In what was initially billed as merger talks but has turned out to be far more of a takeover Penningtons yesterday acquired the trading operations of Manches in a deal brokered by PriceWaterhouseCoopers as administrators.
Under the business transfer agreement, 265 Manches employees, including 46 partners will now move to Penningtons. However, in a reflection of the fact that, despite their contrasting recent profitability the firms are close in lawyer size and revenues, the combined firm will be called Penningtons Manches.
Having been this year earmarked as a firm in need of a merger, Manches turned out one of the worst performances of this year’s LB100, despite operating in the burgeoning private client sector, with revenues down 13% to £26.3m. The decline shifted the firm down 11 places to 93 – its lowest ever rank in the table.
The firm’s profit per lawyer (PPL) was this year at a low of £15,000, amounting to a 67% drop from the first LB100 in 1993, when the firm’s PPL was £44,900. Profit per equity partner (PEP) at the 139-lawyer firm also dropped to £134,000 during the last financial year, compared to £235,000 in 2011/12, a drop of 43%.
In contrast, Penningtons’ revenues increased by a marginal 1% this financial year to £32.5m – a 14% increase over five years – and its PPL is almost three times Manches at £42,000 with PEP more than double Manches at £275,000. However, those profit figures have dropped considerably over the past year, with PEP down by 9%.
The newly-merged firm should now rank ahead of private client firm Speechly Bircham, which generated £57.5m revenue this year coming in 52nd place, and enter the third quartile of the LB100.
Chief executive David Raine, who will continue to head Penningtons Manches, said: ‘This agreement fits with our strategic aims and responds to the ever-changing legal environment in which we now operate.
‘The synergy between Penningtons and Manches was evident early on in our discussions and by joining forces we will be able to offer an enhanced level of expertise to all our clients. The strong reputation and combined experience of our people will enable us to maximise our potential in our core practice areas and in the key sectors in which we operate.
‘The acquisition is the culmination of sustained growth for Penningtons over the last five years.’
Penningtons merged with City practices Dawsons and Wedlake Saint and opened offices in Cambridge and Guildford in spring last year.