2011 Round-Up - Mergers: Bigger and better
12 December 2011
31 October 2011
20 March 2013
1 November 2012
14 January 2013
16 November 2012
The Clydes-BLG and Beachcroft-DAC deals are a smart reaction to a changing insurance landscape, while Canada, Australia and Asia all featured prominently
For the UK legal market there were two mergers that really mattered in 2011: Clyde & Co and BLG, and Beachcroft and DAC. The symmetry of the two talks - both deals are predicated on creating hefty platforms for insurance clients with a view to ever-more expansion globally - captivated the market for months.
The logic behind both deals was obvious. Big insurance clients have been consolidating for more than a decade and now even rates for premium work are under pressure.
David and Goliath?
For BLG, which had suffered a series of senior defections - an eight-partner team left in March for Holman Fenwick Willan - the Clydes merger was a safe haven, although BLG CEO David Jabbari insisted to The Lawyer (6 June) that it was not a rescue deal. However, it was clear which firm was in the driving seat.
BLG partners were transferred on to Clydes’ lockstep, with Clydes senior partner Michael Payton and chief executive Peter Hasson holding the same roles in the combined firm, while BLG’s Jabbari and senior partner Simon Konsta will take up management board roles.
Certainly, BLG had turned in some decent results for the 2010-11 financial year. Its net profit jumped by 35 per cent, from £16.8m to £22m, with revenue up by 17 per cent, from £80.8m to £94.5m. That revenue increase took account of the firm’s acquisition of a 19-partner business from the now defunct Halliwells. Although BLG had a number of partner exits just prior to the signing of the merger deal, those departures reduced the number of conflicts at the merged firm from around 40 to seven.
For Clydes it was yet another example of faultless footwork. The firm has grown enormously over the past few years. In 2010-11 turnover broke through the £200m barrier for the first time, of which £124m was generated by its UK offices. Payton has internationalised the firm to an extraordinary degree: it now has 22 offices overseas, including the acquisition of Canadian firm Nicholl Paskell-Mede in March 2011. Payton told The Lawyer (24 October) that Clydes (the merged firm will dispense with the BLG brand) was now actively targeting Zimbabwe, Brazil, Singapore and the US.
The second major UK merger of the year, between DAC and Beachcroft, went live on 31 October.
Based on 2010-11 financials, the combined firm will turn over £177m and have 222 partners operating across three key sectors of insurance, healthcare and real estate. Leveraging off the Beachcroft volume business is central to the merged firm’s strategy, while international expansion is high on the agenda.
Legacy DAC had a successful Latin America practice, with bases in Madrid and Mexico and alliances with JBO Advocacia in Brazil and SegurosLex in Chile. The firm
is looking at growing its presence in Mexico and investing in bases in Brazil, Chile, Panama, Colombia and Peru in the next three to five years.
Outside the UK, there were three deals of note. The first was Norton Rose’s absorption of Calgary-based Macleod Dixon (The Lawyer, 10 October) a year after it did a deal with Ogilvy Renault.
“It was a no-brainer,” Norton Rose chief executive Peter Martyr told The Lawyer.
The two Canadian operations will be merged, but the Canada arm remains a financially independent arm of the Norton Rose network. All told, the deal makes the firm into
one of the world’s five largest by headcount, giving it 2,900 lawyers in 43 offices. What is more, it will also acquire an office in Kazakhstan. Macleod has offices in Caracas, Bogotá and Almaty as well as a Moscow team to complement Norton Rose’s existing one.
Brits pop Down Under
The second was the tie-up between Ashurst and Australian giant Blake Dawson. Ashurst, with 222 partners and a turnover of £303m, is a tad larger than Blakes, which has 172 partners and a £250m revenue, and it is the UK firm that is in the driving seat. Blakes will rebrand as Ashurst, and if the financials are aligned properly, the two will merge in early 2014.
“We’re very pleased with the way we developed in Europe organically,” Ashurst senior partner Charlie Geffen told The Lawyer (3 October). “Originally we thought we’d do the same thing in Asia, but it was pretty clear the pace of change was very rapid. The region’s vast.”
Blake Dawson pipped one of its Australian rivals to the glory of being the first Aussie practice to enter into a close deal with an international firm. But Mallesons Stephen Jaques’ merger with Chinese giant King & Wood, agreed just this month, is arguably the most significant of all the major mergers if 2011.
If there was any doubt that power is moving east, the spectre of the first Sino-Australian powerhouse should convince the sceptics.