DEAL OF THE WEEK – PRICEWATERHOUSECOOPERS

Davis Polk and Herbert Smith settle for less on PwC sell-off

Davis Polk & Wardwell and Herbert Smith have seen their roles advising Pricewaterhouse-Coopers' (PwC) consulting partners scaled back after the proposed flotation of the business was abandoned in favour of a $3.5bn (£2.27bn) sale to IBM.
Cravath Swaine & Moore and Skadden Arps Slate Meagher & Flom had roles in the sale of PwC's consulting arm to IBM. Cravath acted for PwC, with Linklaters providing European and UK advice. Skadden acted for IBM in New York and London.
The decision to sell the business rather than to float put Davis Polk and Herbert Smith on the back foot. They were advising PwC's consulting partners on the proposed flotation of the business that was going to be named 'Monday'. But now that the deal has become one between PwC and IBM, rather than PwC and its consulting partners, Davis Polk and Herbert Smith will have greatly reduced roles.
Herbert Smith partner Stephen Barnard confirmed that, while both firms are involved in the selloff to IBM, they would have had larger roles on the Monday float. “We and Davis Polk had massive roles on the initial public offering. Now, obviously, there's less work for us, but we're still instructed by the consulting partners,” he said.
Barnard added that the consulting partners would have needed legal advice on their stake in Monday if it had floated. Now they will need advice on employment-related matters.
Herbert Smith and Davis Polk were part of a consortium of 450 lawyers that have been working flat out on the Monday float since February. Herbert Smith's German best friend Gleiss Lutz and Belgian firm Stibbe were also involved in the Monday deal.
PwC is understood to have been considering disposing of its consulting arm for two or three years. The collapse of Enron and the Andersen accounting scandal that followed was what prompted the accountancy firm to concentrate on completing a deal.
The Monday float was planned for this summer. That deal was still going ahead until mid-July, when PwC decided to sell the consulting business to IBM instead. Advisers had only two weeks to complete the IBM deal. PwC is also IBM's auditor and both parties wanted to complete it during a period when there were no PwC auditors on site at IBM.
Some 50 lawyers from Cravath and 30 from Skadden were involved in implementing the IBM sale. Cravath had 10 partners on the deal, led by Robert Townsend and James Woolery. Partners Peter Atkins and Howard Ellin led the Skadden team. The Linklaters team was led by London-based partners Tom Wethered and Anne Drummond.