Legal Business

The IT crowd: Travers, Kirkland and Freshfields line up as Micro Focus seals $8.8bn HP deal

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Corporate Kirkland & EllisTravers Smith
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Travers Smith and Kirkland & Ellis have teamed up to advise UK tech firm Micro Focus on its $8.8bn deal for Hewlett-Packard’s software business.

Micro Focus returned to its longstanding adviser Travers Smith, which it used in March on its $540m acquisition of Serena Software, alongside Kirkland. The deal, which was primarily structured under Delaware law, saw Travers head of corporate Spencer Summerfield advise Micro Focus alongside corporate partner Jon Reddington on English law. Kirkland fielded a team led by New York corporate partners William Sorabella, David Feirstein and John Kupiec.

Hewlett Packard Enterprise (HPE), which includes the assets of Autonomy, the UK software group that HP purchased in a troubled deal in 2011, will spin off and merge its non-core software assets with Micro Focus. The UK company will pay $2.5bn in cash to HPE, while HPE shareholders will own 50.1% of the combined company that will operate under the name Micro Focus.

The transaction underlines Micro Focus’s status as a trophy client for Travers. The Newbury-based company is now one of the UK’s largest technology companies with annual revenues of over £3bn and an expected market capitalisation of over £10bn.

Freshfields Bruckhaus Deringer acted alongside Wall Street leader Wachtell, Lipton, Rosen & Katz for HPE. Freshfields, which advised on the split of HP late last year into Hewlett Packard Enterprise and HP Inc, fielded a team under global M&A co-head Ben Spiers and London corporate partner Stephen Hewes. It is has been a busy summer for the pair, with Spiers and Hewes also advising Japan’s SoftBank on its £24.3bn takeover of the UK’s largest tech company Arm Holdings. Micro Focus took Arm’s place on the FTSE 100 as a consequence of that deal.

Ashurst, meanwhile, advised JP Morgan Cazenove, which is the lead financial adviser and sole sponsor to Micro Focus, fielding a team under corporate partner Dominic Ross.

tom.moore@legalease.co.uk

Legal Business

Boyd becomes the latest Linklaters partner to jump ship to Kirkland

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Strategic recruitment Kirkland & EllisLinklaters
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Rising private equity star Stuart Boyd has become the fifth Linklaters partner in the City to switch to US rival Kirkland & Ellis (K&E) in the last 18 months.

Boyd, who counts the likes of The Carlyle Group, CVC Capital Partners and Bridgepoint as clients, is to join K&E’s London office.

The move sees Boyd reunite with ex-Linklaters private equity partners, David Holdsworth, who agreed to move to K&E earlier this month, and the Magic Circle firm’s former Nordic head of private equity Roger Johnson, who joined last September.

Boyd leaves Linklaters after 13 years at the Magic Circle firm, having joined as a trainee in 2003. As an associate, he was part of the Linklaters team advising British bank RBS on its now infamous €71bn hostile takeover of Dutch bank ABN Amro in 2007 as part of a consortium that included Santander Group and Fortis.

Boyd became a partner in 2013, building a strong practice handling with private equity M&A and restructuring. His recent deal list includes acting for Filipino noodle maker Monde Nissin on its £550m purchase of meat-substitute food company Quorn from its private equity owners in October and advising Brait, the investment vehicle of retail magnate Christo Wiese, on its £1.9bn acquisition of clothing chain New Look last May.

His exit further depletes Linklaters’ private equity team, which on top of Holdsworth and Johnson, also lost head of real estate M&A Matthew Elliott to Kirkland & Ellis in 2015. Elliott had built his practice around high-end real estate M&A for private equity and sovereign wealth funds. Linklaters has proved fertile hunting ground for K&E, with the US firm having also hired Linklaters’ UK head of competition, Paula Riedel, at the end of 2015.

The move comes as the US firm rebuilds its frontline deals capability in London after losing a six-partner team led by Christian Iwasko and Erik Dahl to Sidley Austin at the start of the year as the latter looks to build a stronger reputation in the City PE market.

tom.moore@legalease.co.uk

Read more about private equity in the City in the feature: ‘ABC – the brutally simple world of a private equity lawyer.’

For more on the challenges facing Kirkland & Ellis’ City operation, see ‘Kiss the ring – patronage, in-fighting and exits threaten to stall Kirkland’s bandwagon’

Legal Business

Kirkland takes fourth Linklaters City partner in a year, appointing PE partner Holdsworth

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Strategic recruitment Kirkland & EllisLinklaters
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Kirkland & Ellis has returned to Magic Circle firm Linklaters for one of its last remaining private equity heavyweights in the City, hiring David Holdsworth as the US firm rebuilds its London office.

The appointment follows the news earlier this year that Kirkland lost capital markets partner Andrew Hagan, who quit to join Freshfields Bruckhaus Deringer days after the firm lost a six-partner team to Sidley Austin.

