Making their marks
21 January 2002
25 March 2014
25 November 2013
28 July 2014
9 June 2014
12 June 2014
Germany is home to around 35 international law firms, each with domestic law capability. During the past few years, UK and US law firms have spotted potential gems - in the shape of deals, personnel and entire law firms - and bombarded the market. You would think with all this going on there would have been no time to do any lawyering, but not so. The activity in Germany last year was not positively healthy - it was worse than the London market - but according to Thomson Financial Securities Data, Germany completed 1,382 transactions with a combined value of $80.1 bn (£55.75bn). More importantly, there was time for some rising stars to emerge - young partners who single-handedly earned the right to wallow in the credit of the deals.
Perhaps the most telling story is in the top 10 tables, where a new group is beginning to emerge. The tables have been dominated by Freshfields Bruckhaus Deringer and Hengeler Mueller for years. But now Linklaters Oppenhoff & Rädler and Shearman & Sterling are making their presence felt. Out of the top 10 deals, Linklaters Oppenhoff advised on two, while Freshfields bagged five. However, out of the top 20 deals, Linklaters Oppenhoff handled four, compared with Freshfields' six. Shearman, similarly, made up ground on the smaller deals - it acted on two out of the top 10, but five in the top 20. Only Hengeler maintained the consistency, acting on four in the top 10 and eight in the top 20.
Thomson Financial's data shows the combined forces of Herbert Smith and Gleiss Lutz Hootz Hirsch - which are not yet merged - as being top of the German M&A market. The duo completed 16 deals in Germany last year, at a huge value of $52.1bn (£36.262bn). Freshfields came in second, completing 40 deals valued at $48.6bn (£33.826bn), proving that Gleiss Lutz can pull in the large value deals that matter.
Gleiss Lutz, with 15 partners and 15 assistants in Germany, has traditionally been underestimated and has shied away from the limelight, largely due to its client base. The firm has never courted the investment banks, retaining a more conservative, traditional client base of family-owned private companies. But its profile is changing. Of last year's top 10 deals, Gleiss Lutz acted on three, the most notable being the mammoth Dresdner Bank and Allianz deal, valued at $19.7bn (£13.711bn). Gleiss Lutz was heavily involved, acting for long-term client Munich Re, which owned shares in Dresdner. The partner on the deal was head of corporate Gerhard Wirth, who also enrolled young partner Hansjorg Scheel for the job. The firm would usually have acted for its established client Dresdner Bank, but a conflict ensured that Freshfields jumped in. Wirth was also involved in the abortive merger between Dresdner and Deutsche Bank.
The other M&A heavyweight at Gleiss Lutz is Gerhard Wegen, who acted on the largest private deal in Germany last year - the Haindl family's sale of shares in its own company to UPM-Kymmene, valued at $3.3bn (£2.297bn).
What stands out about Gleiss Lutz is the extent to which it pushes its young partners forward. It has an abundance of young flesh between its walls and it gives them free rein on major deals involving well-established clients.
Take Hansjorg Scheel, 37 years old, who single-handedly acted for Munich Re on its deal with Ergo, worth £3.3bn. His forte is deals involving financial institutions, evidenced by his role in the highly-unusual Kugelfischer deal, a pilot for many deals to come. On this, Scheel, alongside Wirth, acted for Merrill Lynch on the first public/private hostile takeover by INA. Another star of the firm is Ralf Thaeter, an outstanding partner aged 40, who has acted on deals such as the share purchase by ZF Friedrichshafen from Siemens AG and the 'steel deal' between Bohler-Uddeholm, a Gleiss Lutz client, and Firth Rixson. Thaeter has also found time to establish his own energy-related M&A practice in Berlin.
And there are other young rainmakers in the firm. Christian Cascante, 36 years old, completed the innovative IT asset deal for his client, Brokat and eOne Global. Another, Hoimar von Ditfurth (ancient at 40 years old) acted on the energy side for both E.ON and US private equity house Blackstone Capital Partners on the joint venture with VAW aluminium, worth £2.5bn. He also counts Daimler Chrysler as his client. And we must not forget Wolfgang Bosch, the 41-year-old who has worked on virtually everything that NTL has done in Germany in the past few years, and for chemical company Novartis on its acquisitions and disposals.
The push may have something to do with the firm's movement towards the investment banks - they need young, innovative people on the ground if they are to clinch these clients. Partner Gerhard Wegen believes that it is important not to have thick layers of senior people between the client and the young partners. "Our young lawyers are trusted by the clients and have good experience in their own right," he says. "I'm one of the oldest at 52."
