With four of the five largest firms in the Midlands reporting total corporate deal values between July and the end of September of around £500m and above, and with Pinsent Curtis Biddle breaking the £1bn barrier, everything in the corporate garden would seem to be blooming.
This, though, is not the whole story. While Pinsents performed remarkably well, its involvement in the Boots Company’s sale of Halfords to CVC Capital Partners for £427m in July was purely as an adviser to the management. However, in September it did advise games developer Rare on its £239m sale to Microsoft.
In terms of numbers of deals, performance overall is generally up on the same period last year, but lower than previous quarters. Gary Laitner, a senior corporate partner in Pinsents’ Birmingham office, said: “Overall, numbers are probably down.” But he added that the team’s ability to convert action into completions has maintained the flow of good-sized deals.
Catherine Boucher, senior corporate associate at Eversheds, said: “Everyone’s finding it difficult at the moment. Deals are certainly harder to get away, and issues that maybe wouldn’t have held up transactions in the past are taking on an added significance.
“Numbers are down. We’re averaging about two private equity transactions a month, but on top of that we’ve got the bread-and-butter M&A work.”
Successes for the firm include the £116m institutional buyout (IBO) of Jessops in September and the £230m acquisition of Druck Holdings by GE in July.
Numbers are certainly down at DLA. The firm’s seven-partner corporate team, which includes two corporate/tax partners, managed a respectable 14 deals, but the deal values themselves were low. Office managing partner Chris Rawstron admitted: “In volume terms it was okay. In value terms it’s nothing to write home about. The figures can easily be distorted by one transaction. In this quarter, for example, we’ve probably done a similar number of deals, but the value will be around £650m because we’re working on one huge deal in particular.”
This “huge” deal is the £530m recommended offer for T&S Stores by Tesco, announced in October, but not expected to complete until early next year.
In contrast, the pick of the firm’s deals for the third quarter was the £18m secondary buyout of Robinsons Healthcare.
Despite the shaky market, Midlands firms have not seen any redundancies or restructurings. With a much smaller plc base to begin with, the bulk of the market is sub-£100m deals, which are generally affected less by global market conditions.
Even with this in mind, Hammonds has surprised many of its competitors by expanding its corporate team, with three new partners. Amanda Allen joined from Pinsents, Lattice Group general counsel Patrick Somers joined in November and in January Transco senior counsel Christopher Talbot will also join. Recent client wins included Manganese Bronze, the £118m turnover company responsible for building London’s black taxi cabs.
Wragge & Co is also working hard to find a silver lining. “Even in a difficult market there are pockets of success,” said Wragges corporate partner Edward Dawes. “Kidderminster, for example, is the centre of the UK’s carpet industry, and there’s been considerable change there. Many of the companies have been all smiles over the last couple of years and are announcing records profits.
“I’ll certainly be toasting in the New Year with a sense of optimism rather than gloom.”