Law Firm Merger Mania: Eversheds And Sutherland Are Talking
What's driving this deal, which would create a Biglaw behemoth with more than 2,000 lawyers worldwide?
As 2016 draws to a close, Biglaw associates have visions of bonus plums dancing in their heads. Meanwhile, partners have mergers on their minds.
Earlier this month, Arnold & Porter and Kaye Scholer announced their merger. Meanwhile, the troubled U.K. firm of King & Wood Mallesons continues to seek a suitor.
Finding a merger partner when you’re in dire straits is difficult. It’s much easier to be merging for purposes of strengthening your platform, as opposed to mere survival. This takes us to today’s potential transaction, involving two firms on solid footing that seek to go global. From Casey Sullivan of Big Law Business:
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The Atlanta-based law firm Sutherland Asbill & Brennan is in merger discussions with Eversheds of London, the firms announced on Tuesday.
If consummated, the deal would create a law firm with more than 2,300 lawyers spanning 31 offices in 29 countries, the firms said in a joint statement. Combined revenue would be more than $900 million, according to the firm’s 2015 revenue figures, placing it among the top 40 largest law firms in the world by revenue.
“Joining forces with Sutherland will give each firm’s clients a global platform and we will be discussing with our partners positively in the coming weeks,” said Eversheds chief executive Bryan Hughes, in a statement.
The announcement depicted the discussions as being in an advanced, yet incomplete stage. It said that both firms have presented the proposed combination to their partners, who will likely vote on the deal before year-end.
“A new entity called Eversheds Sutherland, overseen by a global Board and with equal representation from each firm would be created by this transaction,” the firms said.
It makes sense for the Eversheds name to take precedence, given the comparative size of the two firms. In terms of headcount, Eversheds has almost 2,000 lawyers, while Sutherland has around 400. Not surprisingly, Eversheds has much larger revenue as well. But the firms are compatible in terms of profits per partner, as noted by Meredith Hobbs in the Daily Report:
Commensurate with Eversheds’ greater size, its revenue is higher than Sutherland’s, but the two firms have similar profits per equity partner. Eversheds reported revenue of £405.5 million for the 2015-2016 fiscal year—$503.4 million at the current exchange rate of $1.24 to £1—and ranks No. 13 by revenue in Legal Week’s UK Top 50 Firms.
Sutherland reported $301 million in revenue in 2015, ranking No. 107 in the Am Law 200. Sutherland’s PPP is a bit higher at $1.02 million per equity partner, compared with £742,000 or $921,000 per equity partner for Eversheds at the current exchange rate.
What’s motivating the merger talk? From the firms’ joint statement:
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The rationale for the proposed transaction is driven by a shared vision of providing clients with high-quality, consistent and coordinated service around the globe.
Seems sound. As clients go global, many law firms must as well (subject to some exceptions, like Cravath and Wachtell).
Keep in mind that this isn’t a done deal just yet. Both partnerships must approve the transaction. Until then, either party can walk away — just as Foley & Lardner left Eversheds at the altar last year.
Good luck to the two firms as they explore a possible collaboration. If you have information or insight to share, please feel free to email us (subject line: “Eversheds Sutherland”), or text us (646-820-8477). Thanks.
Sutherland and Eversheds Are in Merger Talks [Big Law Business]
Eversheds in late stage merger talks with US firm Sutherland [The Lawyer]
Sutherland and Eversheds Are in Talks to Combine [Am Law Daily]
Sutherland, Eversheds Partners To Vote On Merger [Law360]
Global Client Service Drives Focus for Eversheds and Sutherland Discussions [Sutherland Asbill & Brennan LLP (press release)]
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Earlier: Foley & Lardner To Leave Eversheds Standing At The Altar
Troubled Biglaw Firm Searches For Merger Partner
David Lat is the founder and managing editor of Above the Law and the author of Supreme Ambitions: A Novel. He previously worked as a federal prosecutor in Newark, New Jersey; a litigation associate at Wachtell, Lipton, Rosen & Katz; and a law clerk to Judge Diarmuid F. O’Scannlain of the U.S. Court of Appeals for the Ninth Circuit. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at [email protected].
