Matheson Ormsby uses Chinese walls on MBO

Irish firm Matheson Ormsby Prentice erected Chinese walls in order to advise private equity group Alchemy Partners and the team pursuing a $376.3m (£228.6m) management buyout (MBO) of Irish software company Riverdeep Group.

Mathesons partner Stanley Watson, who advised Alchemy, said: “It was a question of the efficiency of the deal and that turned out to be key. It was decided by all parties that the Chinese walls would be appropriate, but yes, it is a bit unusual.”

The firm was initially appointed by Hertal Acquisitions, the company formed for the buyout by Riverdeep chairman and chief executive Barry O'Callaghan and non-executive director Patrick McDonagh. Alchemy picked Mathesons on the basis of its close relationship with the private equity group and its law firm Macfarlanes.

The arrangement is unusual and in the UK would cause much consternation, but the Irish market is getting used to this method of dealing with apparent conflicts of interest. McCann FitzGerald, for example, is advising the management team at Althyma on its MBO, but is also acting for equity provider Benchmark Capital.

Watson said: “Ireland is quite a small jurisdiction and Chinese walls come up quite a lot. We don't have a myriad of large firms and we operate very professional Chinese walls.”

The deal was complex and media speculation set a very demanding timetable. With a vast array of lawyers working on the deal, having Mathesons on two sides simplified things. The only drawback in the arrangement would be if a dispute occurred further down the line. Irish Law Society rules state that in that instance, the firm would not be able to act for either side.

Charles Martin led the Macfarlanes team advising Alchemy. Mathesons' Tim Scanlon and Edward Miller led the team that advised Hertal, while White & Case's Peter Finlay and Kaya Proudian advised on US law. The company was listed in the US.

Riverdeep Group was advised by William Fry and Dewey Ballantine. Barclays Bank and the Royal Bank of Scotland, joint arrangers of debt finance, were advised by Ashurst Morris Crisp and McCann FitzGerald. Paul Weiss Rifkind Wharton & Garrison advised MSD Capital, another provider of equity finance.