Howard KennedyFsi mulls second London merger as it considers Davenport takeover

HowardKennedyFSI (HKFsi) is in merger talks with London firm CKFT as management pushes ahead with plans to tie-up with Davenport Lyons.

A decision to merge with West End firm Davenport Lyons, which approached HKFsi days after its negotiations with Shakespeares were called off (30 January 2014), is expected to be made within the next six-weeks. 

However HKFsi could be on the verge of two mergers, having been in discussions with 11-partner North London firm CKFT for a number of weeks. The Lawyer revealed the firm’s top level discussions with Davenport Lyons just two weeks ago (14 February 2014). 

A HKFsi spokesperson said: “We have been approached by CKFT, a Hampstead based full service practice.  Again, we are still at very early stages in these talks.  HKFsi remains committed to a vision of growth, be it through bolt-ons, mergers or lateral hires and we will examine all opportunities presented to us.” 

Top level discussions with Davenport Lyons are ongoing but the proposal is yet to be put to the partnership. 

Davenport Lyons is thought to be urgently looking for a merger partner. The £21.9m firm saw its profit per equity partner slip 12.5 per cent to £197,000 last year, representing a 20 per cent drop since 2011. In November it made the decision to close its film and TV group (13 November 2013) and trim its trainee cohort (29 November 2013).  

Meanwhile HowardKennedyFSI, the result of a merger between legacy Howard Kennedy and Finers Stephens Innocent in January 2013 (31 January 2013), recently hired its first chief operating officer (COO) in a bid to integrate the merged firm (29 January 2014). Accountant Ian Harvey joined the firm from Strutt & Parker last month following the exit of chief executive Mark Dembovsky in November (14 November 2013).

Equity partners were presented with a series of ideas drawn out by Harvey last month, though it is not clear if further mergers were part of that presentation. 

Some of the issues at the merged HKFsi, spread across two London bases, are understood to include partner disunity and a lack of communication between the two sets of legacy lawyers and staff. Last year the firm changed banks to Barclays and set a “conservative” annual revenue growth rate of 3 per cent for the next three years.

The expansion of the equity partnership at HKFsi cut average profit per equity partner (PEP) at the combined firm by almost half to £128,092 last year (24 July 13).