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Hammonds
posts turnover dip at 2009-10 year-end Turnover at Hammonds continued to decline in the 2009-10 financial year, falling by 6% to £117.8m. That said, the firm fared better in terms of net profit and average profit per equity partner (PEP). After reporting a 25% fall in PEP in 2008-09, the figure rose by 32% to £364,000 in 2009-10, though the firm’s equity partnership was reduced from 73 to 62 during the same period.
The firm increased its profits by 17.1% to £22.6m. Driving down costs has been high on the firm’s agenda and 77 staff members lost their jobs in February 2009. A number of partners have also left the firm including construction partner Rupert Cowen, Berlin-based real estate partner Martin Fleckenstein and Leeds employment partner Mark Shrives-Wright.
Earlier this year the firm closed its Munich base after losing five lawyers to Eversheds, and also enforced sabbaticals for all associates in its corporate department.
Managing partner Peter Crossley said: “We’re pleased with where we ended up. It was certainly at the upper end of our expectations, particularly when one looks at the challenging situation we were faced with a year ago.”
He added: “Despite the redundancies we invested quite considerably in the last quarter and have started growing again and increasing the partnership in key areas.”
Peter said that employment, pensions and litigation continued to perform well, while the firm’s office in Belgium grew turnover by 7% and in China by 6%. The firm will continue to invest in its energy and utilities practices, as well as international marketing initiatives in the UK and US. ****************************************************************************** A&O, Cleary
and Herbies lead on Bank of Ireland fundraising Allen & Overy (A&O), Cleary Gottlieb Steen & Hamilton and Herbert Smith led a clutch of firms advising on Bank of Ireland’s (BoI) €3.4bn (£2.9bn) integrated debt and equity capital raising. Corporate partner Alun Eynon-Evans and capital markets partner Stephen Miller led the way for the A&O team that advised longstanding client BoI on both the debt and equity elements of the deal. Herbert Smith advised arrangers Citi, Credit Suisse, Davy, Deutsche Bank and UBS on the equity part, which involves a rights issue and institutional shares placing worth a combined €2bn. The team featured incoming head of corporate James Palmer as well as corporate partners Charles Howarth and Adam Wells. Cleary advised the joint bookrunners on the debt capital markets partner Pierre-Marie Boury leading. Other legal advisers on the deal included A&L Goodbody and Arthur Cox, which acted for the banks and BoI respectively on Irish law, and Sullivan & Cromwell, which advised BoI on US law. Stephen said: “It’s an excellent deal for us to be on as it’s quite a large transformational exercise. It’s a turning point for the bank as it will allow it to transfer out of state support.” Charles added: “It was a complicated deal and to come out of it with people thinking you’ve done a good job is positive. It was one of these things that you have to get right: it’s not just one company but the whole economy of the country at stake.” Part of the capital raising will see around half of the Irish government’s €3.5bn in preference shares converted into ordinary shares. Herbert Smith and A&O have previously advised BoI and it is understood that both firms were invited to pitch for roles on the underwriter and issuer sides. *************************************************************************** Freshfields and Hogan lead on Ford's £1bn Volvo
exit Freshfields Bruckhaus Deringer and
Hogan & Hartson have bagged lead roles in Ford’s sale of its Volvo
business to China’s Zheijang Geely Holding Group for $1.8bn (£1.21bn). *************************************************************************** Financial institutions
confident on acquisition finance recovery New research from international legal practice, DLA Piper and Hawkpoint, the independent corporate finance advisory firm, has found that the largest players in the lending community overwhelmingly expect activity in the European acquisition finance market to increase on 2009 levels. The DLA Piper and Hawkpoint European Acquisition Finance Debt Survey, which polled a wide range of the most influential participants in the lending and private equity market including Alchemy Partners, HSBC Bank, Investec Bank, Lloyds Banking Group, NM Rothschild and RBS, found that almost 90% of respondents (88.2%) anticipated growth in deal activity in 2010 compared with 2009. Respondents also had clear views on the sectors which will be busiest in relation to M&A during 2010. More than seven in 10 (71%) stated that healthcare would see deal activity whilst the second most popular choice – business and professional services – is anticipated to be an active sector by nearly two thirds (62.4%). There was scepticism, however, that the real estate and leisure sectors would be active, with only 5.4% and 