Linklaters Oppenhoff is also a firm with bright young things. The firm completed 28 deals at a value of $31.7bn (£22.064bn) last year and has 35 partners and 51 assistants in its German offices. The rising star partners have an average age of 38. The presence of young lawyers such as Hans Ulrich Wilsing (40), Klaus Marinus Hoenig (42), Wolfgang Sturm (42) and Thomas Niessen (37) in Cologne, and Peter Erbacher (44) and Ulrich Wolff (39) in Frankfurt on deals is amazing.
"These men know how to market themselves for the next deal," says Aled Griffiths, editor of German legal magazine JuVe. "They've always had a great reputation, but suddenly they're getting hold of some extraordinary clients."
These German deals have very little to do with referrals from Linklaters in London (although Oppenhoff did benefit from the Linklaters/BP connection on the Veba Oel deal). The lawyers pulling the strings from the Oppenhoff side include Peter Erbacher from the Frankfurt office. He acted for BP on the $3.7bn (£2.575bn) acquisition of shares from E.ON, a deal ranked number four in the top 10 deals. It was a complicated deal with a swop of business divisions and an exchange of some of E.ON's petrol stations against the BP transfer shares. The deal was also subject to clearance problems as there was concern that half of the transaction would clear and the other half would not. Another star, Hans Ulrich Wilsing, acted for Babcock Wilcox Espania SA on the purchase by the state-owned privatisation authority Sepi.
Wilsing in particular is optimistic about future work. "There are quite a number of private negotiated deals around," he says. "Other things keep the market going as well - like the tax reforms."
The reforms, which mean that a company can sell holdings or shares free from corporation tax, have ensured that many deals will arise involving the sale of non-essential, non-core assets that can be sold in the form of shares. These deals are not particularly interesting but they will keep the partners busy. Partners such as Wolfgang Stuem (42), who acted for Klöckner Pentalplast Group on the acquisition by Cinven, valued at £831m, and for Klöckner Werke AG on the hostile takeover by WCM.
Wilsing has no doubts about the reason for the upsurge in young lawyers. "The fact is," he says, "there's a younger breed of well educated, experienced Oppenhoff partners who, either by fate or by luck, were given the chance to make their mark by the fact that a number of the older partners left because of the merger." His joint head of M&A Stephan Koenig believes that the benefits are enormous and that the firm has improved considerably as a result.
The next stop is to woo the investment banks. Linklaters Oppenhoff has not had as strong a relationship as it would have liked with them because the Frankfurt office had always been relatively small and diverse. But this is changing. Wilsing moved to Frankfurt to join Erbacher, Ulrich Wolff, Jochen Laufersweiler and Gotz Eilmann to target the investment banks and snap up the stellar deals.
Shearman also appears more frequently in the German M&A market, acting on three out of the top 10 deals last year. It has on board M&A heavyweight Georg Thoma, who acted on the Dresdner and Allianz deal. He has a strong connection with former Goldman Sachs partner Paul Achleitner and the current chief executive officer of Allianz, which would have helped secure that retainer. Shearman benefited massively from the split of corporate gem Schilling Zutt & Anschütz. Half the partners from this corporate boutique firm joined Allen & Overy but Shearman got the corporate meat from the split.
"Shearman has always had corporate flair," says JuVe's Griffiths. "Even if it was an independent German firm they would still get the deals."
But Shearman secured a real bonus when it recruited M&A lawyer Hans Rolf Körfer from Oppenhoff at the beginning of 2000, one of the lawyers that Linklaters was sorry to see go. He acted for INA on the Kugelfischer deal, something that he believes will pave the way for future deals of this type. "It wasn't really a hostile deal," says Körfer. "Only the management of the company initially saw it as hostile." It later became friendly. He sees a big difference between working for Shearman and Linklaters. "Here in Germany we are local lawyers," he says. "We're totally free in how we serve our clients, which wasn't what Linklaters was offering me." He also acted for Société Générale on its deal with Deutsche Bank, valued at $878m (£611.097m), and for Acquermann on its disposal to Nova, valued at approximately £200m. Harold Selzner, a 36-year-old lawyer from the Düsseldorf office, is well -regarded. He acted for Gerling insurance on the acquisition of MCM.
