Having previously pursued a merger with the now defunct Cobbetts (as it turned out, a lucky reprieve), Pannone’s current discussions with Australian-listed Slater & Gordon (S&G) are seeing talks over which parts of the Manchester-based firm’s diverse business will be included in any deal.
With the firm effectively split into four limbs: its commercial arm; the private client, clinical negligence and personal injury business; its white label service Affinity; and Connect2Law network, discussions are ongoing as to whether the latter two divisions fit with S&G’s model.
Merger talks have been spurred on by Pannone’s finances, in particular its bank loan and overdraft, which its 2012 LLP accounts lodged with Companies House show had then reached £14.7m, despite its highest profit-earning member taking home £537,250, up from £309,314 in 2011. Part of the bank’s overdraft facility (worth £3m) was due for renewal in October.
The LB100 firm also turned out poor financial results for the 2012/13 year, with revenues down to £45.6m, constituting a 10% drop over five years.
The firm held advanced merger talks with Cobbetts last year, according to one source close to the process, but stumbled after the now collapsed firm declared that Pannone had too many full equity partners and raised concerns over Pannone’s Hale and Alderley Edge offices – offices which it subsequently closed with the loss of up to 12 posts, including a mix of fee-earner and secretarial jobs.
Accounts further state that the average number of employees was 539 compared to 595 in 2011, comprising 305 fee-earners and 234 support staff.
As Legal Business went to press a vote was expected in November.
Pannone declined to comment.