You can virtually see the tumbleweed in Paris in August, but for some private equity lawyers there were no grandes vacances. Last week, Latham & Watkins and Weil Gotshal & Manges found themselves closing one of the biggest Paris buyouts of the summer. Weil’s new star David Aknin was advising 3i on its multimillion-euro acquisition of a 52.5 per cent stake in transport company Keolis from SNCF, while Latham’s Xavier Farde was advising Calyon, HSBC-CCF, ING and ICG on the €500m (£342m) senior and mezzanine debt.
Weil and Latham better get used to driving the big Paris private equity transactions. Thanks to their new star transfers, we’ll be seeing more of them in the deals tables.
In the boom year of 2002, there were three kings in the Paris market: Linklaters’ David Aknin, with clients Permira, Apax, Montagu Private Equity and Candover; Ashurst’s Thomas Forschbach, whose clients included Cinven, Goldman Sachs, Sagard, Charterhouse and Chequers; and Willkie Farr & Gallagher’s Daniel Payan, who acts for a raft of clients including PAI.
But in the space of the last eight months, the balance of power has shifted from the UK to the US firms. Last November, Aknin upped sticks for Weil in Paris’s biggest lateral hire for years, and this summer his move was echoed by Forschbach. The similarities were un-canny. Both are talented dealmakers, big billers and highly individualistic, and both moved from a UK firm to a US practice.
It is impossible to overstate the effect the moves have had on the Paris market. As in London, the Paris private equity market is driven by individual relationships, and both Aknin and Forschbach have been the lynchpins of their firms’ practices. Aknin billed £5m in 2002, which represented more than 10 per cent of Linklaters’ total turnover in Paris (even beating his partner Thierry Vassogne, who notched up a mere £4.5m that year).
Linklaters has partially weathered the storm by hiring Michel Frieh from Willkie Farr to boost its team, which includes Alain Garnier and Fabrice de la Morandière.
But Forschbach’s departure is much more problematic for Ashurst. In 2002 – the year of Legrand, Telediffusion de France and Elis – his contribution fuelled the firm’s leap in turnover of 50 per cent to £21m. Nathalie Alibert is one of the rising stars on the Paris scene, having been made up to partner only this year, and she is leaving for Latham with Forschbach. Ashurst sources say that remaining partners Frédéric Pinet, Bertrand Delaunay and Guy Benda will fill the gap. (However, it was genuinely unclear at the time of writing whether Forschbach’s new team at Latham might include any of these young partners.)
Ashurst had another element in its private equity offering; a strong financing practice rivalled only by Gide Loyrette Nouel. However, that practice was weakened, say Paris lawyers, by Jonathan Nabarro’s departure for Allen & Overy earlier this year. It’s lucky for Ashurst that its remaining lead finance partner Laurent Mabila has strong technical reputation and that its acquisition finance CV will still get the firm on the deal sheets. But there’s no doubting that in the space of a year, Ashurst’s private equity capability, for both sponsors and debt providers, has been savagely hacked.
One can only surmise that Aknin’s defection last year set Forschbach thinking. Neither move looks like a strategic play. Both were at the top of their game in well-resourced offices with strong international offerings. More likely is that partnership culture – and, yes, pay – had a lot to do with it. When you’re in a UK lockstep firm and your profit take is dropping, then a US package – despite the weak dollar – looks strangely attractive. Furthermore, both Aknin and Forschbach are known to have chafed at their previous firms’ management.
Certainly, Weil’s and Latham’s growth plans would have been an attractive prospect; even if Simpson Thacher & Bartlett or Kirkland & Ellis were to open in Paris, it’s doubtful whether they’d ever expand enough to become standalone businesses.
The capture of these two big billers marks a watershed for Weil and Latham, which were late entrants into Paris. International firms have been largely unable to break into the public M&A market, because senior partners at Franco-French boutiques such as Bredin Prat and Darrois Villey Maillot Brochier enjoy a hold on the énarquois upper echelons of French business. However, Cleary Gottlieb Steen & Hamilton, Shearman & Sterling and White & Case have had years of practice in going native. They have cultures as French as many of the Franco-French firms, and general counsel at the larger French corporates have few qualms in instructing them.
Weil’s pan-European corporate strategy is back on track. It may have just failed to lure Matthew Layton and James Baird from Clifford Chance at the beginning of this year, but the hire of former Travers Smith Braith-waite partner Mark Soundy has helped soften the blow.
Along with German partner Gerhard Schmidt, Aknin is now a major weapon in the US firm’s Continental armoury – helped too by the merger with French corporate boutique Serra Leavy & Cazals last year.
Latham’s practice in Paris has had a rougher ride than its majestic progress in London and Germany might suggest. The merger with Stibbe Simont Monahan Duhot in 2001 sparked some high-profile departures, and the Paris office has been in consolidation mode.
Although Latham in Paris has had a small private equity business, mostly reliant on ABN Amro and Axa Private Equity, it has never converted its institutional relationship with US house Carlyle into French deals, for example.
Forschbach’s arrival will change that, but Latham has also been attacking the private equity market from the financing side.
Latham’s merger with Stibbe gifted the US firm with a good debt capital markets business, which segued nicely with Latham’s stellar high-yield practice. The fact that Latham got itself onto the mezzanine and the high-yield of the titanic Legrand leveraged buyout was a fillip to its deal list.
Forschbach and Alibert, an ambitious financing practice… Latham Paris is now starting to look a lot like Ashurst this time last year. Except without the lockstep.