Simmons and Mayer Brown merger talks: round two
Rush for transatlantic tie-ups continues as Simmons schedules partner briefing this week
Mark Dawkins
Management at Mayer Brown and Simmons & Simmons are revisiting their merger talks just weeks after discussions broke down, with partners at both firms due to be briefed on a potential union later this week.
As exclusively revealed by TheLawyer.com (18 June), Simmons’ management emailed the partnership at the end of last week, confirming that ”preliminary discussions” had taken place, having previously refused to discuss the aborted talks with partners. The Mayer Brown talks have also been added to the agenda of a routine partner meeting to be held this Friday (25 June).
A merged firm would have a global turnover in excess of £1bn, with 2,400 lawyers working across offices in the US, Europe, the Middle East and Asia.
The resumed talks come after high-level meetings were held between both management teams last week in a secret offsite location. This came after The Lawyer revealed (7 June) that the two firms had held initial talks that had encountered problems.
The news comes after US firm Sonnenschein Nath & Rosenthal and UK counterpart Denton Wilde Sapte recently voted to merge on 30 September 2010 to create a £500m business, while Hogan & Hartson and Lovells completed their transatlantic merger in May.
Tony Williams, principal at Jomati Consultants, said: “This is a continuation of a trend we’ve seen over the past nine months and it puts pressure on other firms to seriously look at their options.”
The motivation for Mayer Brown is a desire to expand its UK offering after its 2002 tie-up with Rowe & Maw failed to deliver expected growth. But a source close to Mayer Brown was surprised that the firm had approached Simmons.
“I find it extraordinary because Chicago seemed to be very worried about international expansion,” said the source. “They didn’t like the loss of control and this would mean total loss of control.”
Simmons managing partner Mark Dawkins is known to be attracted by the opportunity to grow in the US, where Chicago-headquartered Mayer Brown has seven offices, together with the opportunity to broaden its coverage in East and South East Asia and in Germany.
The firm’s management has put greater coverage in China and Germany at the top of its international agenda. Having had earlier plans thwarted after its Chinese head Huen Wong left for Fried Frank in 2006, Simmons recently obtained a licence to open in Beijing and has hired partner Davis Wang from King & Wood to lead the office.
However, Simmons wanted to get good Chinese lawyers on board rather then sending people over from its other offices. Joining up with Mayer Brown, which has 50 lawyers in the Chinese capital, would help it reach this goal immediately.
While there is not a widespread geographical overlap between the two firms, with duplication of offices in six locations across Western Europe and China, the source added that any combination would almost certainly lead to a slew of departures.
Although there had been some unrest within Simmons’ partnership about not being informed of the initial merger discussions, sources indicated that there was a lack of consensus among partners over the necessary strategic direction the firm should take, meaning that management will likely have the final say on how it should proceed.
Mayer Brown and Simmons declined to comment.
Mayer Brown’s offices
Total: 22
Americas
Charlotte, Chicago, Houston, Los Angeles, New York, Palo Alto, Rio de Janeiro, São Paulo, Washington DC
Asia
Bangkok, Beijing, Guangzhou, Hanoi, Ho Chi Minh City,
Hong Kong, Shanghai
Europe
Berlin, Brussels, Cologne, Frankfurt, London, Paris
Simmons’ offices
Total: 19
Europe
Amsterdam, Brussels, Düsseldorf, Frankfurt, Funchal, Lisbon, London, Madrid, Milan, Padua,
Paris, Rome, Rotterdam
Middle East
Abu Dhabi, Doha, Dubai
Asia
Hong Kong, Shanghai, Tokyo
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Readers' comments (22)
Anonymous | 21-Jun-2010 10:34 am
The office networks of the two firms fit together almost perfectly.
This merger would at a stroke deliver Mayer Brown a credible platform in Europe and the Middle East, and Simmons a credible platform in the U.S.
It would also give the combined firm the resources to compete with larger competitors like Hogan Lovells. Simmons is currently in a very awkward position, much bigger than niche firms like Macfarlanes but far smaller than the biggest international firms. It needs a merger.
