Revealed: A&O to axe half of its leveraged finance practice

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  • bad idea

    It's a bad idea to let these people go. Leveraged acquisitions will be back and there will be demand for LBO lawyers.

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  • Not before time

    Whilst one may have limited sympathy for these people as individuals it's this sort of scammy lending that's caused the collapse we're facing now. People far less able to weather the storm than these bright eyed lawyers have been destroyed by the City barrow boys, ably assisted by A&O and their like, who set off on this reckless lending binge.

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  • A&O

    These guys carried the firm for years: it's pure politics.

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  • Figures

    The graph speaks for it self, is should be perfectly clear to anyone who is not "sticking their head in the sand" that this sector is not going to recover to 2007 levels for some considerable time, if at all in the foreseeable future.

    The best that can reasonably be hoped for is a recovery to 2005 levels, on that basis the cuts will probably (ignoring re-deployment) turn out not to be as deep as would be required to match staffing to the levels of activity this side of 2012

    It was as clear in May 2007 that this sector was going to be severely damaged by the credit crunch as it was that the Northern Rock business model was completely unsustainable thus one does wonder how many A & O has "lost" from this department already.

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  • A&O Lev Fin

    Good riddance I say - some of those b*stards made my life a living hell!!!!

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  • leveraged finance at a&o

    the partners in the group were amongst some of the most disgusting people i have ever met or worked for. let them rot.

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  • Lev Fin

    Your correspondent, although probably not quite right in saying that the Leveraged Financiers carried the firm for years, is doubtless on the right track.

    For many years the Lev Fin Group is believed to have substantially out- performed, and to have been year in/year out a major contributor to the partnership pot after meeting its own costs and covering its own partners' profit shares - sometimes, it has been said, contributing in terms of profit double the profit share of its partners- as well as delivering substantial work into the European network.

    However after Tony Keal and Stephen Gillespie left the time was ripe to settle old scores and take over territory. It is no coincidence that the general Banking group in London (where Banking management is located) is believed to be losing only 2 partners despite being around twice the size of the Lev Fin Group (and for several years having colonised ever greater amounts of leveraged finance work, which on occasions, in the view of some , was not executed to a comparable standard).

    The 'spin' is fascinating, in that whilst the London Lev Fin Group may comprise 12 partners it is believed that only 8 of them actually do Leveraged Finance, so A&O has chopped over 60% of its specialised London partners at a time when others in the sector, especially on the Borrower side, are extremely busy (this says much about the wider firm's overall failure to attract and retain borrower side work).

    It is also believed that the Lev Fin Group has more or less washed its face in the current downturn, which is likely more than can be said for many areas of A&O in London over the previous 10 or so boom years.

    So the cutbacks do appear to be politically focussed. They are certainly very short sighted, driven more by score settling and perceptions of who can be axed to keep up the pep without risk of management losing a partnership vote, than by a cool headed appraisal of the likely direction of Lev Fin business.

    Major PE firms are not simply going to shut up shop and disappear. Certainly there is much less debt available and hence they are for now pursuing alternative investment strategies (most of which require specialist Lev Fin advice from senior people) such as partnering with corporates, buying minority stakes, pure equity deals for assets carrying substantial debt already and negotiating a roll-over of that debt, debt purchases, 'loan to own' , infra-structure acquisitions etc.

    The sector will continue to exist and will continue to require specialised Lev Fin skills,and of course there is substantial work for both Bank side and Borrower side lawyers with the existing PE portfolio companies, many of which will be having a tough time.

    All-in all a sad indictment of the firm and an extremely short termist knee jerk reaction which ultimately will prove to be a major error, as well as a quite appalling example of fratricide. CC, Links, FBD and a number of US firms will be looking to the future with relish.

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  • Leveraged finance at A&O

    I concur with the comments of 17.36 and 13.50. Disgusting is quite an appropriate term to use when referring to the majority of the partners in that team. They are awkward antisocial morons who slam associates with ridiculous (and often unnecessary) deadlines. May they have many sleepless nights.

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  • off

    Agree with many of the previous comments - some of those leaving were a nightmare to work for. However its the associates left behind (or not) that I feel sorry for.

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  • The Leveraged Finance Five

    The five leveraged finance partners at A&O who have been axed are the victims of dirty politics pure and simple. They have suffered from a lack of leadership within the leveraged finance practice since Tony Keal and Stephen Gillespie left in November 2005/May 2006 respectively and since those departures, they have not had a strong voice in the partnership championing their cause. In something of a palace coup, Tim Polglase was crowned head of leveraged finance following Keal's departure at a time when Gillespie was transitioning out of management and back into fee-earning work. Sadly, he has failed to unite all of the constituent factions within leveraged finance and the axe has fallen on a very soft target - is this A&O management's take on "revenge is a dish best eaten cold". Only two other partners from other parts of the London banking practice are being let go in A&O's current round of redundancies. The leveraged finance five have been sacrificed to save the skins of other weaker but rather more biddable performers many of whom have been actively cannibalising A&O's leveraged finance practice with the connivance and/or active support of banking department management for some time.
    That this is not a strategic decision is amply and clearly demonstrated by the fact that a large number of partners in the global loans group carry on practices comprised substantially of leveraged finance work, and so one can only conclude that A&O have taken advantage of adverse market conditions to show the door to a group of people who, rightly or wrongly, have been regarded internally as at best "difficult" and at worst, dissidents. A&O is an organisation where dissent, far from being encouraged, is ruthlessly stamped out - the culture is more 1984/Brave New World than live and let live. Partners who have the temerity to question management dictat and/or not to take everything at face value are branded as troublemakers and are sidelined.
    A slightly less coloured and more charitable (though nonetheless unforgivable) view of what has happened to the A&O leveraged finance practice might be to say that central and departmental management simply do not have a clear and deep understanding of what partners in the leveraged finance group actually do. As "anonymous" posting at 19:28 on 10th March 2009 has pointed out, only eight of the twelve partners in A&O London leveraged finance group actually do mainstream leveraged finance work, and even a number of those eight partners have practices which are considerably broader than "pure" leveraged finance, so A&O is cutting off its nose to spite its face. The decision to terminate these partners represents a disastrous, even suicidal, loss of talent, skills and experience from the firm and says nothing for A&O’s “partnership” ethos. It is interesting to note that there was no question of any of these partners being offered an opportunity to re-skill at the standing A&O's much vaunted commitment to re-skilling as a necessary encomium to current market conditions.
    One can only hope that with the benefit of time and reflection, the departing partners will come to realise that A&O is a great place to be out of.

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