Legal Business

Market reaction: jury still out on Irwin Mitchell’s £40m takeover of Thomas Eggar

Market reaction: jury still out on Irwin Mitchell’s £40m takeover of Thomas Eggar

In a move that demonstrates consolidation is still very much on trend for national law firms, Irwin Mitchell’s continuation of its aggressive expansion policy by merging with the south-east based Thomas Eggar this month has garnered a mixed reaction from the market.

It is clear that Irwin Mitchell – a law firm traditionally known for its personal injury work as its omnipresent TV advertising campaigns have proved – has been moving further into the private client and commercial sectors following its acquisition of Mayfair boutique Berkeley Law a year ago. The national firm has needed to significantly diversify its revenue streams, with PI fees being hit hard and another government crackdown on claims recently announced in the Autumn Statement.

This push into private client and commercial services has been enhanced by its merger with Thomas Eggar, which is regarded as having a heavyweight private client practice in the south east and cited as top tier in the regional section of The Legal 500 for planning and sports law.

‘It is interesting because of Irwin Mitchell’s acquisition of Berkeley Law last year,’ says one partner in the management team at a national firm. ‘Clearly they are very interested in private client – we thought the Berkeley Law acquisition was very interesting because that was a very top quality, niche private client practice. Private client can be really profitable but you have to be in the right part of the market. You have to be doing it for relatively high-net-worth people.’

According to another peer, Irwin Mitchell had been looking in the south east for some time for the last few years in a bid to build out its national coverage. The firm already has a Southampton office, but it is one of its smaller offerings with 27 staff.

‘From their perspective I can see why it makes sense because they were desperate to get some big footprint in the south-east of England. They are strong in the north and the midlands; they have a Scottish operation. They have wide coverage but if they want to be a truly national firm I guess they had to have a proper flag in the ground in the south east.’

The acquisition of Thomas Eggar is the largest individual deal in Irwin Mitchell’s history, and those at the firm are upfront about continued expansion being a major part of the firm’ strategy – through further acquisitions and growing organically.

A spokesperson for the firm said it would be looking for further organic growth but would also make acquistions where they would clearly add value to shareholders. The firm brought in a head of corporate finance – Chris Belsham – in 2014, whose role is to look for new opportunities.

As for funding this rapid growth, many touted Irwin Mitchell as the firm most likely to pioneer a law firm IPO in the UK before Gateley broke that particular ground this year. Irwin Mitchell had turned to its banks for finance in 2014, converting its overdraft facility into a £60m loan package.

But while Irwin Mitchell appears to have all but abandoned the idea of going to the public markets for now it was particulalrly vocal about the advantages of floating on the stock exchange back in 2011 and is known to have brought in some heavweight lateral hires on the basis that a signifcant capital payout was likely.

The firm says it has not ruled an IPO out. ‘As far as an IPO is concerned we are often looking at it because why wouldn’t we in terms of understanding if it’s right for our business in terms of raising money?’ says the spokesperson. ‘It’s not something that’s key to us, it’s just an option like it is for lots of other companies.’

Overall, this latest tie-up with 175-lawyer Thomas Eggar – which has six offices in Chichester, Gatwick, London, Newbury, Southampton and Worthing – looks to be a good bolt-on for Irwin Mitchell. However, some in the market are sceptical about the benefits for the smaller south-east outfit.

Irwin Mitchell may have originally approached Thomas Eggar regarding the tie-up but one partner at a rival regional player firm suggests that Thomas Eggar would have been only too happy to merge, given recent struggles with profitability. The firm announced flat revenues of £41.1m for the financial year 2014/15, although revenues are up 18% since 2010. Profitability is weaker than a number of LB100 firms based in the south, including Stevens & Bolton, Cripps and Birketts.

‘Profits per equity partner were £259,000 last year,’ adds the partner. ‘For a firm of that size in terms of headcount and turnover – it’s just not good enough really. And I suspect that Vicky Brackett [Thomas Eggar’s managing partner] was desperate to find some solution to try and improve profitability because when you have low profits you can’t keep your best people. It’s a fact of life. Nor can you attract good new people. Whether this is the answer, I just don’t know.’

