The M&A market needs stable economic, political and financial conditions in order to thrive. Liquidity remained, but as for the others, let’s just say as 2022 unfolded the headwinds increased.
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Nathalie Tidman, Legal Business: Is it an oversimplification to say that inflationary pressure, if it eases, will kick-start M&A again?
Eric Knai, Eversheds Sutherland: We have been having a lot of discussions with our clients but also with investment bankers, bankers and economists. They say that inflation is a factor, but only one of a number of factors that impacts M&A.
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Partners from Herbert Smith Freehills (HSF), Davis Polk and Eversheds Sutherland have secured advisory roles on the administration and £3.4m sale of online furniture retailer Made.com to Next.
In early November, Made.com filed notice of its intention to appoint administrators, advised by a HSF team led by London restructuring partner John Chetwood and including City corporate partners Ben Ward and Caroline Rae. Since the administration, 320 Made.com jobs have been axed as the company collapsed.
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After yet another galling sexual misconduct episode to blight the profession, the Solicitors Regulation Authority (SRA) has come out swinging after accusations it was slow to act.
In October 2021, former Eversheds Sutherland trainee Thomas Hagyard was jailed for eight years after being convicted of two counts of assault by penetration, and two counts of sexual assault. Hagyard had joined Eversheds only a month prior.
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Eversheds Sutherland had its transactional divisions to thank, as the firm’s corporate practice turned in its ‘best ever year’ to help achieve rocketing profits.
Profit per equity partner (PEP) jumped a considerable 26% from £984,000 to £1.2m, surpassing the £1m barrier. Net profits increased a similarly pacey 23% to £150.3m, while revenue was up 8% from £629m to £678.4m.
Chief executive Lee Ranson (pictured) told Legal Business: ‘The transactional side had its best ever year. Other parts did well but when that transactional engine is really firing you expect the whole business to feed off it.’
Ranson viewed the eye-catching PEP increase as a case of delayed gratification: ‘Last year we held some investment reserve back and it wasn’t distributed among the partners. We haven’t had the same need this year.’
The PEP spike came amid a marginal increase in overall partner headcount, as the firm combined concerted recruitment efforts in the M&A space with a spate of retirements. Among the most notable corporate lateral hires last year was Roger Barron, who arrived in May following a stint as a partner at Paul Hastings. Barron, who spent 27 years at Linklaters, joined as a ‘senior M&A adviser’ and is expected to provide strategic counsel as Eversheds seeks to bolster its global corporate capabilities.
As for the year ahead, Ranson is bullish about the need for investment: ‘We continue to look at expansion generally, but particularly in Europe, when opportunities meet client need. I want to emphasise that there is no slowing down in investment strategy – there may be ups and downs in the market but our continued commitment to investment will remain strong.’
Underlining this appetite, earlier this year Eversheds formalised a long-standing relationship with Bulgarian relationship firm Tsvetkova Bebov & Partners to officially launch in the region.
In a week of globetrotting action for firms, Ashurst has solidified its American ambitions by opening a new office in Texas.
In May, Legal Business reported that Ashurst was seeking to add depth in the US as a ‘strategic priority’, with chief executive Paul Jenkins stating the firm needed ‘to do more in the US over time.’ Jenkins said that it was in the firm’s core sectors, which included infrastructure, financial institutions-related work, the digital economy, real estate, energy transition and funds, that Ashurst could be doing more stateside.
This week’s opening falls neatly into Ashurst’s aim of building out its sector expertise in the country as the firm branded it a projects and infrastructure play. Anna Hermelin, co-head of Ashurst’s Americas projects practice commented: ‘With plans for major investment in infrastructure development over the next five years, establishing a small branch office in Austin allows us to further capitalise on the significant market opportunities and provides a collaborative workspace for our US lawyers to continue to meet client demand.’
To lead the new hub, newly-arrived infrastructure partner Wes Strickland will be splitting his practice between Los Angeles and Austin. Strickland, who will be managing partner in Austin, joined Ashurst last October from Holland & Knight. Ashurst confirmed that as of launch, Strickland will be supported by one other lawyer.
In Europe, Eversheds Sutherland has formalised a long-standing relationship with Bulgarian relationship firm Tsvetkova Bebov & Partners to officially launch in the region. The tie-up hands Eversheds a four-partner office in Sofia led by M&A partner Irina Tsvetkova and capital markets partner Nikolay Bebov.
The other partners are Damyan Leshev, a specialist in capital markets and banking, and Victoria Tzonkova, who advises clients on transactions, dispute resolution, insolvency, and employment law matters. Joining the four partners are 15 other lawyers, who bring both a national and international client base.
Ian Gray, Eversheds’ European chair, told Legal Business that the move offered the firm’s clients ‘more geographic coverage under a consistent brand.’ He also hailed the impact of Tsvetkova: ‘She is a very effective leader and bringing a strong female leader into our business is a real plus in our ambition for greater diversity.’
Tsvetkova added: ‘By joining forces with Eversheds Sutherland, and having the weight of a global brand behind us, we will be able to drive further growth of our practice across CEE. This is a very important step for us. Our people, our clients and our communities will all benefit from our more visible presence in the market.’
Antony Walsh, Robin Johnson and Hannah Kaye discuss factors influencing
M&A deals
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Eversheds Sutherland’s Richard Moulton, Eric Knai, Amanda Partland, James Trevis and Stephen Nash outline how their firm’s corporate group has gone from strength to strength
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The key question at the present time is ‘what’s next for M&A’? Ever since the financial crisis, the M&A market has been strong, driven by a favourable economic backdrop, a large pool of liquidity and fundamental structural dynamics being driven by digitalisation and more recently by the move towards net zero. This strength in activity has only ever been seriously held back by the pandemic, which was – at least for M&A – a relatively short lived affair. At no time in the last decade have we faced as many headwinds as we do now, but how will the M&A market adapt?
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In recent years, environmental, social and governance (ESG) issues have become increasingly important to shareholders and boards, as the regulatory landscape has developed quickly in multiple jurisdictions, and the financial and reputational risks of non-compliance with ESG regulation and best practice have increased. Listed companies, large corporates, private equity funds and financial institutions are all now subject to increased ESG-related reporting and disclosure obligations, and are demanding greater transparency and standards from investee companies in ESG matters. ESG factors are also increasingly relevant to acquisition finance, with the growth of the sustainable finance market.
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