Commentary: Willkie and Dickson Minto alliance - they do protest too much
On paper, an alliance between Willkie Farr & Gallagher and Dickson Minto makes perfect sense. Talk to anyone in the market and the most common response is, "well, they had to do something", a claim that is made interchangeably for both firms.
July 16, 2008 at 10:39 PM
4 minute read
On paper, an alliance between Willkie Farr & Gallagher and Dickson Minto makes perfect sense. Talk to anyone in the market and the most common response is, "well, they had to do something", a claim that is made interchangeably for both firms.
After all, the UK has long been the glaring hole in Willkie's European practice and, while its core private equity market has developed a significantly more international outlook over the last five years, many would contend that Dickson Minto's UK-only stance is nearing the end of its shelf life.
But if the tie-up is as good as it looks, why has it received such a cool reception in the private equity community, even allowing for inter-firm rivalry?
Clearly there are benefits for both parties. For Willkie, the alliance immediately gives it numbers on the ground – the one thing it has patently failed to achieve in the UK, despite its success in Paris and, to a lesser extent, Italy and Germany.
Willkie has made no secret of its review of its City office and its desire to expand it, but despite this it currently has just one full time partner in London (Jon Lyman) and one who splits his time between the UK and Paris (Eduardo Fernandez).
Willkie is also lacking the private equity reputation it has on the continent, so having access to a ready-made team of lawyers working with such clients as BC Capital Partners and Charterhouse – the Anglo-Scottish firm's marquee clients – is advantageous.
The pitfalls come down to what the relationship delivers in practice. The deal is expected to operate as a largely exclusive alliance with the typical caveat that the pair can refer to other firms if a client requests it.
Critics have highlighted the danger that Willkie, which has worked regularly with Travers Smith, could miss out on referrals. Set against that, though European buy-out houses have begun to venture tentatively into the US, the flow of referrals stateside are not likely to be that substantial.
Also those who argue that Dickson Minto itself may not give Willkie the numbers it needs on the ground, as the boutique lacks the depth of support that would allow either firm to truly take on its rivals.
Worse still, the alliance fails to deal with the biggest problem facing Dickson Minto: succession. An internal strategy document drawn up six years ago acknowledged the challenges facing the firm in terms of shifts in the market.
The document observes that failure to find a convincing answer to the international question would leave it "milking the franchise" in the short- to medium-term. Past that, it concluded that the "status quo is not sustainable in the long-term".
And if that was true six years ago, it would seem doubly so now that respected founders Alastair Dickson and Bruce Minto are reaching the age when most serious deal-makers start to scale down their commitments.
Given this context, the claim that the tie-up is the end of the road, with a more substantive union not being even contemplated, is difficult to take seriously. Nevertheless, that is the line.
Willkie's Daniel Hurstel comments: "We made a choice to go for an alliance and we are very happy with it. History shows alliances can work and we will make this a great success. It's an alliance full stop, not a first step to anything else. We have a particular culture so we haven't paid much attention to the merger idea".
Time will tell, but not everyone is convinced.
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