Merger talks between Shakespeares and Davenport Lyons have broken down, leaving Davenport Lyons on the market for a potential deal, sources suggest.
It is understood that the talks were called off earlier this week, with some Davenport Lyons insiders under the impression that discussions were still ongoing as late as Tuesday (28 January).
Davenport Lyons’ equity partners have been called into a meeting today, but it is not known whether the meeting concerns the shape of the firm going forward. The firm is understood to be have been interested in looking for a merger partner.
“There are no substantial discussions,” insisted Shakespeares’ CEO Paul Wilson. “We’re not presently in discussions with any law firm in the UK regarding mergers or takeovers.”
Wilson has stated publicly that he aims to grow his firm into a £50m mid-tier heavyweight this year, previously telling The Lawyer that the firm remains confident that its acquisitive strategy is good for the business.
In September, the firm expanded through two bolt-on acquisitions – with Leicester-based Marrons and Coventry-based Newsome Vaughan – as it continued in its bid to be a £50m firm (5 September 2013). These folllow a merger with Leicester-based Harvey Ingram (24 May 2012), which posted revenues of £19m in 2011/12.
Meanwhile Davenport Lyons has had a challenging 12 months. The firm closed its film and TV group in November (13 November 2013), announcing that it would trim its trainee cohort in the same month (29 November 2013).
The firm saw its turnover drop during 2012/13, from £24.5m to £21.9m, while average profit per equity partner (PEP) slipped by 12.5 per cent to £197,000. This followed a 9 per cent drop in PEP to £225,000 in the previous year, meaning PEP has dropped 20 per cent since 2010/11.
The firm took a strategic decision not to make any lawyers or staff redundant during the recession, instead taking out a loan facility from RBS in 2008 to fund a hiring spree.
Davenport Lyons did not respond to requests for comment at the time of writing.