Kirkland, Wachtell Go 3 For 3 In Year's Biggest LBOs

The $6.9 billion acquisition of BMC Software Inc., announced Monday, is the third-biggest leveraged buyout of the year. The common thread in all three: Kirkland & Ellis LLP on one side and Wachtell Lipton Rosen & Katz on the other.

Kirkland is representing Bain Capital LLC and Golden Gate Capital LLC on their go-private deal for the Texas-based software company. That follows buy-side roles in the leveraged buyouts of H.J. Heinz Co. and Dell Inc.

Lining up on the other side each time has been Wachtell, which represented BMC and Heinz's special committees, as well as Michael Dell — technically on the buy side, but in keeping with Wachtell's reputation as a staunch advocate for management.

For Kirkland, the BMC buyout is the latest in a string of bigger deals that have added large-cap swagger to its traditionally midmarket practice.

In February, it helped 3G Capital Management LLC and Warren Buffett's Berkshire Hathaway Inc. ink a $28 billion deal for Heinz. Kirkland's relationship with 3G goes back to the Burger King buyout in 2010, a deal that earned a bit of buzz for its novel dual-track structure. Partners Stephen Fraidin and Bill Sorabella, who came over together from Fried Frank Harris Shriver & Jacobson LLP a decade ago, handled both deals.

Last month, partners Daniel Wolf and David Fox helped Blackstone take a run at Dell after Blackstone's longtime counsel, Simpson Thacher & Bartlett LLP, was conflicted out of the transaction. The bid was over nearly as quickly as it surfaced, but gave Kirkland its first shot at impressing Blackstone and kept the firm two-for-two on the year's megabuyouts.

The trifecta came Monday when Bain and Golden Gate announced their go-private deal for BMC.

Although both are longtime clients, the deal is a mini-coup for Kirkland, which has traditionally handled Bain's European work and ceded U.S. deals to Ropes & Gray LLP. But BMC is the second-straight U.S. acquisition that has gone to Kirkland, following the $1.6 billion carveout of Maryland-based Apex Tool Group in October.

It's also the first leveraged buyout for partner Sarkis Jebejian since he joined Kirkland from Cravath Swaine & Moore LLP in December. His jump was a rare defection for Cravath, which purposely avoids private equity work, and a big win for Kirkland, which has one of the country's broadest sponsor and financial adviser practices.

"Kirkland has worked hard to cultivate its brand, and it's paying off," legal recruiter Kent Zimmerman said in an interview earlier this year. "They have hired and promoted the kinds of lawyers that are looking for room to be entrepreneurial in their practices."

If Kirkland's success this year is a reflection of what it does best, the same can be said of Wachtell's. Known as management's best friend in BigLaw, Wachtell has built its reputation guiding companies through transformational deals that are often hostile, conflicted or otherwise thorny. Its three starring roles this year are no exception.

Martin Lipton — the inventor of the poison pill and a staunch defender of CEOs' rights — is leading a seven-partner Wachtell team helping Michael Dell through what has become a rocky buyout process. The founder is teaming up with Silver Lake Partners and contributing about $4.3 billion of his own money to take the company private, but has faced pushback from some shareholders.

Meanwhile, partners Edward Herlihy and David Shapiro advised the Heinz special committee. The pair helped secure a rare price bump from Warren Buffett and pushed for a higher reverse breakup fee and protections for Heinz's Pittsburgh roots and philanthropic efforts.

And Wachtell landed on the BMC deal after defending the company from an activist investor, another of its signature services. Elliott Management Corp. had built up a 9.6 percent stake, just shy of BMC's 10 percent poison pill cap, and pushed the company to sell itself.

The headline-grabbing deals give both law firms a head start on the 2013 league tables. Last year, Wachtell was fourth in U.S. deals by dollar value and Kirkland was sixth, having jumped 22 spots in two years, according to Mergermarket.

Willkie Farr & Gallagher LLP has gone three-for-three, too, though not entirely for principals. The firm is advising Insight Venture Partners as part of the BMC buyer group, represented Insight as a partner in Blackstone's short-lived bid for Dell and advised Bank of America Merrill Lynch as financial adviser to Heinz.

Davis Polk & Wardwell LLP is two-for-three, advising Heinz and JPMorgan as financial adviser to Dell's special committee. So is Weil Gotshal & Manges LLP, whose star M&A partner Michael Aiello has racked up advisory roles for Evercore Partners Inc. as adviser to Dell's special committee and Morgan Stanley & Co. Inc. as adviser to BMC.

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