The much-trailed recruitment by Kirkland & Ellis of Linklaters’ City private equity team surely signals the high-water mark for the traditional buy-out lawyer, coming weeks after similar appointments at Weil Gotshal & Manges and Allen & Overy.
Who would have predicted years back that this breed of corporate lawyer, having emerged little noticed in the 1980s, would end up in such demand?
Even brushing aside rumours of gargantuan packages offered for the departing pair, Graham White and Raymond McKeeve, the US firm has clearly offered substantially more than either was earning in Linklaters’ partnership.
And what is the US firm getting for its largesse? The pair certainly bring a decent pedigree in the sector, as well as a proven track record of building up a practice largely from scratch after joining the magic circle firm from SJ Berwin back in 2001.
The practice mix also looks promising with the US firm having clients such as Bain Capital and CapVest that could do with more UK capability, while the pair are expected to bring a good chunk of work for names like CVC Capital Partners and the Tchenguiz brothers.
Sceptics note that Kirkland, despite its impeccable buy-out credentials, does not have the most internationally-minded client base, a factor underlined by the lack of a London office for Madison Dearborn. There is also a relative lack of debt capability, though with Kirk-land’s hunt for a senior leveraged buy-out partner well-advanced, that problem looks imminently solvable.
Back at Silk Street, the outlook is less promising. The episode has been a bruising affair for Linklaters and a pretty dismal attempt at integrating external talent, even for a firm unpractised in London at the art of the lateral hire. This lack of integration was emphasised by the development of a quality practice, but one that always looked — whatever the private equity deal league tables said — as too mid-market to cross over with Linklaters’ M&A machine.
As such, it is not so much that the departing pair did not click with the firm’s debt team (though true enough) as that they did not click with the firm at all. For their part, White and McKeeve were eager to get back to a firm where private equity is unambiguously central.
As one Linklaters partner comments: "I have a lot of time for Graham and Raymond, but they could be tough guys to work with."
Still, with five years’ investment in the sector and larger houses increasingly retaining multiple counsel, it is not back to square one. Linklaters is also glad that senior associate Richard Youle, a fellow SJ Berwin man and a name on many rivals’ hiring list, looks set to stay on having just been made up to the partnership.
But the key issue will be whether its current strategy under new practice head Charlie Jacobs is convincingly executed. Jacobs’ contention that public M&A and private equity are converging is uncontroversial, given the role of buy-out money in bids for FTSE 100 targets such as ITV and BAA.
And the logic of bringing private equity experience firmly within the M&A team not only plays to Linklaters’ strengths, it is in many ways the future of the industry. Indeed, it is the model that has worked spectacularly for Freshfields Bruckhaus Deringer.
But much time has been lost. If Linklaters is not ready to really put private equity at the heart of its business, it should just save itself a lot of bother.
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Commentary: Buying out those buy-out boys
Published: 06/04/2006 00:00
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