Paper chase

Fresh from the Telegraph triumph, Lovells’ Marco Compagnoni wants to take his private equity group to new heights. Catrin Griffiths reports

How apt. Lovells’ Marco Compagnoni really is a reader of The Daily Telegraph. And that’s just as well, because he’ll be getting to know the paper a lot better from now on. For on Tuesday 22 June, the Barclay brothers, advised by Compagnoni, triumphed in one of the longest-running auctions in the City.

For the Barclay camp, the Telegraph Group bid was a nail-biter. After the brothers’ initial offer last year, the bid went through several rounds, with a seeming cast of thousands, including Axel Springer, Candover, CVC, Daily Mail and General Trust, KKR, Northern & Shell and 3i.

In the end, it went down to two: the Barclay brothers and Lovells versus 3i, Veronis Suhler and Travers Smith Braithwaite. There is a certain piquancy to this, given that Compagnoni is Lovells’ relationship partner for 3i, but such is life in the freewheeling world of private equity. The Barclay brothers got the prize for £729m.

“I’ve never been involved in or seen an auction that was quite so fiercely fought,” says Compagnoni. “We had stage after stage to get through. A lot of times auctions can be all smoke and mirrors, but this really was deeply, hotly fought over.”

With Lovells’ M&A practice largely reliant on a few key corporates such as SABMiller and Granada (as was), it is Compagnoni’s private equity group that is making much of the running at the moment.

Compagnoni’s billings – along with his acute political antennae – have given him massive clout at Lovells, and he’s on a roll. There’s one obstacle, though. It’s a practice centred on just two full-time partners: Compagnoni himself and Derek Baird. It might be having a good run, but can Lovells seriously hope to challenge those well-stocked teams at Clifford Chance and Ashurst?

The Lovells love-in

Sitting in a slightly overbright Lovells meeting room, Compagnoni pops open an orange juice and leans forward conspiratorially. Yes, he admits, it’s time to expand. That’s a cue for us to veer into an off-the-record discussion on who Lovells should try to hire, which is by far the most amusing part of the meeting, not least because of Compagnoni’s flashes of acid humour.

Expansion – or at least the contemplation of it – is a new development for Compagnoni because his group has stayed very small, with few internal promotions. Fellow partner Julie Bradshaw has a flexible working arrangement, while Alison Hampton is now a consultant working part time. The only other full-time partner is Baird, late of Dickson Minto and a prickly foil, shall we say, to Compagnoni’s flawless manners.

For the moment the Barclay brothers – clients for over 20 years – are going to be keeping Lovells busy. The knotty problem of the Westferry printing plant – jointly owned by Express Newspapers and the Telegraph Group – has still to be ironed out, although Compagnoni neatly skirts that issue.

Every lawyer loves an acquisitive client, and the Telegraph deal is just the latest in a takeover trail that has brought a string of deals to Lovells: the £750m Littlewoods acquisition in October 2002 and the £590m acquisition of GUS’s home shopping division are two of the most obvious examples. Compagnoni is an assiduous point man for the brothers, and he claims he is always happy to cut short any holidays to handle their legal work.

“The Barclays expect total loyalty and they get it,” he says. “You get access all the time to a very small group of decision-makers. They make very clear and commercial calls. As a lawyer it’s great, because you know the five or so things that matter to them on a transaction.”

In return, the Barclays have been unswervingly loyal to Lovells. As The Lawyer reported last week, the Barclay brothers were the only bidders to guarantee all fees; others, such as Travers Smith and the 3i consortium, had been hired on a contingency fee basis. A spokesman for the Barclays tells The Lawyer: “As usual, Marco and Lovells did a really good job for us – he’s very thorough and concentrates on the big issues.”

Building the business

Lovells’ private equity business was originally centered on Doughty Hanson. The departure of Alan Murray-Jones to Skadden Arps Slate Meagher & Flom in early 2001 was widely touted as being the death to Lovells’ practice, which at the time was seen by many – wrongly – as a one-client business. Certainly, much of the Doughty business migrated with Murray-Jones, but Compagnoni says that it has settled into a “very comfortable dual-sourcing relationship”. For instance, last week Bradshaw and Frankfurt partner Oliver Felsenstein closed Doughty’s €1.5bn (£1bn) disposal of ATU to KKR.

Bradshaw, whose major relationship was with 3i, was a protégée of Murray-Jones, and before his departure she was seconded to Frankfurt as part of the Lovells-Boesebeck Droste integration. It meant resources in London seemed a little stretched when he left, especially when partner Leah Dunlop was sent to Rome in 2001.
However, in 2001 Compagnoni landed a solid hire in Dickson Minto’s Derek Baird to augment the team. Baird brought his Apax contacts with him and acted for Apax on its abortive bid for National Car Parks; Lovells must have been hugely disappointed not to make the cut on Apax’s recent panel. Intriguingly, Baird has nicely farmed his relationship with his former colleagues to the extent that he has started to pick up work from Charterhouse.

“Derek’s come into the Advent and HG Capital relationships very well,” says Compagnoni. “And he’s gone out of his way to say that he isn’t going to take people from Dickson Minto – he and Alastair [Dickson] have a lot of respect for each other.”

In Advent International, Compagnoni sees absolute vindication of Lovells’ European strategy. He was a vocal advocate internally for a Continental presence, having sensed that it would differentiate Lovells’ practice from those of some of its City competitors. “Some people here wanted to merge with another London firm,” he recalls, “and I just thought: ‘Hello Woolworths’.”

Seconding partners around the Continent may have made the firm slightly under-resourced in London a couple years ago, he says, but it’s paying off now. “Three years ago we didn’t act for Advent – now they’re one of Lovells’ biggest clients,” he confides. Compagnoni works closely with German private equity partner (and former German managing partner) Felsenstein, with the result that not only Advent but HG Capital are serviced across several jurisdictions.

“Their European offering is very, very important,” says John Singer, joint managing director of Advent International. “And what Marco will do is ensure that we’ve got the right people.” Lovells is now Advent’s preferred adviser for cross-border deals, with Macfarlanes being used for more domestic work.

“Part of the reason the Lovells relationship works,” adds Singer, “is because you’re made to feel a special client.” Compagnoni is famed throughout Lovells for his standards of client service. “He’s evangelical about it,” says one lawyer. “And the reason the European thing is working is because he’s harangued and kicked and dragged and cajoled, all because he has to eyeball clients and say we can deliver a service across the network.”

Reeling them in

Despite Lovells’ new desire for a lateral, you get the impression that Compagnoni wouldn’t want to dilute the practice with a massive raft of new partners. He appears to operate best in a smaller environment; there is an easy intimacy about him coupled with a clear aversion to law firm bureaucracy. “He thinks that meetings about client development are a bit nonsensical,” says a colleague. “He dislikes meetings for the sake of meetings – everything’s always on a strict guillotine.”

For Compagnoni the deal junkie, it’s a black and white issue. You can be as patient as you like – but you have to land the fish in the end.
“People confuse activity with progress,” he declares. “Marketing, unless you bring home a job, is a failure.” Lovells’ favourite son hasn’t finished yet.
Marco Compagnoni