Risky business - A return on Simmons/Mayer Brown won't come easy
If transatlantic merger bids are the current flavour of the month, in one important sense the talks between Simmons & Simmons and Mayer Brown are a break with recent convention. The birth of Hogan Lovells and SNR Denton and the ongoing talks between SJ Berwin and Proskauer Rose all represent deals that come with minimal risks given their strategic importance. Lack of overlap in practices and clear areas of responsibility mean that putting these businesses together will somewhat limit the always daunting challenges of integration.
June 22, 2010 at 12:58 AM
3 minute read
If transatlantic merger bids are the current flavour of the month, in one important sense the talks between Simmons & Simmons and Mayer Brown are a break with recent convention. The birth of Hogan Lovells and SNR Denton and the ongoing talks between SJ Berwin and Proskauer Rose all represent deals that come with minimal risks given their strategic importance. Lack of overlap in practices and clear areas of responsibility mean that putting these businesses together will somewhat limit the always daunting challenges of integration.
A union of Simmons and Mayer Brown holds no such comfort, with the two firms having to contemplate huge management and practice issues if they want to go over the line. This is most obvious in London, where a merger would create a full service commercial practice with well over 200 partners in a period of sedate economic activity. Yet current indications are that the talks are focused less on London and more on the global stage, in particular Asia. This raises some awkward questions for Simmons, which seemed to have squandered the early ground it made in Asia a decade ago. While the UK firm has made little secret of its long-term aim to expand in the region, the ripe moment was surely four or five years ago. Simmons has also had mixed fortunes in continental Europe and failed to make much headway in other key emerging economies.
And on a wider level, these are two (unquestionably good) firms that have failed to settle into a run of form over the last five years, at least by the uncompromising standards of London and New York, the latter a market that has proved even more troublesome to Mayer Brown than the City. Given Simmons' priorities – New York, Asia, finance – maybe Sidley Austin is a better bet.
So what would a deal bring? Scale, obviously, creating a practice with revenues of around £1bn, which would help fund European expansion and bring in the US firm's solid German practice. Mayer Brown also boasts a sizeable operation in Asia thanks to the well-regarded tie-up with Johnson Stokes & Master two years ago. And if the two City arms are skilfully integrated, Simmons and Mayer Brown would achieve real muscle in finance, energy and projects in the UK. Obviously, access to a large, upper mid-tier US practice is not to be lightly dismissed, though it will not on its own be a great deal closer for a globally-orientated merger.
All these considerations must be carefully weighed. For all the talk of Asia, there is not nearly enough on the table to justify a deal with this much risk simply to scale up in the Far East. But if the rest of the combination looks attractive, then maybe it is worth a punt. High risk brings high return.
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