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Anonymous | 21-Jun-2010 12:49 pm
The above comment sounds somewhat spin-like. This is not about geography. There are major differences in revenue and PEP that could translate through into U.S.-focused power and influence. Persuading Chicago that the deal is more than simply one of getting a bigger London office and that nothing else will change will be a major task. For this to work the numbers, the practice areas, client conflicts, the culture, voting structures, partnership compensation and management structures will need to align. Still a very long way to go.
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Anonymous | 21-Jun-2010 2:35 pm
Anonymous | 21-Jun-2010 12:49 pm - what you describe as differences are the sort of issues Lovells and Hogan faced and yet they decided to go ahead - a properly structured Simmons MB merger would be a good thing.
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Merging With A US Firm Can Be A Good Thing | 21-Jun-2010 3:40 pm
I’m always amused reading the comments about UK-US mergers. It was the same with Lovells and Denton WS.
There is always a retreat into parochialism from the UK end. It’s as if UK lawyers and the UK legal commentariat are unaware of the US market, and seem to be judging these US merger partners soley on the basis of their small London offices – which admittedly are often a bit rag-tag, but hardly reflect the size and power of these firms in the United States.
Do any of these people read the US legal press, do they do business in the U.S, do they work with U.S law firms? I suspect not. Or do they get all their news from the union jack-waving UK legal weeklies? Do they believe that London firms are indeed the best in the world?
What is interesting is that in all these three mergers, a stronger US firm with a better brand and financials (Hogan, Sonnenschein, Mayer) has merged with a weaker UK counterpart, yet all the comments seem aghast that the British would contemplate such a tie-up.
The U.S is still by far the world’s largest economy, it’s legal market is over 50% of the global market, and there are many firms in the AmLaw 100 who are larger and better than all but the best MC firms, yet, because they are based in Atlanta or Miami or Philadelphia or Cleveland, they will barley be known to most myopic City partners – who have only heard of a handful of Wall St names.
That doesn’t mean they’re not good firms. Mayer a good example. Sure, they have had problems in London but they are a powerhouse in the U.S, and increasingly in Asia.
For the record, I’m British and not tied to any of these firms, but the jingoism from those that think the world ends at London Bridge is laughable.
I’m amazed that more half-arsed UK firms aren’t on the phone to the States.
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Anonymous | 21-Jun-2010 5:09 pm
I'm amazed that a US firm would want to merge with an outfit like Simmons. It is common knowledge that the firm has a number of serious issues and there are suggestions that the numbers are not good for the past year. Its strategy has largely failed - I mean can anyone tell me on this board what Simmons stands for? To my mind it is simply large and substandard made up of magic circle rejects. I can see exactly why management at Simmons would want this merger but clearly a number of partners there would be like turkeys voting for Christmas if they approved it. I wonder though if they are even able to be that self perceptive?
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David Ufuoma Omamogho | 21-Jun-2010 5:51 pm
The key ingredient of any merger is UNITY OF PURPOSE AND VISION AND OVERALL ADVANCEMENT OF THE OBJECTS OF THE MERGER.
Two Heads are usually better than one and unity of purpose and mind generate exponential growth.
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Anonymous | 21-Jun-2010 11:47 pm
Mayer Browns London office, and frankly most of its U.S operation, is in a dire state. I do not believe for one moment that an innovative and well respect firm, (Simmons not MB) would jeapordize such a cohesive entity merely to add bulk to its business model, this proposed merger, if true, does not make any economic sense. Simmons would loose control over its business and inherit a disunified group of offices with many deep rooted issues that more commonly go by the name Mayer Brown. MB would infect Simmons from within and soon find themselves losing longstanding clients and lawyers.
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Anonymous | 22-Jun-2010 7:35 am
There's more to this than just London. Both firms would be substantially strengthened in France and Germany, MB acquires it's own presences in Spain, Italy, Netherlands, Portugal and UAE. Those offices will all benefit from the MB strength in US, Brazil and Asia. MB would have 60% of it's lawyers outside the US which will hardly be US centric. MB is an extremely strong Finance, Telecoms and Litigation firm - combined strengths in London for the two firms. Global clients want global strength and relationships, this looks like a smart deal.
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Anonymous | 22-Jun-2010 9:36 am
Simmons would have to be insane. They are a decent firm, with some good practices, but need to resolve their lack of corporate weight. A merger with Mayer Brown would not do anything to resolve that problem and would bring plenty of new problems of its own.