Holdsworth leaves Linklaters after 14 years at the firm, the last seven of which he has been a partner. He will become the fourth Linklaters partner to join Kirkland in the last 12 months.

The move sees Holdsworth reunited with Linklaters former Nordic head of private equity Roger Johnson and the Magic Circle firm’s ex-head of real estate M&A Matthew Elliott, as both joined Kirkland last year. The US firm also hired Linklaters’ UK head of competition, Paula Riedel, at the end of 2015.

Linklaters has lost a lot of the emerging talent it hoped would fill the gap left by private equity co-heads Richard Youle and Ian Bagshaw when they left to join White & Case in 2013.

Holdsworth counts TDR Capital, Golden Gate Capital and Sumitomo Mitsui Banking Corporation as clients, and is known for his role on TDR Capital’s £800m take-over of upmarket gym chain David Lloyd at the end of 2013. Since then he has scored advisory roles on several big-ticket deals, including advising US computer systems provider Attachmate Group on a reverse takeover by UK rival Micro Focus to form a company worth $2.35bn last year and led on Japanese e-commerce giant Rakuten’s $900m purchase of chat application Viber in 2014.

He joins Kirkland’s London office where the revolving door continues to spin. High yield heavyweight Ward McKimm who quit to join Freshfields in June 2015; Stephen Gillespie departed for Gibson Dunn in December 2014; and Graham White joined Fried, Frank, Harris, Shriver & Jacobson in October 2014. More recently, the firm lost a six-partner private equity team to Sidley Austin in the City.

tom.moore@legalease.co.uk, jaishree.kalia@legalease.co.uk

For more on the challenges facing Kirkland & Ellis’ City operation, see ‘Kiss the ring – patronage, in-fighting and exits threaten to stall Kirkland’s bandwagon‘

Legal Business

Sidley secures TowerBrook work despite K&E charm offensive

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Corporate Kirkland & EllisSidley Austin
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After a high-profile tussle and one of the biggest team hires in the City, Sidley Austin has secured the corporate work of key Kirkland & Ellis client TowerBrook Capital Partners, amid claims that Sidley pushed aggressively to secure the work.

The news comes after a six-partner team announced in February it would depart Kirkland and set up a City private equity team at Sidley.

Of the six joiners, corporate partners Erik Dahl and Christian Iwasko managed the TowerBrook relationship while at Kirkland, generating $20m a year – a major chunk of Kirkland’s estimated $180m in City revenues last year. Kirkland advises TowerBrook on the lion’s share of its M&A mandates across Europe.

Some of Dahl and Iwasko’s TowerBrook deals include acting for Braas Monier Building Group, which it bought in 2009 with Apollo Global Management and York Capital Management, on its refinancing, high-yield bond offering and initial public offering in 2014; advising on the sale of the Jimmy Choo group to Labelux Group in 2011; and representing the client on its €443m sale of PolymerLatex in 2010.

The move comes amid claims that Sidley has quoted aggressively on fees to successfully secure the transfer of work despite a last-ditch effort by Kirkland to retain a least a chunk of its mandates.

‘I have never seen anything like this before,’ said one City private equity partner. ‘Moving a client into a non-full-service start-up is always risky. [Sidley] is saying “take a punt on us for a year and see how it works”.’

Another added: ‘I was surprised to hear this. TowerBrook is an active client and they are clearly buying the business.’

However, George Petrow, who co-heads Sidley’s finance practice, said in a statement that assertions that clients set to follow the Kirkland team would ‘enjoy a more generous fee arrangement’ were ‘untrue’. TowerBrook declined to comment.

Sidley has clearly made every effort to bolster its newly-launched deal team. Of the six partners joining, private equity partner Fatema Orjela, banking partner Bryan Robson, corporate partner Sava Savov and tax partner Oliver Currall are all understood to have joined Sidley on salaries between $1m and $1.5m. Dahl and Iwasko on the other hand are on financial guarantees of $5m. Sidley last month bolstered its leveraged finance team with the hire of Willkie Farr & Gallagher partner James Crooks.

The firm also hiked the pay of seven associates to secure the recruits. It is understood that one-year post-qualification experience (PQE) associates will see wages rise from £95,000 to £105,000 while two years’ PQE will see pay packets increase from £105,000 to £115,000. Associates with three years’ PQE will take home £129,000, an increase of £14,000.

Sidley, which has historically focused on structured finance in the UK, is also in the process of launching a Munich office, mainly to service Dahl’s clients, despite axing its Frankfurt office in 2014 following a spate of partner exits that put the office under a review in 2013. Dahl worked out of both London and Munich while at Kirkland.

jaishree.kalia@legalease.co.uk

Legal Business

Sidley secures TowerBrook work despite K&E charm offensive

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Corporate Kirkland & EllisSidley Austin
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Tussle continues over lucrative work after K&E raid

After a high-profile tussle and one of the biggest team hires in the City, Sidley Austin has secured the corporate work of key Kirkland & Ellis client TowerBrook Capital Partners, amid claims that Sidley pushed aggressively to secure the work.

