With ABN Amro the latest in a long line of Dutch bluechips to end up in foreign hands this year, and the effects of the US sub-prime mortgage crisis sweeping through continental Europe, Legal Week prepared for a series of hard-luck tales as it embarked on a visit to Amsterdam and Brussels last month.
But, with an active local deal market and the credit crunch apparently nibbling rather than biting, the mood among law firms in
In addition to gearing up to ditch its office in The Hague next year, Dutch blue-blood De Brauw Blackstone Westbroek — widely viewed as Amsterdam’s top local corporate firm — did not make up a single equity partner this year, while the Netherlands’ other domestic giant, NautaDutilh, has just gone through a hefty partnership restructuring, which saw the firm’s Rotterdam office survive only by the skin of its teeth.
While size and shape also remains a high priority for the international firms based in the region, both groups of firms have managed to make the most of a robust M&A market.
Insulated from the crunch?
A slew of Europe’s large private equity players — including 3i and CVC Capital Partners — have all been active in the region this year, although such deals have not been as large or as highly leveraged as in the
Cleary Gottlieb Steen & Hamilton’s respected local corporate partner Laurent Legein (pictured left) echoes the view of many in the market when he says: “The credit crunch is unlikely to have a strong impact on the Belgian market.”
He adds: “Paradoxically, it might have a positive effect — most of the Belgian leveraged buy-out deals are in the mid-market range, where the funds can generally still get the financing. At the same time, as valuations go down a little and funds become less present on auction sales, the industrial buyers may see acquisition opportunities.”
The battle for ABN
The biggest deal in the
The saga began back in March, when Barclays — advised by Clifford Chance (CC) — launched an audacious £80bn bid. The target handed Nauta the main role, with Allen & Overy (A&O) and Stibbe also grabbing a slice of the action. Davis Polk & Wardwell provided
But a consortium comprising Royal Bank of Scotland (RBS),
RBS called in Linklaters, while De Brauw also won substantial work from the consortium — advising
After a tough period for Nauta, which saw the firm put its strategy under the microscope and downsize its
“ABN was a great deal for the firm to be involved in. It has been a good year for Nauta. My sense is the
Nauta chairman Marc Blom is upbeat about the firm’s current position in the market but concedes it may remain unclear who the newly-acquired ABN will turn to in the future, but is quietly confident the firm can play a role.
The takeover trend
The ABN deal was as symbolic as it was large, representing the first of the
“The ABN takeover was a shock to many in the market,” says De Brauw corporate partner Lodewijk Hijmans van den Bergh (pictured left). “It was the first real hostile takeover of a large Dutch company and the consortium exceeded all expectations by winning the battle.”
Other recent examples of Dutch companies being taken over by a foreign suitor include baby-food leader Royal Numico being absorbed by French giant Danone for E11.8bn (£8.5bn) and iconic brewery Grolsch, which was snapped up by SABMiller for E816m (£583m).
Other deals saw electrical distribution company Hagemeyer also end up in French hands after French electrical distribution company Rexel finally ironed out a deal to acquire its Dutch peer for E3.1bn (£2.2bn).
UK-based SABMiller’s acquisition of Grolsch last month was particularly notable in terms of legal advisers, following SABMiller’s decision to instruct Herbert Smith ally Stibbe rather than long-term adviser Lovells.
While local partners concede the trend could impact on their business — the argument as ever centres on who will lose out.
Freshfields Bruckhaus Deringer corporate partner Steven Perrick (pictured right) argues that the trend will play into the hands of international firms based in the region.
“It is a trend we are watching carefully but I think it will be the international firms that benefit,” says Amsterdam-based Perrick. “We often act for the buyer or the bidder and our model is designed to cater for big cross-border deals, which are increasingly common in this jurisdiction. We expect to also remain the trusted advisers of a few Dutch bluechips.”
Many in the market point to De Brauw as the firm that could be negatively affected by such a trend. The firm — which ditched its alliance with Linklaters in 2002 — has remained fiercely independent but has still managed to grab roles on the lion’s share of the big Dutch deals.
With a lot of the Dutch corporates — where traditionally the firm has deep, institutional contacts — now being picked up by foreign owners with legal advisers of their own, De Brauw’s model mean the firm could find itself exposed.
One rival remarks: “A few years ago, De Brauw’s client list would have been almost entirely made up of the Dutch bluechips, but they do a lot more work for the investment banks now.”
This, says De Brauw’s van den Bergh, is true, but it is an indication that the firm is growing its client base and adapting to the new corporate climate rather than a damning indictment of its independent model.
He says: “The trend of foreign companies taking over Dutch corporates presents a challenge, but also a lot of new opportunities for advisers.”
He adds: “Advising Fortis and Santander on the ABN deal was the first time we have advised either on large transactions, as was the case with Danone [which the firm advised on its takeover of Royal Numico]. Consolidation in a number of markets, particularly the financial institutions, has been on the cards for some time and it is something our model caters for, with our extensive links to other top independent law firms in other jurisdictions.”
Meanwhile, A&O’s
He adds: “The bigger worry, however, is de-listings. Listed companies provide a good stream of work for law firms.”
A weighty issue
Despite the corporate activity during the past 12 months, the lower fees generated in the region, coupled with gloomy global economic forecasts, mean growth and promotion is a tightly controlled affair. Linklaters operates a country weighting system in
Due to completing mergers in
While the firm does not comment on the details of its remuneration structure in the region, it is understood that the firm’s central lockstep has several gateways to control the flow of equity to partners in the
Meanwhile, A&O’s magic circle rival Freshfields has always maintained a stripped-down office in
“We do not have any fixed-share partners in
But, it is not just the international firms that have felt the need to keep a tight reign on headcount. Nauta and De Brauw have both been on a concerted drive to keep headcount down.
Nauta has spent the last few years undergoing a well-publicised restructuring of its partnership. De Brauw, on the other hand, failed to make up a single equity partner this year and is gearing up to axe its office in The Hague next year — a move that has been public for some time.
Eubelius’ loss is Government’s Geen
One of the most talked-about moves in
Geens, who had indicated for some time that he was interested in a foray into Belgian politics, was appointed as private secretary for economic affairs to Kris Peeters in July.
While his name remains on Eubelius’ short but distinguished partnership list, rivals say his new government role will leave him with little time for the law. However, Eubelius insists he will remain at the core of the firm’s strategic development and will return to the firm in May 2009 at the end of Peeters’ term.
Many of Geens’ peers smile wryly when questioned about the prospect of him returning to private practice full-time, saying that his partners have perhaps underestimated the extent of his political ambitions.
Despite Geens being otherwise engaged, rivals are confident that the 100-lawyer firm will maintain its position as the jurisdiction’s premier independent law firm, singling out Marieke Wyckaert — who will head up the 40-lawyer corporate department in Geens’ absence — for particular praise.
Managing partner Patrick Hofstrossler says: “There will be no change in the firm’s philosophy and Koen will play a key role in our strategic development.”
For small but mature markets such as Belgium and the Netherlands, the size and shape of the countries’ commercial law firms and the fees they command will always be limited.
While the four international magic circle firms will continue to tinker with their remuneration structures to adapt to the markets, they all consider
