Lead associate Jamie Holdoway joined the Paul Hastings corporate team in January 2020. Just months later he was playing a key role in advising private equity fund Francisco Partners (FP) on the merger of its portfolio company, Consignor, in the midst of a global pandemic.
Consignor, a Norwegian cloud transport administration system platform, was merging with its Swedish counterpart Unifaun – a portfolio company of Marlin Equity Partners (MEP).
Consignor and Unifaun were both acquired during the third quarter of 2020 by competitive auctions. The market for cloud computing, or software as a service (SaaS), assets across Europe was intensely competitive at the time, as investors sought assets with business models which were resilient to the pandemic.
MEP and FP subsequently proposed merging both assets as part of a joint venture to create synergies and efficiencies. This transaction was subject to purview of the European Commission on the basis that MEP and FP were deemed to have joint control for antitrust purposes. The regulatory backdrop was challenging because the Commission had no precedent for establishing the market definition for SaaS platforms in Europe.
“Early on, we identified that there was a regulatory time lag, insofar that there were no precedent decisions which fitted the target group’s sector. Building the case ‘from the bottom up’ was a very challenging and, ultimately, rewarding experience”, Holdoway recalls.
He was fresh into a new firm, had one deal under his belt with the new team and the day after that deal closed, he had been sent home to work due to the pandemic. “Fortunately, the Paul Hastings private equity team is relatively small, so I got to know all the key people very quickly. The compact size of the team is one of the main reasons I joined Paul Hastings. There are very few firms that have a transatlantic presence and a strong private equity brand that have managed to maintain a small team. I didn’t want to join a firm where you are one of a hundred associates”, he says.
This was a bonus when adapting to lockdown restrictions too, as Holdoway explains, “client expectations remained the same during the pandemic – not unreasonable as they had to cope with challenges of their own. We are fortunate, insofar that we have always deliberately structured our teams relatively leanly in order to ensure that individuals feel they have a significant level of personal investment in client projects. As a result, from a project management perspective, the transition to working remotely was fairly seamless”.
Jamie Holdoway’s professional background
Prior to joining Paul Hastings, Holdoway was at Weil, Gotshal & Manges, where he moved after qualifying at Travis Smith in 2012. “I have focused on private equity almost exclusively since I was a junior associate, particularly acting for financial sponsors such as private equity funds, pension funds and sovereign wealth funds. I have experience of a broad spectrum of downstream activity, with a particular focus on cross-border transactions in the large cap and upper-mid market. More recently, I have acted on several co-investments between sponsors”, he explains.
“The big draw of private equity work for me, as a junior, was working closely with deal teams, which provided the opportunity to build client relationships from early in my career. Most private equity firms operate lean structures, meaning that the premium placed on key adviser relationships can be higher than in other sectors.”
His previous experience was about to pay dividends as he and the team set about their aim of gaining approval from the Commission in Phase 1, which involved the collation and marshalling of a substantive amount of data to put forward compelling arguments as to how the Commission should approach market definition for a SaaS platform operating across Europe.
Fortunately, the team had already considered the market definition issue as part of a potential submission to the Swedish antitrust authority, so it took the lead role in laying the foundation and crafting the substantive arguments to be submitted to the Commission, as well as advising the client on the parameters which should apply to collecting data which would support these arguments.
In addition to the challenging regulatory backdrop in Europe, what required particular attention to detail in this situation was to combine two geographically disparate businesses in a common platform operated by two sponsors.
While such joint ventures are relatively common in strategic M&A between corporates, they are much less common between financial sponsors, particularly in a 50:50 scenario. And, while both sponsors operate in the same market sector, there is no pre-existing relationship between them in relation to a jointly held asset. Therefore, the whole relationship needed to be negotiated from scratch.
“When faced with a situation where there isn’t an obvious legal precedent to work from, the legal team needs to advance the arguments from the bottom up. You can use analogous markets, but there is no certainty with that approach”, says Holdoway. “The team built the arguments from the bottom-up, collating evidence, much of which was proprietary, relating to market definition in a sector which is new and doesn’t conform to concepts of historic market definitions, as well as managing the expectations of two different clients throughout the process.”
The skill was not just advancing an argument that the firm thought would prevail, according to Holdoway, but advancing a submission that it believed anticipated the needs of the regulator. “The team managed multiple experts, collated their advice into a succinct submission that considered the issue from all angles and understood the way that regulators were likely to respond.”
As a result of this approach, the team secured Phase 1 antitrust clearance from the Commission, while managing client expectations and working creatively to put forward arguments in favour of an appropriate market definition which would be acceptable to the regulator. The transaction, which completed in February 2021, has established the first legal precedent for market definition for software platforms at an EU level, and established a solid basis for future platform co-investments between sponsors on an equivalent basis.
The deal was led by vice-chair of the firm’s global PE practice Anu Balasubramanian, who Holdoway works with closely. “Much of our work is cross-border and requires collaboration with our global network. For example, earlier this year I worked on Francisco Partners’ acquisition of CDK’s international business with Mike Kennedy, who is a key relationship partner for Francisco Partners in the US”, Holdoway says. “I frequently work with Richard Kitchen, who acts on borrower-side financing mandates for financial sponsors, and Arun Birla on tax structuring.”
After the success of this joint-venture, FP instructed Paul Hastings’ London corporate team to act on its largest transaction by value in Europe to date – the acquisition of the international business segment of CDK Global which completed in March 2021.
For Holdoway, the complexity of the FP deal lay in “anticipating whether the interests of both investors would always naturally align, and identifying situations where there was potential for disagreement, conflict or dispute resolution”. Meanwhile, he and the team had to grapple the nuances of a specialist discipline, that while unfamiliar to them, was fundamental to the clients’ objectives.
“It set a new legal precedent in merger control in the software space. In addition, the deal was true a 50/50 joint venture which is relatively rare in PE, between two investors that operate in the same space but that have not invested alongside each other before”, he explains.
“It has shown me the importance of identifying a significant material issue which doesn’t fall squarely within my practice area and having to understand how it will impact my client’s objectives. It has undoubtedly given me experience and insight that will stand me in good stead when working on the many new “club” deals that I expect to see in the future.”
About Jamie Holdoway
2020-present: Private equity lawyer, Paul Hastings
2015-2020: Associate, Weil Gotshal & Manges
2012-2015: Associate, Travers Smith
2010-2012: Trainee solicitor, Travers Smith
Who’s Who: the Paul Hastings corporate team
Leading: Partner Anu Balasubramanian
Senior associate: Jamie Holdoway
Other partners: Pierre Kirch (litigation and competition, Paris and Brussels), Arun Birla (tax, London)