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.
The Mills & Reeve takeover of George Davies, which will create a firm with revenues of around £76m, has been under discussion for a number of months. A formal business case was due to be presented to partners at the end of April.
Guy Hinchley, managing partner of Mills & Reeve, said in a statement: ‘Discussions are ongoing with the senior management team at George Davies. We have been working through the usual due diligence process and are finalising the business case to present to partners.’
George Davies, which has 18 partners, would add around £6.5m to Mills & Reeve’s £69.4m revenue, based on 2011/12 results, and move the firm a couple of spots up the LB100 rankings.
‘We weren’t in any rush because we wanted it to be culturally right for the firm and the client.’
Victoria Brackett, Thomas Eggar
Critically, the addition of George Davies will add strength to the Mills & Reeve’s Manchester practice, which it launched in 2008. Local stalwart George Davies has a long-established, full-service practice in the second-largest UK legal market, notably in private client, media and sport. Both firms are based in 1 New York Street, Manchester, which should make integration more straightforward.
Meanwhile, south east outfit Thomas Eggar announced its own acquisition of 36-lawyer London practice Pritchard Englefield last month.
The deal, which went live on 1 May, roughly doubles the size of Thomas Eggar’s City arm and sees the 58-partner firm increase its revenue from £34.6m to £40.6m with Pritchard Englefield taking Thomas Eggar’s name.
Pritchard Englefield’s five equity partners were all involved in negotiations and the merger received the required 75% mandate from Thomas Eggar’s 24 equity partners in a vote at the end of March. Three of the five Pritchard Englefield equity partners will retain their equity status post merger, while two will become fixed-share partners.
Thomas Eggar has been on the hunt for added strength in London for some time and the addition of Pritchard Englefield’s City practice has been billed as substantially bolstering its profile as an institutional adviser.
The deal looks a credible move given Pritchard Englefield has a relatively large corporate practice for a firm of its size, currently generating a third of its revenues from corporate work. The Legal 500 ranks it in the second tier of firms recommended in the City for M&A deals up to £50m.
Thomas Eggar managing partner Victoria Brackett will continue to lead the firm, with Pritchard Englefield managing partner Ros Ashby joining the combined practices’ ten-strong management board. Thomas Eggar’s London team of around 30 lawyers will relocate to Pritchard Englefield’s office on New Street.
Brackett, who restructured Thomas Eggar’s management team after being elected managing partner a year ago, 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. We found the right partner. We weren’t in any rush because we wanted it to be culturally right for the firm and the client.’
Given its strength in private client, Thomas Eggar has notably invested in a tax department in the City, recently hiring from Pinsent Masons and Baker & McKenzie, as well as taking on Berwin Leighton Paisner partner Andrew Watters earlier this year.
However, its finances were arguably in need of the boost that the addition of Pritchard Englefield could provide. According to the LB100, revenues were up just 1% for 2011/12, while profit per lawyer was down 3% to £37,000 – still one of the highest in the South peer group.
‘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,’ said Brackett. ‘It’s exciting for us all, the biggest measure of success will be if our people and clients continue to feel valued and see an improvement in their engagement with the combined firm.’
Meanwhile, Withers and Speechly Bircham’s merger discussions continue. The firms confirmed at the end of March that they were in preliminary talks to form a 600-lawyer, £170m practice that will fit easily into the top 25 of the LB100. On paper, the union would make strategic sense. The two firms have near-identical profit margins (Speechly 20%; Withers 21%), although Withers has a considerably higher profit per lawyer of £72,000 to Speechly’s £46,000.
In a joint statement, the firms said: ‘Withers and Speechly Bircham can confirm that they are in preliminary discussions regarding a potential merger. Both firms see exciting opportunities for growth in such a merger.’
‘Both Withers and Speechly Bircham have been growing their international offering in response to changes in the global legal market and the increasing importance of private capital in the world economy.’
The real benefit of the merger will be the combined strength in serving high-net-worth clients. Both firms have considerable international wealth management practices. Withers is a longstanding transatlantic law firm, while both have expanded in recent years into different but strategically important private client jurisdictions.