Speaking to Legal Business earlier this year, Brackett said the firm had been approached almost every day for a merger and would merge in the right circumstances, including geographic advantage, and the deepening of a particular service line that is selling well – ‘ the ‘expertise merger.’ She also mentioned that consolidation was ‘certainly on the radar.’

On that basis certainly there are obvious attractions to the union. Yet for all the talk of practice synergies and geographic spread coming out of the two firms, there remains little information on the cultural fit. It remains to be seen how a predominantly northern personal injury firm known for its acquisitive nature will gel with a traditional south east firm with a strong focus on private client work.

Not that cultural fit particularly matters in what is by any measure a takeover by the sprawling national player. Thomas Eggar will adopt Irwin Mitchell’s brand in the first half of 2016, while Brackett will join its executive board. The 22 equity partners at Thomas Eggar will be become full share partners at Irwin Mitchell, according to the firm.

The interesting question is whether being ‘the legal brand of choice’ will carry much weight with wealthy landowners in Sussex, or with some of Thomas Eggar’s experienced private client partners.

kathryn.mccann@legalease.co.uk

Legal Business

The £250m ‘expertise merger’: Irwin Mitchell agrees takeover of south east stalwart Thomas Eggar

The £250m ‘expertise merger’: Irwin Mitchell agrees takeover of south east stalwart Thomas Eggar

After six months of talks national firm Irwin Mitchell and LB100 firm Thomas Eggar have voted to approve their union, creating an £250m firm with plans to establish a leading private wealth business.

Announced today (26 November) the addition of Thomas Eggar to Irwin Mitchell’s 700-lawyer, £210m practice would be a more than credible addition to its business in the area outside the M25. 175-lawyer Thomas Eggar has six offices in Chichester, Gatwick, London, Newbury, Southampton and Worthing.

While Thomas Eggar’s revenues for 2014/15 were flat at £41m, the firm has seen an 18% increase in turnover over the last five years. It is regarded as having a heavyweight private client practice and is cited as top tier in The Legal 500 for planning and sports law.

Irwin Mitchell has carved a name for itself in the private client space also having acquired Mayfair boutique Berkeley Law in November 2014. 

Contracts have been signed and the merger is expected to formally complete in December. All 450 Thomas Eggar employees, including 67 partners, transfer to Irwin Mitchell after a Transfer of Undertakings (Protection of Employment) Regulations (TUPE) process beginning today.

Thomas Eggar will adopt the national firm’s brand in the first half of 2016 while  managing partner Vicky Brackett will join Irwin Mitchell’s executive board.

Speaking to Legal Business earlier this year, Brackett said Thomas Eggar would seek out a merger to improve its strategic positioning, with reasons cited including gaining geographic advantage and deepening particular service lines to create an ‘expertise merger’.

Today, Brackett said: ‘We did engage in talks with other firms. Then, we were approached by Irwin Mitchell. The need to consolidate arises from client demand and provides a much better service.’

She added that there will be no requirement for partners to serve particular notice periods as a result of the merger, and that the firms’ remuneration structures were broadly the same. As such she said management would not be looking to review the model in the foreseeable future.

Thomas Eggar, according to the latest Legal Business 100 report, has 22 equity partners with a PEP of £259,000. They will all become full share partners at Irwin Mitchell. 

Irwin Mitchell group chief executive Andrew Tucker added: ‘This deal will significantly add to the value and diversification of our business and act as a catalyst for further growth. It will add significant additional scale to our Business Legal Services division which, if it were a standalone business, would now be a top-50 legal firm in its own right.’

sarah.downey@legalease.co.uk          

 

Legal Business

Due south: Irwin Mitchell in takeover talks with Thomas Eggar

Due south: Irwin Mitchell in takeover talks with Thomas Eggar

National firm Irwin Mitchell is in merger discussions with LB100 firm Thomas Eggar with a view to extending its reach in the south east.

According to rollonfriday.com, the two firms have been in talks for some weeks now, although staff have not yet been informed of any concrete plans yet.

The addition of Thomas Eggar to Irwin Mitchell’s 700-lawyer, £210m practice would give it a more than credible business in the area outside the M25. The 175-lawyer firm has six offices in Chichester, Gatwick, London, Newbury, Southampton and Worthing. Thomas Eggar’s revenues for 2014/15 were flat at £41m, although the firm has seen an 18% increase in turnover over the last five years.

