Dentons hits the merger trail again

Merger is not a strategy. Howard Morris knows this, but Denton Wilde Sapte’s history seems to suggest otherwise. In 1998 the Denton Hall side embarked on comic three-way negotiations with Theodore Goddard and Richards Butler. That would never have created the most dynamic firm in the world, but it probably would have been the politest. Wilde Sapte was in talks with Andersen Legal around the same time, and we know where that ended up.

Denton Hall and Wilde Sapte were fantastically pleased to have kept their merger discussions out of the press back in 1999, but in retrospect, it looks like the management was more bothered about leaks than engineering a transformative merger with market clout.

As we reveal today, Dentons’ new managing partner is on a mission to turn things around, and he’s ruling out nothing. Hence, his colleague Jonathan Tatten’s target list of merger candidates – Nabarro Nathanson, Simmons & Simmons, Taylor Wessing and possibly Travers Smith.

You can ignore Dentons’ wistful inclusion of Travers Smith. Even Latham & Watkins hasn’t made headway there. As the Snow Hill firm has rejected a series of US suitors, Chris Carroll is not likely to take Morris’s call. With average profits per equity partner (PEP) rumoured to be touching half a million this year, the firm’s independence is paying off.

You can also discount Simmons and Taylor Wessing, both of which have their own strategic issues to iron out. Nabarros, though, is an undiscovered gem. A perennially undervalued stock, it’s no longer too heavy on property. It has crisp management, a balanced business, and a cohesive partnership. What’s more, average PEP is set to rise to £400,000. “We’re delighted! We’ve never been on anyone’s merger list before,” exclaims one Nabarros partner, tongue only slightly in cheek.

Dentons has a solid business, but you have to question whether its partners really want to change. Before the merger, Wilde Sapte had a market-leading domestic banking practice. Now it’s increasingly on the sidelines. Yet this was not an inevitability – Camerons also faced the same shrinkage, but its energy levels were high enough to compensate.

Unlike Camerons, Dentons has no corporate practice to speak of, but its energy, finance and projects businesses ought to make it attractive. What puts people off Dentons isn’t the business profile. It’s the lethargy.