The national newspapers like to compare Qinetiq to Q, James Bond’s legendary gadget maker, and it is this sense of innovation that the company is hoping to draw on to make it a force in the private sector. Qinetiq is right at the start of a big adventure. The company, which is part of the Ministry of Defence (MoD) and which used to be called the Defence Evaluations and Research Agency (Dera), is in the midst of its public-to-private transition. It is a learning process for all concerned, and the newly-established legal department is playing an essential part in the conversion.
Lynton Boardman, Qinetiq’s general counsel and company secretary, joined the company in July 2002 following a stint as Syngenta’s head of legal for Europe, Africa and the Middle East. Syngenta is the agrochemicals business formed by the merger of the agrochemicals divisions of AstraZeneca and Novartis. Boardman came from the AstraZeneca side after qualifying with Simmons & Simmons.
Boardman’s brief is to bring the legal team together, get to grips with the company’s external lawyers and put in place the processes that will be required when the company is eventually floated on the stock exchange. But all of this has had to go on hold while Qinetiq sorts out the first step of the process.
The Carlyle Group is buying a £250m stake in Qinetiq. This gives the US private equity house an equity stake of 33 per cent, but the deal is structured so that it has 51 per cent of the voting rights. “There’s a complicated matrix of ordinary shares, preference shares and preferred ordinary shares, which guarantee the appropriate rights,” explains Boardman. The plan was to bring in a strategic partner that will take over Qinetiq and shepherd it into the private sector.
The transaction has taken up about 90 per cent of Boardman’s time. “I’ve never had to work until four in the morning, which is what I’ve had to do on this transaction,” he says. “The last time I was working those sort of hours was with Charles Mayo at Simmons & Simmons all those years ago. So I really have come full circle.”
Mayer is advising the MoD on the Carlyle transaction. Herbert Smith is advising Qinetiq, led by corporate partners Stephen Rayfield and Adrian Clough. Boardman has never worked with Herbert Smith before but, as a new boy, he has found the firm’s experience of the company priceless. “There’s been a feeling of trying to play catch-up,” says Boardman.
The deal has been a new experience for Boardman and his fledgling team. “It’s been interesting being the target for the first time in my career,” he says. “There’s been a huge amount of due diligence, which I’ve had to manage. The banks which are financing the deal and Carlyle have done an awful lot in terms of putting due diligence reports together, which I’ve had to make sure are accurate. Quite often the target has no role to play in this, but it’s an LBO (leveraged buyout) and there’s a degree of management equity, so there’s been a lot of cooperation with the target.”
All along the idea has been to float the organisation. “But, of course, being Govern-ment-owned, being in the technology sector and market conditions have conspired against any float this year,” Boardman explains. The current plan, then, is to float in three or four years.
Due to the demands of this deal, the formation of Boardman’s department has largely gone on hold. Boardman has two corporate lawyers, two lawyers servicing non-central business needs, one person to assist with company secretarial duties and a separate team of two intellectual property (IP) lawyers and 15 patent attorneys. He hopes to bring them all under his wing and recruit more.
Boardman is at the beginning of a mission to assess all the needs of the legal department. Although he has been delighted with Herbert Smith’s work, the firm will still have to prove itself again. “I’m not a fan of ‘one firm fits all’,” Boardman explains. “We start with a clean sheet of paper. There’ll be a panel set up.”
CMS Cameron McKenna advises Qinetiq on a lot of joint venture documentation. The company has a ventures function with funds to go out and create new technologies. Wragge & Co also advises on some of the smaller-scale deals in this department.
Ultimately, all of this means there will be a lot more work for outside law firms. “There will be a lot of work on the environmental side. On the IP side, with such a capable set of patent attorneys, we’ve probably got enough expertise. I’d think that more of the focus would be on bringing people in when we need to litigate,” says Boardman.
And it is not just Boardman’s choice of firms that will get the clean sheet treatment. “You’re effectively creating a new organisation from scratch, which hasn’t had to comply with a lot of legal requirements in the past because it’s had Crown immunity. All of a sudden you have an independent organisation which does. Getting the necessary licences in place is very time-consuming,” he explains.
Boardman adds that the legal function has in the past not been central to Qinetiq’s or Dera’s thinking – a situation that he is determined to change and a challenge that inspires him. “The fantastic opportunity with Qinetiq is that, here’s a company with 50 years-plus of fantastic technology which it’s never really been able to exploit. Now it has the opportunity to service the defence industry’s needs, together with launching that out into the commercial sector,” he says.
Boardman’s enthusiasm is contagious and he claims that it is an enthusiasm shared by many in the company. There are also, he suggests, benefits to joining a company that is emerging from the public sector. “The great thing about the organisation is that it’s full of people who are used to processes,” he says. “Now, that can be a good thing and a bad thing: in terms of creating an entrepreneurial spirit, that can sometimes cause issues; but in terms of putting systems in place and being regulated, people will comply.”
General counsel and company secretary
|Sector||Science and technology|
|Legal capability||Seven lawyers and 15 patent attorneys|
|General counsel and company secretary||Lynton Boardman|
|Reporting to||Chief executive officer Sir John Chisholm|
|Main law firms||CMS Cameron McKenna, Herbert Smith and Wragge & Co|