Eversheds chief: shortlist of US merger candidates down to 'two or three' in the new year
Eversheds is looking to have "two or three" merger candidates in its sights by early next year, according to chief executive Bryan Hughes.
November 24, 2014 at 07:08 PM
4 minute read
Eversheds is looking to have "two or three" merger candidates in its sights by early next year, according to chief executive Bryan Hughes.
Over the summer, Eversheds partners overwhelmingly backed plans to pursue a US tie up, with management since assessing options and drawing up an initial shortlist of potential partner firms.
"Our view is that there are no more than ten firms that would be realistic candidates for us," Hughes told Legal Week. "The plan is to reduce that to two or three, hopefully by early next year, and over the course of time to one.
"You can't be global without the US. The fact that we have made the commitment to be truly global by 2020 doesn't mean we are going to wait until 31st of December 2019 to do this. We are going to get on with it."
Hughes (pictured) added that finding a suitable partner was more important than rushing into an ill thought out deal, and that carrying out extensive due diligence may lead to a delay in finalising a tie up.
"It's more important to get this right than to do it quickly," said Hughes. "Some of the transatlantic mergers that we have seen have been driven by external factors rather than strategy but we are in great shape and this is naturally the next stage in our journey."
The firm is targeting neither a specific geographies within the US, nor any particular practice group synergies, according to Hughes.
"Practice groups are not a priority in as much as the type of firms that we are looking at are in the main significant (or) full service firms and we therefore don't anticipate any gaps in service."
Having agreed to pursue a US combination at the firm's partner conference in July, members were also asked to name which of six factors was most important in a partner firm. Only 3% of partners said the size of the target firm as the most important factor, while only 5% highlighted US domestic coverage.
By far and away the most important factor for partners was shared vision and culture with the prospective firm.
Hughes said: ""We are open minded. We may well end up going for a merger of equals but if we can't find someone of that size we are more than happy to look at a firm that gives us a platform but possibly not the complete picture."
Perhaps the most obvious route for Eversheds would be to make a series of smaller acquisitions, as legacy DLA did a decade ago when it completed mergers with both Chicago's Piper Rudnick and Californian firm Gray Cary Ware & Friedenrich.
However, a US office head for another UK firm warned that such a strategy could be "potentially dangerous".
"If you do a small US merger that isn't one of equals it cuts off all the relationships you have get with other US firms without getting a real beachhead in place," said the partner. "You're then looking for that second merger to almost force it to work."
Hughes admitted that Eversheds is "not a perfect fit for any US firm" and vice versa. He continued: "It would obviously be our preference to have coverage in the major markets in the States but geographical coverage is not our major driver. Cultural fit is key for us and if that means we sacrifice coverage to ensure that we get the right cultural fit, so be it. "
In order to foster a greater shared culture, the firm has already planned a series of mutual secondments with its US partner. Hughes himself has undertaken three trips to the States this year and anticipates as many visits in 2015.
Another consideration for Eversheds is the need to balance the competing desires of different practice groups within the firm. Corporate partners, said Hughes, will be keen to take advantage of capital markets capability in New York, whereas litigation partners may favour a Washington based firm. The firm boasts Microsoft, Amazon and Starbucks as key corporate clients in the US already.
Hughes also stressed that the search for a US merger will not stop the firm exploring opportunities in other markets, such as Turkey, where the firm is also understood to be looking at ways to expand its footprint.
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