14% of respondents predicting significant deals would be concluded in 2010. Despite the generally optimistic mood – and the recent high-profile Marken and Pets at Home deals involving significant multiples and debt underwriting – the consensus is that most activity will be seen at the mid/low value end of the market. Three quarters (75.4%) of respondents felt that the most active size-range for deals would be below £150m, with the £50m-£100m range being where the highest proportion of respondents (29.3%) believed most deals would be done. In terms of geography, over 75% believed that the UK would remain Europe’s most active jurisdiction for M&A. In terms of capital structure of the deals, the survey provided strong evidence that the target equity contribution will now be 50%. Almost nine in 10 (87.6%) of those polled suggested that equity will make up greater than 45% of the capital structure of new deals in 2010, with more than 20% (21.3%) believing that it will make up more than 50%. Over 70% (71.9%) said that the mezzanine finance element for deals will range from 5-15% of the capital structure. The overwhelming view (86.5%) is that senior debt leverage will stay below 3.5x during 2010 and no-one believed that the average senior debt on transactions would be greater than 4x. Philip Butler, partner, head of leveraged finance at DLA Piper, commented: "Whilst having a particular focus on the debt side of the private equity market, the survey results are nonetheless very reflective of the overall market mood at present. Optimism is on the rise with deal activity having increased considerably towards the end of the last quarter of 2009 and into early 2010 with some significant mid-market transactions being completed. These have included hotly contested auction processes, staple financing packages and have even been accompanied by talk of underwriting capacity returning to the market for the right deal. Nevertheless whilst clearly this is a better place to be in than this time last year, confidence remains fragile and from a debt perspective, the survey results confirm that debt liquidity will remain challenging in 2010 both in terms of the number of really active participants and the market terms available." *************************************************************************** Asset manager BLM Partners taps
Nomura for first GC London-based asset management firm BLM Partners has appointed Jeffrey Iverson as its general counsel. Jeffrey joins the firm in this newly created role from Nomura International, where he was an executive director in the M&A advisory and merchant banking legal department. He said: “I’m pleased to be joining such an entrepreneurial firm, which has a unique investment approach and an unrivalled level of skills and expertise within the partnership. BLM Partners is well positioned to capitalise on the opportunities arising from the current European marketplace.” Jeffrey’s role will include responsibility for all legal and compliance matters and working with the founding partners to continue to develop BLM’s investment offering and deliver its strategy. Gary Long, president and chief operating officer of BLM Partners, said: “[Jeffrey’s] legal and regulatory knowledge, as well as extensive experience within the financial services sector, will be a significant asset to the firm as it continues to grow and invest in European mid-cap companies.” At Nomura International Jeffrey advised on the integration of certain businesses acquired from Lehman Brothers as well as providing legal and regulatory advice to the European and Middle East M&A and merchant banking groups. Prior to that he was an executive director at Lehman Brothers International from 2004-08 and previously an associate at Weil Gotshal & Manges and Cooley Godward. ***************************************************************************
Tenon and RSM Bentley Jennison merge The boards of Tenon Group PLC and RSM Bentley Jennison, two accountancy firms, are to merge creating a significant force in financial management. The practice will trade as RSM Tenon and the merger will enhance the combined group’s scale, geographic coverage and service portfolio. It will benefit from a strong strategic fit and common culture and is expected to reset the industry standard in terms of client focus and service delivery. On completion of the deal, RSM Tenon will:
The financial management division will have complete national coverage and will focus on delivering market-leading wealth advisory services, innovative employee benefits solutions and balanced risk-adjusted investment management services to private clients, mid-to-large corporate and listed companies. The organisations bring together complementary geographic spread, and differing sector capabilities and specialist services such as RSM Bentley Jennison’s dominant position in risk management and Tenon’s market leading position in Recovery. The two organisations have a mutual focus on providing flexible and innovative, customer-focused solutions which are expected to deliver significant benefits to all stakeholders. Andy Raynor, the chief executive of Tenon Group PLC, will head the enlarged firm. Tony Stockdale, national managing partner of RSM Bentley Jennison, Richard Smith, national head of risk management for RSM Bentley Jennison, and Mark Lucas, head of corporate finance at Tenon, will join the PLC board as executive directors. Tony will represent the enlarged firm on the RSM international board and will assume overall responsibility for the significantly enlarged financial management business. Tony will be supported operationally by John White, managing director of RSM Bentley Jennison Financial Management and Peter O’Sullivan, head of Tenon Financial Services. Commenting on the merger, Andy Raynor said: “This deal is a combination of the two most substantial entrepreneurial businesses in our industry. It is the beginning of a new era of opportunity and growth for our teams and provides us with an excellent platform from which to challenge traditional approaches to client focus and service delivery.” Tony Stockdale commented: “We recognised the significant power of combining our practices. Both businesses have always had a strong focus on financial services and our differing sector strengths and complementary geographical footprint make this deal an extremely exciting proposition. The deal benefits all stakeholders – the shareholders, both teams and most critically our clients who will undoubtedly benefit from the new and considerable depth of resource and expertise.” ***************************************************************************
CC's Popham to champion UK financial services as chair of new City
body Clifford Chance senior partner Stuart Popham is to
chair a new organisation that will represent the interests of the UK’s
financial services industry. Popham (pictured), who is already chair of the CBI London Council, said the new body would “steer a clear, well-defined course through the inevitable changes, reforms and reappraisals” that would affect the industry in the aftermath of the banking crisis. He added: “We must put right the mistakes of the past, forge a new deal with the British public and establish a co-ordinated agenda to promote UK financial services on the European and world stages.” The lobby group is backed by City stalwarts Sir Win Bischoff of Lloyds Banking Group and Bob Wigley, the former European head of Merrill Lynch. John Ingamells, former political secretary to the British embassy in Seoul and director of public affairs at asset management firm Fidelity International, will be the body’s inaugural director. ***************************************************************************
DLA Piper breaks into Latin America DLA Piper is opening an office in Brazil to function
as a springboard into the rest of Latin America. Joint CEO Nigel Knowles said: “DLA Piper has a very active Latin America practice and we’ve been exploring opportunities to open an office in Brazil for some time. We look forward to opening an office there in the near future, which will serve as the base of operations for the regional practice. “We expect that this will complement a number of our core practices and sectors, including energy, projects, corporate and finance, tax and hospitality.” DLA Piper’s regional expansion plans are being driven from its US offices. Key to the initiative are Chicago-based partner and chair of the firm’s Latin America practice Stuart Berkson and New York-based partner and global co-chair of the energy practice RobertGruendel. Tampa-based partner and former Republican senator for Florida Mel Martinez is also instrumental. News of DLA Piper’s launch follows recent plans from Gibson Dunn & Crutcher to open in São Paulo, as well a commitment to office space there from Simpson Thacher & Bartlett. ***************************************************************************
Lehman
Brothers - the aftershocks are still being felt in the legal world A year ago today lawyers across the globe were coming to terms with the fact that the world as they knew had almost come to an end. After an agonising weekend, Lehman Brothers finally collapsed on 15 September 2008, followed in quick succession by the sales of Merrill Lynch, Wachovia and Washington Mutual, as well as the bailout of insurance giant AIG. In the weeks and months that followed RBS had to be rescued by the UK Government, LloydsTSB’s takeover of HBOS was rushed through and Bradford & Bingley was broken up and part nationalised. It hardly seemed possible that a little over a year before, Northern Rock’s troubles had seemed like a big deal. Clearly there was plenty of legal work to come out of crisis, but the general feeling exactly a year ago was one of disbelief and fear. Linklaters partner Tony Bugg, who was called in to act for Lehman’s UK administrator Tony Lomas at PricewaterhouseCoopers (PwC), recalls how surreal it was when the bank’s fate was finally sealed. “We had a meeting at 5.30am on Monday that went on until 7.30am,” he