This is not to say that Hengeler and Freshfields have not always had brilliant young lawyers on board; they have. But traditionally, they have a top-heavy system, with a thicker layer of senior partners holding out between the young partners and the clients. For Freshfields, where current management has another two years to go, there will be an issue as to whether there are enough young partners to make management material. Generations move on within both law firms and client companies, and investment bankers are getting younger. There are a vast range of private deals (such as Haindl'sche Papierfabriken) that will come to the forefront in Germany this year and these transactions would be perfect for young lawyers to cut their teeth on.
|Top 10 German M&A deals 2001|
|Date announced||Target name||Target nation||Acquirer name||Acquirer nation||Status||Value $bn (£bn)||Target adviser||Acquirer adviser|
|1/4/01||Dresdner Bank||Germany||Allianz AG||Germany||Completed||19.7 (13.71)||Freshfelds Bruckhaus Deringer, Gleiss Lutz||Shearman & Sterling, Hengeler Mueller|
|13/2/01||GZ Bank||Germany||DG bank||Germany||Completed||5.3 (3.69)||In-house||White & Case|
|23/2/01||Deutsche Telecom||Germany||Liberty Media (AT&T)||US||Pending||5 (3.48)||Hengeler Mueller||Freshfields Bruckhaus Deringer|
|16/7/01||Veba Oel (E.ON)||Germany||BP||Germany||Completed||3.7 (2.58)||Freshfields Bruckhaus Deringer||Linklaters Oppenhoff Rädler|
|1/4/01||Ergo Versicherungsgruppe||Germany||Muenchener Rueckversicherungs||Germany||Completed||3.4 (2.37)||Hengeler Mueller, Gleiss Lutz Hootz Hirsch|
|29/5/01||Haindl'sche Papierfabriken||Germany||UPM-Kymmene||Finland||Completed||3.3 (2.10)||Gleiss Lutz||Freshfields Bruckhaus Deringer|
|24/12/01||VAW aluminium||Germany||Norsk Hydro||Norway||Pending||2.8 (1.95)||Shearman & Sterling||Linklaters Oppenhoff|
|3/1/01||Messer Griesheim Gmbh||Germany||Investor Group||Germany||Completed||2.5 (1.74)||Freshfields, Shearman & Sterling||Hengeler Mueller, Clifford Chance, Allen & Overy, Baker & McKenzie, Millbank Tweed|
|10/1/01||Bankgesellschaft Berlin||Germany||Berlin||Germany||Completed||1.6 (1.11)|
|4/12/01||Berliner Kraft und Licht||Germany||Vattenfall AB||Sweden||Completed||1.6 (1.11)||White & Case, Allen & Overy||Sullivan & Cromwell, Clifford Chance|
|Source: Thomson Financial|
|Deals completed or unconditional with German target in 2001|
|Rank||Legal adviser||Ranking value inc net debt of target $bn (£bn)||Market share||Number of deals|
|1||Herbert Smith/Gleiss Lutz||52.124 (36.279)||47.1||16|
|2||Freshfields Bruckhaus Deringer||48.571 (33.806)||43.9||40|
|3||Hengeler Mueller||46.019 (32.030)||41.6||27|
|4||Shearman & Sterling||35.337 (24.595)||31.9||10|
|6||Jones Day Reavis & Pogue||31.623 (22.010)||28.6||10|
|7||Clifford Chance||21.099 (14.685)||19.1||26|
|8||Cleary Gottlieb Steen & Hamilton||20.465 (14.244)||18.5||4|
|9||Sullivan & Cromwell||20.321 (14.144)||18.4||2|
|10||Blake Dawson Waldron||19.656 (13.681)||17.8||2|
|11||CMS Hasche Sigle Eschenlohr Peltzer Schafer||13.838 (9.631)||12.5||3|
|12||White & Case||10.007 (6.965)||9.0||11|
|13||Haarmann Hemmelrath & Partner||9.463 (6.586)||8.6||7|
|14=||Dorsey & Whitney||9.394 (6.538)||8.5||1|
|14=||Norton Rose||9.394 (6.538)||8.5||1|
|16||Latham & Watkins||5.992 (4.170)||5.4||6|
|17||Allen & Overy||4.229 (2.943)||3.8||7|
|20||Cravath Swaine & Moore||3.453 (2.403)||3.1||4|
|21||Gibson Dunn & Crutcher||2.945 (2.050)||2.7||8|
|22||Baker & McKenzie||2.663 (1.854)||2.4||4|
|23||Milbank Tweed Hadley & McCloy||2.468 (1.718)||2.2||1|
|24||Squire Sanders & Dempsey||1.616 (1.125)||1.5||2|
|25||Covington & Burling||1.329 (0.925)||1.2||2|
|Source: Thomson Financial|