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What can needy Manches bring to Penningtons’ party?
Manches’ financial decline is of long duration. Despite repeated attempts to reboot growth through management changes and cash-calls, 2012/13 proved a low point. Average profit per equity partner dropped by £100,000 to £135,000, while net profit fell to a 10-year low, dropping by 42 per cent from £3.7m to £2.15m.
By contrast, Penningtons saw net profit and average profit per equity per partner (PEP) climb steadily after 2008 before contracting slightly at the latest year-end – from £7.5m to £6.8m for net profit and from £301,000 to £275,000 for PEP.
The figures speak for themselves. Manches, a one-time leader in the family and real estate law, is looking to shore up its future with a Penningtons tie-up.
Market commentators are less than surprised by the move – after all Manches has been looking for a merger partner for some time. But what’s in it for Penningtons? Just two years ago the firm positioned itself as an acquisitor after a double merger with St Albans’ Wedlake Saint and Lincoln’s Inn outfit Dawsons. Sources suggest a merger with Manches may be a step too far.
“I’m honestly not sure what’s in it for Penningtons,” says a source. “Manches is a firm that seems to have been drifting for some time and the departure of family law partner Helen Ward to Stewarts Law [in September 2012] was the straw that broke the camel’s back.”
Manches will have to work hard to convince the market that this is a courtship of equals.