says. “A judge came in and we put Lehman into administration at 7.56am. It was clearly a very different kind of proceeding in the UK to the US. We were all sat in meeting room 207, in jeans with a judge deciding the fate of Lehman. It felt very odd to be doing all of this at One Silk Street.” For those working at Canary Wharf, the enormity of the situation was all too visible, with streams of Lehman staff filing out of the bank’s building over the course of the day. “Walking to work past Lehman’s offices early that morning, ranks of TV crews and journalists were already building up, expecting drama – never a good sign,” says a Clifford Chance associate. “Like my colleagues, I spent most of Monday following developments on the news, but also seeing the human effects of the collapse from my window. “Throughout the day, bankers steadily drifted out, dodging journalists and the growing number of bystanders. Some were carrying boxes and leaving forever, some were giving up and heading to bars in Canary Wharf; others were just leaving the building to reflect but were determined to carry on. “In the days after, the chatter in the City was about nothing else. But as the dust settled my thoughts were with the younger guys at Lehman. Just starting their careers like me – how would we fare in the new post-Lehman world?” While Linklaters was one of the first firms to have direct involvement in the fallout from Lehman, lawyers on both sides of the Atlantic were panicking about what the day’s events would mean in the longer term. “Lehman failing was never really contemplated by anyone seriously. Now, the unthinkable has become thinkable,” says Allen & Overy’s US head Kevin O’Shea. Ashurst corporate head Stephen Lloyd recalls visiting Lehman’s Canary Wharf offices days after the collapse after the firm was instructed by the investment banking team that later joined Nomura. “Arriving at Lehman’s swanky Docklands offices on the following Saturday, a colleague found himself unable to get into the building for the meetings,” says Lloyd. “He eventually had to call the mobile of the lead PwC liquidator, who personally descended 20 floors and let him into the building (the security staff had all been dismissed) but not before advising my colleague to bring his own coffee and snacks with him. The vending machines had all been switched off, and the departing staff had emptied them as they left.” Although lawyers at all levels of the market were justifiably concerned about the impact Lehman would have on all global markets, in the immediate aftermath of the bank’s collapse there was plenty of work up for grabs. Aside from the Lehman instructions, which saw Weil Gotshal & Manges partner Harvey Miller advise on the bank’s Chapter 11 bankruptcy filing, Fannie Mae and Freddie Mac were both nationalised, Morgan Stanley and Goldman Sachs were converted from investment banks into bank holding companies, and Bank of America (BoA) acquired Merrill. And that was just the beginning. Throughout the crisis, while firms such as Cravath Swaine & Moore, Davis Polk & Wardwell, Linklaters and Shearman & Sterling appeared on numerous deals, three names in particular stood out for their ubiquity: Wachtell’s Herlihy, Simpson Thacher & Bartlett’s Lee Meyerson and, of course, Sullivan & Cromwell’s Rodge Cohen. Cohen advised Fannie Mae when the US government took control of it and Freddie Mac. Cravath partner Robert Joffe advised Fannie Mae’s independent directors while Freddie Mac turned to Davis Polk partner Randall Guynn. Herlihy advised the US government. Cohen was then retained by AIG, which needed guidance through a series of woes that ended up with the insurer being bailed out by the government. AIG also received advice from a Weil Gotshal team that included partners Marcia Goldstein and Michael Aiello, while the US Treasury and the New York Federal Bank turned to Davis Polk partners Bradley Smith and Marshall Huebner. Cohen still found time to advise Goldman Sachs on its transformation from an investment bank into a holding company. Sullivan won another Goldman mandate when relationship partner John Mead gave the bank advice on a $5bn (£3.42bn) cash injection from veteran investor Warren Buffett, who turned to Munger Tolles & Olsen. Further bank disasters saw Sullivan’s Cohen guide JPMorgan though its acquisition of Washington Mutual, which was advised by Simpson Thacher’s Meyerson, and he advised Wachovia on its own sale. Cohen also advised Japanese bank Mitsubishi UF J Financial Group when it injected billions of dollars into Morgan Stanley, which turned to Wachtell’s Herlihy. Aside from Lehman, whose global reach meant UK as well as US firms were handed leading instructions, the first flurry of credit-crunch related deals went mainly to New York-based firms. BoA’s takeover of Merrill gifted a role to Linklaters, though, with corporate partner Olivia McKendrick advising the former on the non-US aspects of the deal. Shearman partner John Madden led a team advising on the US side of the transaction while