Morgan Stanley and Goldman Sachs Group Inc. both decided last month that it was worth losing millions of dollars in fees to get credit on a big merger they didn’t work on, four people with knowledge of the matter said.
The investment banks asked for credit in league tables—rankings of advisers on mergers and acquisitions (M&A) maintained by both Bloomberg LP and Dealogic—for working on the $25 billion sale of Forest Laboratories Inc. to Actavis Inc. last month. Neither actually had a role on the deal, said the people who asked not to be identified discussing confidential information.
“It’s a form of buying league-table credit,” Gordon said. Contract tails are fairly common, and designed to protect investment banks in case a client does a deal shortly after a contract expires.
Dealogic gives banks credit for work on a deal when they claim it and doesn’t automatically give financing banks advisory credit for a deal. If another bank disputes the claim, Dealogic will go to the banks and the client company and ask for the engagement letter that verifies services on the deal, said Ed Jones, a spokesman for the company.