Why LG sits at the top of Wragges' target list
18 November 2013 | By Lucy Burton
18 November 2013
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25 November 2013
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Wragges has been on a hunt for a London merger since 2009 when Lawrence Graham was one of four firms on its hit list, so why now?
Wragge & Co has had its eye on Lawrence Graham (LG) since 2009 when it was looking to invest £20m of reserved cash. At the time department heads were asked to choose from a list of four firms that had been shortlisted by management, with Lawrence Graham (LG) topping the list.
Around 20 senior equity partners were involved in the process, with sources suggesting that the firm was on the hunt for a partner with particular strengths in financial services and energy.
While LG was well-known for its decent real estate group, the general consensus among the Wragges partners about a tie-up was lukewarm. Let’s not forget that this was the middle of a recession, mergers were (and still are) a risky affair, and for a tie-up to go ahead there had to be a spark of passions between the firms.
It was, to use a dating analogy, a ‘thanks for the number, but I’m not going to call’ moment.
“It was quite clinical, there wasn’t a lot of animation around [the decision],” recalls one source. “There was no big ‘what about this reason,’ it was just a discussion that ended.”
Only the discussions didn’t close for good. High level partners inside the firm are aware of the lofty ambitions for growth in 2014 set out by Wragges senior partner Quentin Poole. A source says it is just the start of a part of a three-year plan towards considerable expansion. A tie-up with LG would certainly give it an international boost, adding four international bases (Dubai, Monaco, Moscow, Singapore) to Wragges’ five (Paris, Dubai, Munich, Brussels, China). The crossover would be in the Middle East.
In an effort to fulfill those big expansion plans, Wragges has been in merger talks with various firms over the years. Those firms are understood to include RPC, Barlow Lyde & Gilbert (which has since merged with Clyde & Co), and Bird & Bird. With the 2014 deadline looming, is this why the love affair with LG has been reignited?
After another year in which LG’s £5.1m annual rent bill hit profits (average profit per equity partner down from £303,000 to £260,000 for 2012/13), LG managing partner Hugh Maule is on a mission to put some profitability back into the firm. The decision to sublet two floors of its London headquarters is one method of plugging that profit gap.
Sources suggest that this may have been the black hole that was a deterrent to any firm looking to merge with LG in recent years. Certainly Field Fisher Waterhouse (FFW) wasn’t too enamoured with a deal when it took a closer look at the firm. FFW called off discussions last June without putting it to the partnerships.
Whether the talks between LG and Wragges will get beyond the toe-touching stage remains to be seen. Sources suggest that the inital reaction at both firms has been split. “It’s like going back to an ex-boyfriend, you never know if the reasons they rejected them in the first place were good or not,” observes one source. ”It will probably be more of a takeover [for Wragges] than a merger.”
Wragges will want to be in the driving seat of such a deal and will want to force a vote that will count in its favour. For LG partners the battle for brains and brand is just beginning. It may be left heartbroken once again.