Number Crunching: Clifford Chance, private equity practice

Last week’s news that Clifford Chance global head of private equity David Walker is leaving to join Latham & Watkins in London marks yet another major departure from the magic circle firm’s practice, following six previous key partner exits from the firm’s funds, tax or buyouts teams since 2009.

The departure puts the spotlight back on the Canary Wharf firm’s practice. Once a leader in the field, it is now a target for expansive and opportunistic American firms. An analysis of the firm’s deals data suggests the practice is not what it was, and Walker’s exit looks like a major loss for the practice – at least at first glance.

Clifford Chance’s private equity practice suffered, as other City firms did, from the deal downturn that followed Lehman Brothers’ collapse. Data from Thomson Reuters shows that it advised on

90 private equity buyouts in 2008 and just 35 in 2009. Lehman crashed in September 2008, leading to a market-wide drop in transaction volumes.

David Walker
David Walker

The data includes buy-side financial sponsor activity, defined by Thomson Reuters as any M&A deal in which the acquirer, investor or their parents are financial sponsors or a portfolio company. It therefore excludes disposals to other buyers.

Clifford Chance insists the 2009 drop was unrelated to the exit of transactional star partner Adam Signy to Simpson Thacher & Bartlett, claiming his focus was more on corporate and M&A. Plus his key private equity client, Candover Investments, suffered so heavily in the financial crisis that it announced it was winding itself down in 2010.

The firm’s deal volume bounced back to 68 in 2010 and rose further to 85 to 2011; in both years it lost high-profile fund formation partners – Jason Glover and Ed Gander to Simpson Thacher and Weil Gotshal & Manges respectively. Neither departures had an effect on the deals practice directly but both were blows to morale.

Simon tinkler
Simon Tinkler

Figures have not quite recovered, with 2012’s count at 76, but London corporate head Simon Tinkler predicts a better 2013.

“From late 2008 through to late 2009 nobody was doing deals. In 2009 the market kind of stopped for 12 to 18 months. In 2011/12, there were relatively low levels of deals but more stability,” he says. “We expect to see a larger number of deals in 2013 than 2012.”


Carlyle Group

David Walker’s key client, Carlyle Group, largely works with Latham & Watkins in the US, so his move is almost certain to shore up its relationship with the American buyout major. Data shows that since 2007, the UK firm has advised Carlyle on 15 deals to September 2012, compared with Latham’s 74. Linklaters is on 11 but is making progress.

Clifford Chance has advised Carlyle on between three and six deals per year since between 2007 and September 2012, roughly half of the total being on the buy side. It is thought Walker led roughly two deals a year in total for clients such as Carlyle and Equistone Partners Europe (formerly Barclays Private Equity).

The differences are small, but the firm’s record of acting for Carlyle has dropped from six deals in 2007 to none in 2009, steady at two between 2010 and 2012. Most have been on the buy side.

Other partners on the Carlyle account include Kem Ihenacho, Amy Mahon and Caroline Sherrell.

Five headline deals for Carlyle

1 David Walker led on the client’s acquisition of a stake in QinetiQ for £42m in 2002, its first big deal for the group

2 In 2007 Carlyle instructed the firm for its sale of a 50 per cent stake in AZ Electronic Materials to Vestar Capital Partners. Capital markets partners Adrian Cartwright and Iain Hunter then led for Carlyle, Vestar and AZ on the latter’s 2010 IPO

3 In 2008 Walker advised Carlyle on its £360m acquisition of Talaris from De La Rue

4 Carlyle sold its French Anthemis property portfolio to a subsidiary of Deutsche Bank for €70.7m in 2010, instructing Clifford Chance

5 In 2012 the practice head led again on the sale of Talaris to Japan’s Glory for £650m alongside then-senior associate Caroline Sherrell (now a partner)