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Macfarlanes breaks £200m barrier as PEP grows 26% in buoyant year

Macfarlanes has grown its revenue 20% to £201.5m in yet another sign of a strong financial year for mid-tier City firms.

Profits per equity partner (PEP) also rose 26% to £1.74m as the firm lifted operating profit 25% to £107m, cementing its position as one of the most profitable operators in the Square Mile.

‘All of our critical business generating areas have performed consistently strongly throughout the year,’ senior partner Charles Martin told Legal Business. ‘We have had a busy summer, and that makes a big difference.’

The growth outpaced last year’s performance by some margin, with Macfarlanes growing revenues 4% to £167.6m and PEP 7.6% to £1.38m in 2016/17.

Mandates keeping the firm busy included advising US cinema chain Regal Entertainment on the $3.6bn takeover bid from Cineworld and tech start-up Improbable on its $502m financing from SoftBank.

‘M&A has held up surprisingly strongly, private equity was buoyant, there has been a huge amount of fundraising, lots of exit activity,’ Martin said. ‘Virtually every industry is dealing with disruptive change, and one of the ways clients are responding to it is through M&A activity.’

The year also saw some unusual lateral market activity for the City stalwart. Macfarlanes launched a corporate crime and investigations practice in March with the hire of Eversheds Sutherland corporate crime head Neill Blundell but lost investment fund finance group leader Bronwen Jones to Reed Smith and rising deal star Emmie Jones to White & Case.

The firm also made the unusual move of announcing Martin’s successor as senior partner two years before the end of his term. Private client partner Sebastian Prichard Jones will take over in 2020, bringing to an end Martin’s 12 years at the helm.

Martin struck a cautious tone when discussing the prospects for the coming year, saying the firm expected it to be more challenging: ‘The year has started well, but it’s far too early to say.’

A number of other mid-tier players have posted strong financial results over the last few weeks. Fieldfisher hiked its top line 24% to turn over £207m, while Osborne Clarke reported 14% global revenue growth to €273m.