So there I am, in Addleshaw Booth & Co’s London reception, idly leafing through a few limp brochures and waiting for partner Simon Pilling. Pilling is going to tell me all about Addleshaws’ private equity practice and whether it can crack the City. It’s a chance to meet one of the firm’s new favourite sons. And then, not one but two shadows fall across me.
It looks like national corporate head Sean Lippell has decided to gatecrash The Lawyer‘s interview with his protégé. “You’ve got two for the price of one!” Lippell offers, a tad over-brightly. Just then I spy senior partner Paul Lee advancing on our happy band, at which point I really start to worry – it’s the end of the day, and I’m really not sure I’m up for a Lippell-Lee wall of sound – but luckily, Lee veers off in another direction.
As Lippell launches enthusiastically into the subject of Addleshaws’ corporate progression, Pilling does the docile routine. Judging by their interaction, playing fire blanket to Lippell’s firecracker is something he seems rather used to. Lippell peers at my notebook and says in apparent wonder: “I can’t believe how fast you write.” Pilling, in tones as dry as sand, adds: “Especially given how fast you speak, Sean.”
The relationship between Lippell and Pilling goes back a long way. The two men, plus Pilling’s contemporary Andrew Kay, have been a unit for several years. As an assistant, Pilling worked with Lippell at Simpson Curtis (now Pinsent Curtis Biddle), he followed him to Garretts and then – despite being courted by other Leeds firms – to Addleshaws. “I would describe him as having been a mentor in my career,” admits Pilling. “The move down here is a move clearly done on my own. In one sense it’s important I’ve done it on my own and am not following Sean.”
Addleshaws’ corporate practice may be one of the most robust in the regions, but it is not a very mobile business. The most obviously transferable practice and the one with the most potential to grow is private equity. After all, with City houses scaling back their regional operations, there are a lot of investment executives heading back south. Pilling was posted down south last October with the specific task of breaking into the City’s private equity market.
Addleshaws is taking the classic route of identifying a handful of key houses with which it has done business in the North, and energetically marketing to them in the City. There are some indications that Addleshaws can transfer its Northern institutional relationships to London, but it is very early days yet. So far it has managed to score instructions from 3i, ECI Ventures, Gresham Trust, Rutland Fund Management and Barclays Private Equity (BPE). Inevitably, it was the BPE instruction that has caused the biggest waves; in January this year, Pilling and Addleshaws’ private equity head Darryl Cooke advised the house on the £30m management buyout of fashion retailer Hobbs.
One of Pilling’s other main targets is Gresham, through a relationship with the likes of director Mike Henebery, although Gresham uses a variety of firms, such as DLA, Hammonds and Macfarlanes. Gresham turned to Macfarlanes on its buyout from Zurich – a relationship Addleshaws is unlikely to disturb. Pilling has also scored Rutland Fund Management as a client through his relationship with director Paul Cartwright. “They backed a business a while ago where I acted for a management team and I continued to work closely with them,” says Pilling, who went on to advise Rutland on its £68m Edinburgh Woollen Mills disposal in a secondary buyout in November last year.
But what on earth makes Pilling think that Addleshaws can crack the market where so many others have floundered? “It’s a competitive market and a lot of people are chasing the same houses, but that’s no different to the past eight years in Leeds, where there are fewer people to go at,” he says.
In fact, Addleshaws is explicitly going to make a virtue of its regional hinterland and market itself on generating business to venture capital (VC) houses – business sourced from the North. The private equity houses may be retreating from the regions, but they still want to do deals there. “We can differentiate ourselves because we’ve always recognised the importance of creating deal flow and opportunities for VCs,” says Pilling. “I’m always being told that not many lawyers make efforts to generate transactions.”
Both Pilling and Lippell doggedly maintain that there is space for Addleshaws in London, and that differentiation will not be a major problem. Pilling argues that his team is bigger than Wragge & Co’s fledgling City practice, for example. “You can differentiate by virtue of the size of the team,” he says.
Lippell, with typical brio, says that there are even opportunities to snatch mid-market work from larger players. “We’re differentiating ourselves from Ashurst Morris Crisp and so on by much more partner-led commitment,” he says. “So rather than having three-to-four year qualified assistants, you have a partner leading the equity, the acquisition and banking.”
What’s more, Lippell adds, Addleshaws is going to be cheaper. “We haven’t sold to people on the basis of price,” he says. “But a large part of any transaction is the due diligence and to the extent we can use people in Leeds and Manchester there’s going to be a cost benefit to that.”
Realistically, Ashursts will be untroubled by Addleshaws’ push. The most obvious models are provided by two other firms with Yorkshire roots: Pinsent Curtis Biddle and DLA. Pinsents had a decent management team practice in London, but its defining entrance into the City was via the takeover of Biddle, which advised a handful of mid-market players.
DLA, which had a stronger profile for management teams in the North, nevertheless managed to get a whole slew of houses on side in London, such as HSBC Private Equity, Bank of Scotland, Integrated Finance, Gresham Trust and Dunedin Capital Partners. DLA – unlike Addleshaws – was also helped by having a rock-solid debt finance practice for the Scottish banks, which gave it institutional credibility in the City from the off, but still it was assiduous in making contacts with the VCs in London. What is more, DLA now has no fewer than eight private equity partners in London alone – a number Addleshaws will struggle to match for several years.
“DLA has done well in going out and developing relationships, which is the key to breaking into the London private equity market,” acknowledges Pilling. “I think some people have done very well – Andrew Carpenter at DLA is one example.”
Addleshaws is staking a lot on what Pilling and his team can achieve in London. After years pretending the South didn’t exist, it opened in the City four years ago and its turnover, at £10.8m, is still pitifully small. All of this could mean a big opportunity for Pilling, because the task is enormous – with or without the dubious merits of Theodore Goddard’s corporate offering.
Ah, Theodore Goddard. You knew it would come in somewhere. As a dutiful Addleshaws line partner, Pilling claims minimal knowledge of the talks. Perhaps more worryingly, he also claims minimal knowledge of Theodore Goddard’s corporate practice. “I haven’t sat down and looked at it,” he says.
What that bodes for the two firms’ integration in London is anyone’s guess.
Addleshaw Booth & Co