For much of the past decade, A&O has been on-record saying it would consider a US merger. And yet still nothing. Is there no perfect suitor for the magic circle firm?
There are certainly signs that things might be heating up stateside for A&O. Managing partner Wim Dejonghe is spending a lot of time in New York these days, for one thing. Since London-based capital markets chief David Krischer became the firm’s new US chief, the pair have been spotted having a nibble with various US managing partners on the ground. Dejonghe is understood to be making the trip at least once a month.
But it’s just a social salmon sandwich, insists the press team in not so many words.
Is there really nothing bubbling beneath that broth?
“Whole teams in New York have been looking to leave and the firm is working real hard to keep those people,” insists one New York-based recruiter, pointing out that the last 12 months have seen a number of associates and senior partners bail out of A&O’s New York office, most notably US financial services chief Douglas Landy, who quit for Milbank last March.
“A&O’s US strategy is simply that they don’t have one,” adds the recruiter. “There are a few people who are very busy, but the London guys want them doing London work and the level of work from the City office is dragging them down, stopping them from focusing on more local stuff. They need to figure out who they are [in New York] before doing anything else.”
Dejonghe has admitted in the past that New York has been a difficult nut to crack, but the firm has a habit of dodging on any detail. There’s no committee responsible for finding a US match, and consultants on the ground said they had not been contacted by the firm for advice.
“Nobody is getting a clear message,” adds a source in New York. “There are so many being sent out that everyone’s been left a bit confused.”
Is a US merger the answer anyway? The mystery suitors are most recently understood to have included Shearman & Sterling, Ropes & Gray and Fried Frank, according to numerous sources. None of these deals are expected to materialise.
So what happened? Discussions with Shearman – predicted by most to be the most likely match – are said to have been short-lived. Indeed, the US firm’s 2013 financials are likely to be particularly robust and with a still-new management team in place it is now more focused on building – or rebuilding – its own brand.
Insiders say Shearman has turned its back on the idea of a merger in favour of some me time, with the strategy now to zone in on home-grown talent. Its 2013 financial figures, due out later this week, are expected to reveal a profit rise of almost 20 per cent.
What of the other two?
“Fried Frank would have jumped at the chance to merge with A&O,” claims one source. “But they’ve lost a lot of people, it wouldn’t have been the best idea [for A&O].”
How about taking a crack at Canada? DLA Piper’s talks with collapsed Canadian firm Heenan Blaikie have just fallen through (10 February 2014). Any opportunity here?
When asked if A&O would swoop, the answer from the firm was a short no. And don’t expect a Canadian merger anytime soon, either.
So what does London think? Some point to A&O’s high standards as a possible problem with finding a US match, though not everyone is convinced.
“A Milbank would turn its nose up at the idea,” offers one US recruiter, adding that the firm is an attractive potential for many others. Others say the idea simply won’t work.
“Large British firms merging with US firms in my experience doesn’t work,” adds a US managing partner. “The US firm often wants to be the dominant party, so if you’re a senior partner at a large UK firm it can be difficult to adapt. I imagine A&O only wants to tie-up with a US top 50, so as far as I can see there is no perfect suitor for the magic circle.”
Are these merger rumours likely to last for another decade? Could be.
“Our US strategy is the same as it ever was,” adds a spokesperson.
Perhaps that’s the problem?