Banks Buying M&A League-Table Credit

Morgan Stanley and Goldman Sachs are said to have gotten credit as advisers on an M&A deal they didn't work on, by lowering fees they were owed.

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.

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