Pannone takeover by Slater & Gordon hits delays as partners rebel

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  • This is classic asset-stripping behaviour. Slaters are sitting outside the process with their menu of areas they want, not concerned if the firm falls apart in the interim. From their point of view they are killing a competitor with a stronger brand than theirs. Deals like this can only work if the target firm has a strong and experienced enough management team to hold it all together. Pannone doesn't have that team. Babes and slaughter comes to mind!

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  • Hmmmmm

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  • The music is stopping at Pannone and some will be without chairs, neither going over to S&G nor to Paul Jonson's new outfit. A few partners spring to mind, including those in Insolvency and Construction. Quite possibly these individuals that are opposed to the S&G takeover.

    I also wonder what's going to happen to Pannone's overdraft, rumoured to be around £12m? Presumably a good chunk, if not all, of the purchase price is going towards clearing that.

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  • Seems a bit of a mess. It is 'unfortunate' that the potential purchase leaked before it was a done deal. One wonders what will happen if the Slater & Gordon's deal does not progress.

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  • Bushman suggest you read up on UK partnership law, considering the pitfalls in managing a group of "owner" lawyers.
    UK LLP members' agreements provide "owners" with rights employees can only dream about.....
    Looking at Pannone's latest results they have increased their margin whilst maintaining turnover. Perhaps their rebel partners will have to start working for their living as the article says "Sources speculated that the individual interests of some partners was preventing a consensus ".
    Turkeys not wanting to vote Christmas ( only nine weeks on Wednesday ) comes to mind.
    The S&G team have completed several purchases since RJW last year, Pannone may be next and a major blow to the rest of the UK market if it goes through taking the A$.
    S&G consideration for RJW A$82,492,000 April 2012 around 50 million pounds !

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  • Even though Pannone has been a seriously under-performing law firm for the last three years (one of the least profitable law firms in the top 100), the brand is still strong thanks to the legacy of Roger Pannone and his landmark cases. It's amazing that Pannone would give away that brand to become a 'bucket shop' though they probably have no choice. I suppose the new firm will be called Slater Gordon Pannone in an attempt to push the brand up. Slaters are known in Australia as a 'slip and trip' or worker compensation firm whereas Pannone had at least made some steps to being recognised as a broader consumer firm. Slater's acquisition strategy seems to be very similar to the sub-prime lending market before the credit crisis: buy up a load of toxic assets and repackage them in the hope that someone will believe they are valuable. You know what happened there!

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  • It's always a real shock when you see a well known firm get into this kind of trouble. When did it all go wrong for Pannone? How did they get into such a situation of extreme debt and miniscule profitability? They had a good brand. For all their flaws Slaters will be better run and introduce the right disciplines. Maybe they can remedy the failure? Doesn't look like there's a very strong future for Pannone's management team!!

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  • The people I feel sorry for are the Pannone staff. Once again they will be the people who pay the price for the poor management of the firm and the need for this rescue deal. Pannone's disastrous profitability will mean that the deal will be premised on huge cost savings. Typically you'd expect this to translate into 20% of staff being made redundant.

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  • Seems that Pannone have been treading water for sometime focussing on stripping out costs getting rid of partners who weren't cutting the mustard and investing where most firms have in digital.

    The B2C side of the firm for a long time has been subsidising the commercial / corporate B2B offering and is a valuable proposition for S&G to target and will give them an excellent team of high quality people.

    Yes I do feel sorry for the staff that will no doubt be made redundant, but for some this will be an incredible opportunity to help build probably in five years the largest consumer legal brand, with a strong marketing push through traditional and with the experience gained from Pannone through digital, where they punch well above their weight.

    MP

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  • One; Slater and Gordon are not simply a 'slip and trip' firm. That lazy, casual comment by 'Vegemite' is disingenuous at which many would take offence. Slaters, as a visit to their website and the Wikipedia entry explains, has been engaged in some of the major legal 'Class action' and Workers Comp cases in Australia, many of which have resulted in changes to legislation. Behind the scenes, quietly and without fuss strategists within Slaters engage with Government at Federal and State level to effect positive change with regard to TAC victims claims and workers’ rights. Two; Slaters are not engaged in 'asset stripping' as Bushman so charmingly puts it. They are simply taking advantage of a UK legislative change which means, in simple terms, that a person need not be a Solicitor in order to own/operate a firm of Solicitors. Evidence as to the lack of asset stripping is there for all to see in the form of the type of companies that they are acquiring; Slaters are buying underperforming firms that are engaged in the kind of law that won't be going away. It’s only right and fair that coasting and underperforming staff are bought out and let go. Companies engaged in Commercial need not worry (or even hope) of being acquired. Three; Slaters are adding value to the companies they acquire and both the FT and ASX appears to appreciate this strategy. It would appear however, that Slaters have a problem with the unique flavour of Scots Law as they have not bought anything north of the border. Yet. Sayonara.

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