according to legal requirements.”

Mergermarket did not state the specific deals for which it had given credit to different advisors, saying a detailed report in this regard was due next week. But in an email response, a company spokesperson said, “At times, the mandates given to firms such as EY are a bit difficult to determine, whether they fall under accountancy or financial advisory. In such instances, we reach out and request further details.”

There are two separate league tables for M&As — for financial advisors and legal advisors. Largely, the financial advisory league table also gives credit for fairness opinion providers, along with those providing direct advisory for M&As. But services such as due diligence and tax advisory are not given credit in these league tables, as these are considered accountancy services.

These rankings come in handy when bankers approach clients for an advisory pitch. With rankings as varied as these, it is difficult for a client to estimate an accurate position of an advisor in the market. “The information provided by us to the agencies who prepare league tables is in full compliance with what is sought by them for the compilation of these rankings. We are unable to provide any further comment on specific transactions on account of confidentiality agreements with our clients,” an EY spokesperson said, responding to specific questions on these discrepancies.

It is not only the top ranking that is confusing but also the second and third ones. While Bank of America Merrill Lynch is second on Dealogic’s rankings, it is third on that of Bloomberg and Thomson Reuters and fourth on the Mergermarket’s rankings. ICICI Securities is ranked third by Mergermarket and Dealogic, but fourth by Bloomberg and Thomson Reuters.

“Variation of one position in the rankings is understandable, as there could be a difference in methodology, but a very sharp difference is certainly a matter of worry,” said a senior investment banker at one of these top three firms, on condition of anonymity.