Commentary: Pressure is on for Kirkland as McKeeve heads for the exit
For many in the private equity community it was only a matter of time, but last week's announcement that one of its most-trumpeted signings, Raymond McKeeve, had resigned leaves Kirkland & Ellis facing awkward questions about its UK strategy. Rumours, which partners had conceded internally were not baseless, had been circulating for months that all was not well with the firm's private equity team. Even ignoring claims that McKeeve's informal style was not playing well within a conservative partnership and judging the team purely on performance, the situation did not look good, with many questioning whether McKeeve and his ex-Linklaters colleague Graham White had delivered
March 12, 2008 at 11:13 PM
4 minute read
For many in the private equity community it was only a matter of time, but last week's announcement that one of its most-trumpeted signings, Raymond McKeeve, had resigned leaves Kirkland & Ellis facing awkward questions about its UK strategy.
Rumours, which partners had conceded internally were not baseless, had been circulating for months that all was not well with the firm's private equity team. Even ignoring claims that McKeeve's informal style was not playing well within a conservative partnership and judging the team purely on performance, the situation did not look good, with many questioning whether McKeeve and his ex-Linklaters colleague Graham White had delivered.
To be honest, delivery in this case was never going to be easy because expectations were justifiably sky high. With White and McKeeve reputedly recruited on respective annual packages in the region of $4.5m (£2.2m) and $1.5m (£742,000) it was, by some readings, the most expensive recruitment ever made in the City legal market. Kirkland refutes claims the duo received three-year guarantees, saying the firm's meritocratic pay system meant their equity allocation was reviewed annually.
Neither did it help that the duo moved at the same time as Weil Gotshal & Manges recruited a buy-out team from Lovells led by Marco Compagnoni, which has proved a rather unflattering comparison for Kirkland. While there are indications that the tightly-knit Lovells team caused some upheaval, the team clearly delivered on deals, securing headline-grabbing roles on bids such as Alliance Boots and EMI. In comparison the Kirkland pair have been very low-profile.
Likewise, Linklaters, whose City private equity practice was being written off in some quarters, actually retained most of its clients and proved far more active in the market than Kirkland. As one rival partner told Legal Week: "You judge success by mandates and theirs are just not visible."
True, the pair managed to get Kirkland added to Apax's coveted panel but other regular advisers such as Ashurst are still getting the bulk of the work. And, while the duo were probably unlucky that clients such as CVC and Robert Tchenguiz have been less active than hoped, firms recruit expensive rainmakers to create their own luck. The apparent lack of integration with the rest of the practice was underlined by the lack of work conducted for Kirkland's most important client in Europe, Bain Capital.
Kirkland's unhelpful attitude to enquiries about its performance has added to the impression that all is not well. The firm repeatedly claimed everything was fine before admitting last Tuesday that, yes, McKeeve was to leave the firm. Likewise, Kirkland was unable to provide examples of the pair's work despite being given a week's notice as this article went to press.
With its City M&A push failing to gather momentum, the pressure is on for Kirkland and White, who has worked with McKeevefor 14 years, to prove that they can build a top-level European private equity practice. With an underweight corporate team, the firm's practice now looks out of balance, having built up a heavyweight funds and leveraged finance team, not to mention indications that the episode has unsettled some of Kirkland's City partners. Yet rebuilding and recruitment will now be more of a challenge. Faced with a choice, ambitious associates with a mind to do private equity at a top US practice would surely favour Weil Gotshal or Cleary Gottlieb Steen & Hamilton.
Given its impeccable credentials and eight years' investment in its UK corporate practice, that must be a galling position for the firm to find itself in.
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