Herlihy was on the team acting for BoA. When the crisis got to the stage that the US government had to step in, Simpson Thacher’s Meyerson won a beauty parade to advise on the $700bn (£478.39bn) financial markets bailout package. In the UK a similar scheme saw the Government’s trusted adviser Slaughter and May step up to the plate, with partner Nigel Boardman and Nilufer von Bismarck leading the advice. Davis Polk, a member of Slaughters’ best-friends network, advised the Government on the US aspects of the bailout. Davis Polk London partner Jeffrey Oakes and New York partner Arthur Long led the advice. The Government’s £50bn bank rescue scheme gifted roles to a raft of City firms, with Linklaters banking head, Robert Elliott, advising Royal Bank of Scotland (RBS) and relationship partner Jeremy Parr acting for Lloyds TSB in relation to the scheme. HBOS called on Allen & Overy (A&O) head of financial institutions Alistair Asher. He and Parr were both instructed when Lloyds began merger talks with HBOS in September 2008, with the two banks expected at that time to be the main recipients of the £50bn fund. In reality, take-up of the scheme was limited (CHK) and the Government had to part nationalise RBS and Bradford & Bingley (B&B). Freshfields Bruckhaus Deringer advised the Bank of England on the bailout plan, led by corporate partners Michael Raffan and Karen Fountain, and also acted for the bank on a separate liquidity scheme that would see the Government offer short-term loans of up to a total of £200bn in a bid to encourage banks to start lending to each other. When it was B&B’s turn to be rescued in September, Ashurst, Herbert Smith and Slaughters won the key mandates. After a weekend of emergency talks, it was decided that Spanish bank Santander would take over B&B’s savings business and branches, while the £50bn lending business was nationalised. Herbert Smith corporate head Michael Walter advised B&B, with corporate partners Will Pearce and Adam Levitt and restructuring partners Kevin Pullen and Laurence Elliott. Santander called on Ashurst senior partner Charlie Geffen along with corporate partner James Perry and commercial partner Clive Tucker. Slaughters partner Charles Randell advised the Government. In January 2009 Slaughters’ Randell again took the lead role advising the Treasury on the Government’s bailout of RBS and establishment of the £50bn asset protection programme. Freshfields acted for the Bank of England with financial services partner Michael Raffan leading a team for the firm. Senior partner Guy Morton, head of finance Alan Newton, antitrust partner Andrew Renshaw and corporate partner Mac Mackenzie were also involved. *************************************************************************** Law Society to students: legal career may be too
risky The Law Society is set to launch a campaign warning students to think twice about embarking on a career in law. news from thelawyer.com *************************************************************************** Accountancy firms It’s a jungle out there for the profession, which is desperately trying to navigate itself through the dense and oppressive foliage of the recession and emerge fit enough to take advantage of more clement conditions on the other side. So far, many firms are wilting in the heat, while just a few of the fittest are standing strong. The annual Accountancy Age Top 50 survey has found that four in five firms saw growth rate slow, some dramatically, on previous years – nine posting negative growth figures. Just nine of the top 50 increased growth on their previous set of figures, of which three; PricewaterhouseCoopers, BDO Stoy Hayward and Tenon, relate to 2008 year-ends. Last year’s top 50 survey saw 23 firms, almost half, with increased growth rates. Their 2009 numbers are eagerly awaited, along with many of the other biggest firms whose growth rates hit the skids for their 2008 numbers. KPMG grew just 0.7%, blunted by a drop in corporate finance fees, a thorn in the side for this year’s top firms. Baker Tilly’s corporate finance revenues dropped by 41% to £16m, leaving the firm with zero growth overall. Ernst & Young’s growth rate halved to 4.6%, and the firm declined to provide breakout figures for its service line units as it is now part of E&Y EMEIA. Grant Thornton’s merger with Robson Rhodes saw a fee income of £394m – a 1.3% increase on last year’s pro-forma figures which took both firms’ separate fees into account. High-flying Deloitte grew 11.5% compared to 15.6% for its 2007 year-end. Can they maintain such growth for 2008/09? Well, prospects for the other 100 firms are mixed, if their confidence for the year to come is anything to go by. Split across the board, 32% of respondents said they expected revenue growth rate to be higher than last year, 35% said lower while 33% thought revenue growth would be about the same. To view the complete survey as a pdf go to www.accountancyage.com/resources/top50. www.accountancyage.com
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