By the way, Sonnenscheins partners are describing the "merger" as an alliance only with no profit sharing and no real merger of management.
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Anonymous | 22-Jun-2010 12:12 pm
Mayer Brown is anything but a "power house" in the US. It had a great litigation practice, but that is in reverse with most of its stars having left. There's not much else after that. No finance, no M&A of any substance, just a collection of sole practitioners doing their own thing and sharing expenses (like a very costly London merger and even more costly Asia merger). It may be a good tie up, but S&S would be mad to do it for the US side of things.
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Anonymous | 22-Jun-2010 12:16 pm
Simmons needs to ask itself, how many of the MB partners would it recruit.
Answer: very few because they are not in the same league- intellectually, or in terms of client getting skills.
The good ones have gone- because they can.
So why merge with them?
Come on Simmons-you can do much better.
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UNITY OF PORPOISE | 22-Jun-2010 1:51 pm
I think everyone on this board is completely missing the point: David Ufuoma Omamogho@5.51PM is what Mayer Brown and Simmons needs to make this work. He has a clear sense of direction and would make a great chief executive of the combined firm.
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I've Heard It All Now... | 22-Jun-2010 3:10 pm
I've heard it all now...
Mayer Brown partners are not in the same league intellectually as Simmons parrtners...
I have nothing against Simmons - they are a decent enough firm - but they are not exactly world beaters...and arguably Mayer Brown is a stronger brand in the legal sector
This Little England attitude to US mergers is thinly veiled xenophobia..we don't want Uncle Sam telling us what to do and knocking us into shape
It was the same a few years ago when Richard Butler was acquired by Reed Smith - who are they, you can do better, not exactly Sullivan are they..etc..
Well, I don't think the likes of Sullivan and Cravath are going to be interested so the next tier down in the U.S market - which is still very good - is the reality for all but the very best UK firms
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Anonymous | 22-Jun-2010 4:04 pm
To "I've Heard it All Now":
So, are you suggesting that Reed Smith's Richards Butler takeover was a great success?
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Anonymous | 22-Jun-2010 5:25 pm
Paul Maher is what this firm would need!
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Puff | 22-Jun-2010 5:51 pm
There are a couple of very good reasons why the merger will appeal to most S&S partners. Firstly, MB's PEP is about £200,000 higher than PEP at S&S (which has lagged its peers in this regard for years - anyone remember 3 or 4 years ago when it was sub-£300k?). Secondly, with the sheer scale of MB will allow greater investment in some of the overseas locations where S&S is underweight. S&S simply don't have the critical mass to recruit the right people and compete at the level they want to compete at - MB's money will change that to an extent. Of course, neither of these things addresses the desperate need for some corporate big-hitters in the S&S London office, and I'm not suggesting that a merged firm will suddenly have the quality to worry the top tier firms.
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Anonymous | 23-Jun-2010 11:15 am
I'd be amazed if MB's London PEP is anything like the figures quoted. That is what will be making S&S nervous.
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Anonymous | 23-Jun-2010 1:34 pm
Looking at this the wrong way round on the PEP front. Why should MB tolerate a dilution in its PEP through merging with Simmons (assuming they merge and don't do some sort of DLA-style transatlantic divide). And if Simmons partners are contemplating some sort of PEP uplift then to achieve that there will need to be some sort of price paid - probably in the form of fewer former Simmons partners somewhere down the line. The money doesn't magically appear......
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Anonymous | 23-Jun-2010 2:21 pm
There simply are not enough Simmons partners with a book of business big enough to generate the revenue required to produce the level of PEP of MB. If the merger goes ahead the Simmons partners will suddenly find their targets increased substantially and the removal mechanism (which currently in Simmons has the result of making it hard to remove non-performers) will be changed. Inevitably there will be a large number of partners not up to the job and out of a job. There simply is nothing special about Simmons. They are Volvo lite.
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Anonymous | 23-Jun-2010 8:16 pm
One Simmons partner said: "I don't think that Mayer Brown's London office is very impressive, but it's very exciting that we are talking to a large international firm. We could do with a US presence and a boost in Asia. It could possibly be a good move.
"The only two concerns are what we would do with their London office and that you are not in the driving seat when you're merging with a much larger firm."
Simmons' partners are clearly very sharp.
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