No fit for the firms.

Current and former partners at Magic Circle firm Allen & Overy and U.S. outfit O'Melveny & Myers have reacted to the news that merger talks between the two are over, with some people citing their protracted length as impacting the end result.

This publication exclusively revealed the pair were in talks last April, but exploratory discussions had kicked off way back in 2017, according to a few people with knowledge of the matter.

Many in the industry had stressed the importance of moving relatively quickly while still trying to negotiate a complex piece of M&A. As time ticked on, some commentators said the likelihood of a deal diminished.

Following confirmation from both firms earlier today (September 2) that talks had ceased, one A&O partner told Legal Week that he believes the length of the discussion process was a problem.

He said: "Sometimes you can overcome other issues if everyone is enthusiastic and energised – but if things drag on then that removes that enthusiasm."

A former A&O partner agreed, saying: "Continued uncertainty is not helpful."

People at both firms stressed that the main reason for the breakdown in discussions was the current adverse macroeconomic conditions, including a reduction in U.S. interest rates and foreign exchange rate volatility, which would impact how a deal would be valued.

But one partner who used to work in one of the firm's London offices said that this could be a "smoke screen" for wider issues that could affect a U.K. firm's attractiveness.

He said: "There's been currency volatility for ages. I think everything is too volatile right now in Europe for a deal – there's Brexit, the possibility of a Corbyn government, etc. Why would a U.S. firm want to reduce its dollar cashflow?"

Commenting on the exchange rate volatility point, another partner who used to work at one of the firms said: "Surely you could bridge that if that was the issue." They added: "I thought it was a good deal."

Others stated that previously flagged problems contributed to the deal being killed.

A faction of corporate partners at A&O's London office were said to be unhappy about the proposed merger, fearing a dilution of brand and divestment of power from the city base.

One former A&O partner based in the city told Legal Week that uncertainty had remained an issue. But he added that the firm's heavyweight banking practice "was swinging behind" the proposed tie-up, after a sustained charm offensive by management team Wim Dejonghe and Andrew Ballheimer.

The current A&O partner said the pair, who are approaching the end of their terms for senior and managing partner respectively, "deserve credit" for overseeing the operation.

He said: "They deserve credit for trying to do something brave and getting it close. I'm sure they're very disappointed, but their job is to bring opportunities like that to the firm.

"It's not like we're in need of that particular merger."

One former colleague concurred. He said: "I imagine there will be some disappointed people in the U.S. – but ultimately it was not a deal that had to be done."

With reporting by Hannah Roberts and Paul Hodkinson.