‘Since Stephen Lloyd joined Allen & Overy (A&O) its star has definitely risen in the world of private equity,’ says one rival partner. As wringing any non-contemptuous words from rivals in the thrusting world of leveraged finance is hard, this view counts as high praise.
The team had a bumper couple of years after Lloyd defected from Ashurst in 2013, shortly joined by ex-colleague Karan Dinamani. Their arrival augmented a practice that previously relied on Gordon Milne as its sole dedicated UK partner. The recruitment of Lloyd, which former senior partner David Morley took a personal hand in, was symbolic for a shop that until then seemed to view private equity (PE) as a conflict-strewn liability for its debt finance team rather than an opportunity for the M&A department.
Relative early success was crystallised in 2015 when the team advised on 31 deals totalling $23.95bn for the likes of Apollo, Blackstone and Carlyle. It won them a place at the top of Dealogic’s European PE league table.
But market view is that the deals are not coming as thick and fast currently. Some blame the relatively small size of the team and the lack of buyout heritage. Looking at Mergermarket stats for European PE activity, the critique looks unduly harsh. A&O advised on 136 ranked deals during Q1-Q3 2017 with a value of $97.2bn. That is a 29% reduction on 2016 by deal value, but the volume of deals compares very credibly to peers.
Earlier this year, A&O won a mandate to advise Exponent Private Equity on its acquisition of Scotts Miracle-Gro, the lawn and garden care company, building on a 2015 mandate with Exponent on its sale of the Fintrax Group. The team also had a significant win advising Carlyle on its sale of the Zodiac Pool Group last year. Its client line-up includes OMERS, Charterhouse, Apax Partners, TDR Capital, Apollo, Advent, 3i Group, PAI Partners and CVC. Many of the deals are mid-market, but you cannot query the pedigree of the sponsors putting work their way.
In spite of this enviable list, peers question how hungry A&O is to become a true rival to the likes of Freshfields Bruckhaus Deringer, Simpson Thacher & Bartlett and Clifford Chance (CC). ‘To get a leading position you must never be complacent. You have to be in clients’ offices every week. You don’t see A&O fighting for business,’ observes one CC veteran.
A&O counters that PE is now a priority, a claim underlined by the promotion of Peter Banks to partner earlier this year. ‘Our investment in the group is continuing. It’s telling that a good proportion of new partners globally this year focus on acting for sponsors,’ says Robin Harvey, co-head of the PE practice in London.
Lloyd’s ambition for five years’ time is for the PE practice to have six or seven partners in London, with an immediate goal of bringing in partners in Germany. His conclusion: ‘We want to be in band one.’
That would take substantial investment at a time when the competition for buyout talent has never been more intense – beyond the level that A&O has yet made clear it is committed to. But for a firm where the PE practice used to extend to what Susan Howard could cover in her lunch break, a lot more progress has been made than many expected.