Birmingham may have lost its battle to host the Millennium Exhibition but England's second city had much to celebrate in 1995. It was a record year for acquisitions in the Midlands, its upbeat economy reflecting the UK as a whole, according to research by KPMG Corporate Finance.
During the period 1994 to 1995, West Midlands-based plcs spent a total of £850 million on acquisitions, compared with £650 million during the 1993-94 period, an increase of more than 30 per cent. Figures for the City tend to be distorted because there are a small number of huge deals. But in Birmingham and the Midlands, there has been a much greater volume of significant deals.
Optimism in the economy – local and national – is reflected in the recent establishment of venture capital trust The Augustus Trust plc by Birmingham firm Martineau Johnson, in a bid to offer 'merchant bank' services to its clients.
Competition is likely to be fierce as business is established in the financial community by newcomers, including Barclays Acquisition Finance Midlands, ECI Ventures and Murray Johnstone, through its acquisition of SUMIT Equity Ventures. The Royal Bank of Scotland has also just opened a corporate office in Birmingham, and stockbroker Williams de Broe has relocated to the city from Wolverhampton.
But the competition is “friendly” in that it will ultimately result in more deals within the region. As one partner says: “There has been a noticeable trend for more deals to be initiated here because Birmingham tends to be quite parochial, and it is also noticeable that, on more and more deals, all the adisers – legal and finanical – are from this city rather than London.”
Edge & Ellison partner Chris Rawstrom says it has been an active year for the financial institutions. Even though merchant bank Singer & Friedlander has closed its Birmingham office to operate nationally from London, the net gains far outweigh the losses, he says.
The former Birmingham-based Pinsent & Co and Leeds-based Simpson Curtis merged in May last year to form a “super practice” which has also expanded its presence in London. Birmingham managing partner Brian Hopkinson says the firm is “still settling down, but it takes time to integrate”. He believes the commercial legal services market has grown, particularly in the last 18 months, because of a buoyant venture capital market.
And despite a recent game of musical chairs within the four firms, including Pinsents' employment head Martin Chitty moving to Wragge & Co, and competition lawyer Geraldine Tickle joining Martineau Johnson from Wragge & Co, there seems to be “an amazing amount of loyalty within the Big Four,” says one partner.
Outside the “premier league”, firms to watch continue to be Dibb Lupton Broomhead and the Arthur Andersen-associated Garrett & Co. Garretts now have four partners and eight assistants and the firm is looking to expand.
Although the four leaders are adopting a wait-and-see approach with Garretts, the recent announcement that Pinsents' London managing partner Paul Downing is to head Price Waterhouse's network of European law firms means the accountancy firms' expansion into the legal market can no longer be ignored. Downing's move was hot on the heels of Hammond Suddards' partner Christopher Arnheim, who set up the accountancy firm's legal practice in London.
One of the advantages of being a one-location firm such as Wragge & Co is that it does not become distracted by events in its other offices. Wragges managing partner Quentin Poole says the office has seen incredible growth in the last two years from 370 to 460 staff. It is continuing to concentrate its resources, for the moment, in one market, aiming for 500 staff in the next quarter.
The rapid growth of the regional firms has led to more and more London work migrating to the regions. And the success of the commercial market, in particular the automotive industry, means more work is filtering down to smaller firms. Medium-sized firms such as Gateley Wareing, Lee Crow-ther, Shakespeares and Anthony Collins are also seen as doing well.
More work also means recruitment across the board and the local law society has set up its own recruitment service in Birmingham. Its administrator, Audrey Price, formerly with Wragge & Co, says that in its first few months of operation, the number of candidates is outnumbering the vacancies. The service will also place trainees.
The consensus seems to be that the Midlands is well placed to compete with the City, and other regional centres such as Leeds and Manchester. As Dibbs partner Nick Seddon explains: “The beauty of the Birmingham marketplace is that it is still growing, with work from the City and elsewhere. It is all part of 'globalisation' – advances in communications mean where a firm is based ceases to be a big issue.”
Poole agrees: “Increasingly, companies are breaking the rules about where they obtain their legal advice. They will now look at other places – a slice of the action in all companies is up for grabs.”