Thomas Eggar has a full commercial offering but is particularly noted as having a heavyweight private client practice and is top-ranked in The Legal 500 for planning and sports law.

Spokesmen at both firms said they would not comment.

A Thomas Eggar spokesman said: ‘At any given time the firm is considering a number of opportunities, but we do not provide comment on speculation.’

However, speaking to Legal Business this summer as part of our LB100 coverage, the firm’s managing partner Vicky Brackett said that Thomas Eggar will look for a merger to improve its strategic positioning, but not at any cost.

She added: ‘We are approached almost every day for a merger. We would merge for a few reasons. The first would be for geographic advantage – there are areas of work we do that would be complemented by particular geographies. We would merge for a deepening to a particular service line that we are selling well – the expertise merger.

‘I am not an advocate of taking a firm the same as ours and adding it together just so you have a bigger turnover, because all you do then is have more of the same and more of the costs. So you double your costs and double your revenue and you literally get two plus two equals four. You need the profitability to drive the investment frankly.’

A tie-up with Irwin Mitchell would certainly meet much of the criteria set out above, with the top-25 firm offering Thomas Eggar a geographic reach far beyond the south east.

mark.mcateer@legalease.co.uk

Legal Business

Merger fever grips mid-market

The trend of mid-market consolidation continues apace, with two major non-City players, Mills & Reeve and Thomas Eggar, announcing separate deals to strengthen their national coverage last month.

With the merger of Bond Pearce and Dickinson Dees going live on 1 May and Withers and Speechly Bircham confirming merger talks in March, partners at Mills & Reeve were due to vote at press time on a potential tie-up with Manchester-based George Davies. This news came just days after Thomas Eggar announced its own merger with City firm Pritchard Englefield.

Legal Business

Consolidation update: Thomas Eggar secures takeover of City boutique Pritchard Englefield

Consolidation update: Thomas Eggar secures takeover of City boutique Pritchard Englefield

South East stalwart Thomas Eggar is to absorb City boutique Pritchard Englefield as the run of consolidation within the UK top 100 continues.

The merger, which will go live on 1 May and roughly doubles the size of Thomas Eggar’s City arm, will see the 58-partner firm increase its revenue from £36m to £42m. The duo will unite under the Thomas Eggar brand.

The acquisition of the 30-lawyer City practice has been billed as substantially bolstering Thomas Eggar’s profile as an institutional adviser.

At first glance the deal looks a credible move given Thomas Eggar’s stated ambition of bulking up in the Capital. Pritchard Englefield has a relatively large corporate practice for a firm of its size. Tracing its roots back more than 150 years, the firm was one of the first UK practices to launch a branch in Germany. It currently generates a third of its revenues from corporate work.

Thomas Eggar managing partner Victoria Brackett will continue to lead firm, with Pritchard Englefield managing partner Ros Ashby joining the combined practice’s 10-strong management board.

Pritchard Englefield’s five equity partners were all involved in negotiations and the merger received the required 75% mandate from Thomas Eggar’s 22 equity partners in a vote on 27 March.

Brackett commented: ‘It was something that we had been looking to do organically but we were still very much alive to the fact that if we could find a firm that was culturally aligned to us then it would accelerate the process.’

Thomas Eggar has notably invested in a tax department in the City, recently relocating a senior partner and an assistant and making senior hires from Berwin Leighton Paisner, Pinsent Masons and Baker & McKenzie. The top 100 UK law firm – which last year generated revenues of £34.6m – is best known for its private client work.

Brackett said of the merger: ‘We hope to integrate both client bases and from this to develop it. What we bring is a wider range of services to Pritchard Englefield’s clients. It’s exciting for us all, the biggest challenge is that our people and clients feel valued and see an improvement.’

Thomas Eggar’s London team of around 30 lawyers will relocate to Pritchard Englefield office on New Street. Staff were informed of the move on Monday (8 April).

The deal comes amid a flurry of mergers and discussions in the legal mid-tier, with Withers and Speechly Bircham last month confirming that they are talks to create a private client-dominated leader.

Click here for The Legal 500 profile on Pritchard Englefield.

Francesca.fanshawe@legalease.co.uk