BLP and Bryan Cave bring in Deloitte to advise on merger as deal edges forward
Big four accountant working on proposed tax structure for transatlantic tie-up
November 23, 2017 at 09:55 AM
3 minute read
Deloitte is advising Berwin Leighton Paisner (BLP) and Bryan Cave on the structure of their proposed merger, as partners gear up to vote on the deal on in the coming weeks.
The big four accountant is working on the details of the tax structure of the new firm for inclusion in the merger proposal documents, according to a source close to the matter.
It is understood that BLP and Bryan Cave are aiming for close financial integration, as opposed to a verein merger or company limited by guarantee structure used in many recent transatlantic tie-ups.
In the announcement confirming the talks, Bryan Cave chair Therese Pritchard said the combined firm "would be one of only a handful of global firms operating in a one-firm structure".
A partner at one of the firms said: "I don't think the plan is to go for a verein – the firms want to be as financially integrated as possible."
Fully integrated transatlantic mergers are rare, and present significant challenges due to the different tax and accounting systems used by UK and US firms.
One senior partner at a firm which has completed a transatlantic merger commented: "The big challenge is managing different sized profit pools and compensation. What sits behind all of that is the reach of the Internal Revenue Service (IRS). All UK partners will have to file with the IRS in the US – and that is a huge administrative burden.
"If they are going for full financial integration, that is bold, and there will need to be a mechanism for evening out discrepancies in the profit pools in the UK and US. Other mergers have used measures like having three-year staged integration and specific contributions from partners to deal with legacy liability."
It is expected that the partnership votes at both firms will take place before Christmas, according to partners at each firm.
One said that work is already being referred between both parties, saying that the firms have shared "an impressive amount" of referrals.
If the merger goes ahead, it will create a 1,500-lawyer firm with combined revenues of £730m, with 32 offices in 12 countries around the world.
According to partners, the firms have already held talks about Bryan Cave moving its London-based lawyers into BLP's Adelaide House headquarters if the merger talks are successful.
BLP and Deloitte declined to comment.
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