Legal Business Blogs

Comment: The air of unreality – can the big deal deliver for Ashurst?

‘Historically, what killed Ashurst’s mergers has been apathy. Latham, Fried Frank, Clifford Chance – people were apathetic.’ So recalls one former veteran of the City firm.

Ashurst has finally voted on a transformative merger with its Australian partner. But even two years since the firm agreed a formal alliance with big six Australian outfit Blake Dawson, the idea of Ashurst going through with the tie-up still seems odd, unreal even, though this timeframe was always set out and the Australian practice immediately took the name of its City suitor.

A neutral observer would have to say Ashurst is yet to entirely counter that air of unreality, even among some of its own partners. That the deal has come this close to crossing the line doesn’t mean Blake Dawson is a more compelling proposition than a marriage with Latham (arguably the best legal deal that didn’t happen in the last 20 years) or CC. It does indicate that Ashurst is a more centrally managed, less consensual outfit under the leadership of Charlie Geffen than it used to be.

It’s hard to query that Ashurst needed to be more robustly led, but it is debatable whether the horribly tricky balance of corralling the partnership while winning hearts and minds has been achieved. Partners are currently marching towards this merger with some of the ambivalence of old – it’s just that such attitudes are no longer enough to stop the train leaving the station.

There have certainly been successes. By consensus, the two years since this course was mapped have been absent of serious reverses or dramas. That is an achievement worth noting; there has been no repeat of the painful contortions that greeted Ashurst’s 2009 entry into the US legal market with the acquisition of a large US structured finance team and little sign of the tensions at Herbert Smith Freehills or Hogan Lovells.

Indeed, there is agreement that – for once – the pre-merger claims of cultural common ground have been proven correct. There has been considerable growth in Asia and plenty of cross-working in energy, infrastructure and litigation. Clarity that Ashurst has been in the driving seat on this union has also been welcome.

Set against that, the Australian market has cooled a fair bit since 2011 and some contend that the Australian business still needs to slim down considerably.

Financial performance has been respectable, but probably too steady in itself to generate much additional goodwill. Inevitably, perhaps, there is muttering in the halls of Appold Street about distractions and the amount of management time that has been expended so far.

Perhaps such sentiments linger because, while a solid case can be marshalled for the union around the need to achieve critical mass in Asia, the narrative has been muddled by Ashurst’s complex motives. The end game is a US union. Pulling off a large merger is hard enough; pulling of a large international merger you are triangulating with a view to an ultimate US deal is another matter entirely. The deal went through. But apathy must still be conclusively conquered.