Legal Business

Kiss the ring – patronage, in-fighting and exits threaten to stall Kirkland’s bandwagon

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US firms Kirkland & Ellis
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Jaishree Kalia sizes up the clashing egos and driving ambition at Kirkland’s City arm.

Flashy cars, Dom Pérignon and top dollar are just some of the things associated with Kirkland & Ellis’ City high-flyers. The top ten global law firm has been highly successful in London since setting up shop in 1994 to service trophy client Bain Capital. The practice is certainly substantial, generating over $180m in 2015, according to one partner.

Legal Business

Sidley Austin hikes associate pay to secure Kirkland movers amid plans to launch in Munich

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Salaries Kirkland & EllisSidley Austin
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Sidley Austin is upping its game in the City by announcing it will increase the salary of all its London associates to at least £100,000.

The firm is also making plans to launch a new office in Germany to service some of the new clients it will be taking on.

The pay hike comes as part of the firm’s play to secure a team of associates arriving from Kirkland & Ellis, along with a six-partner team that was recruited in February.

Under the changes, newly qualified associates will receive £10,000 more to £100,000 from 1 May this year.

It is understood that one year post-qualification experience (PQE) associates will see wages rise from £95,000 to £105,000 while two years’ PQE will see pay packets increase from £105,000 to £115,000. Associates with three years’ PQE will take home £129,000, an increase of £14,000 more than before.

Sidley is also giving some of the new partners and the team of seven associates a signing-on fee of up to £100,000 each in addition to their salaries.

City private equity partners Erik Dahl, Christian Iwasko and Fatema Orjela alongside banking partner Bryan Robson, corporate partner Sava Savov and tax partner Oliver Currall quit Kirkland & Ellis in February to join Sidley Austin and improve its private equity offering.

Sidley is also in the process of launching a Munich office, mainly to service Dahl’s clients. Dahl – who served as an officer in the US Army earlier in his career – worked out of both London and Munich while at Kirkland.

The office would be the firm’s first base in Germany having axed its Frankfurt office in 2014 following a spate of partner exits that put the office under a review in 2013.

jaishree.kalia@legalease.co.uk

Legal Business

City office grows faster than US as Kirkland posts 7% global revenue hike

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Financial results 2015 Kirkland & Ellis
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While a handful of high-profile departures has meant Kirkland & Ellis has been the subject of much speculation in the City lately, the firm’s non-US revenue is up around 10%, growing faster than the firm’s overall revenue, driven by London growth.

The US firm has continued to post robust numbers with a global revenue of $2.3bn from $2.15bn in 2015. While turnover is up 7%, profits per equity partner had a slower uptick growing just 3% to $3.6m. In 2014, partner profits surpassed the $3.5m mark rising 7% to $3.51m, which came after a 1% increase in 2013 to $3.28m.

Revenue per lawyer grew 4% to $1.4m, with a similar increase in the global headcount which rose 3% to 1,619 fee-earners from 1,576 the previous year. Equity partner headcount grew 4% from 337 to 351 while non-equity partner numbers grew 3% to 405 from 395.

In line with many other US firms, Kirkland’s non-US arm grew faster than the firm’s domestic component, bringing in a double-digit revenue increase of around 10% – three percentage points higher than the firm’s overall growth.

Of Kirkland’s 12 offices, revenue at the firm’s five international offices – London, Munich, Hong Kong, Shanghai and Beijing – stood at just under $200m in 2015, with London being the largest contributor with an estimated $180m in turnover, Legal Business understands.

Some key deals in the London office this year include advising Montagu Private Equity on its sale of CliniSys to Roper Technologies; acting for Triton Investment Advisors with the sale of its portfolio company Inflight Services Europe to Gate Gourmet; and representing CapVest Partners in its acquisition of IBA Molecular from SK Capital.

Kirkland’s London headcount has grown 17% in the last year and doubled its overall size in the last five years. The office now houses some 174 fee-earners and 62 partners, though a large number of these are non-equity partners. The firm made one of its largest promotion rounds in the City last year making up eight lawyers which amounts to 13% of the total City partner count.

But despite its strong performance the office has been criticised for offering what is viewed by some as excessive compensation packages to lure in talent from rivals – mainly for the hire of Stephen Lucas – one of the best-known names in the leverage buyout market – from Weil Gotshal and Manges in 2014.

Last year, the firm made five high-profile lateral hires in the City, which saw Linklaters’ corporate duo Matthew Elliott and Roger Johnson join, alongside fellow competition partner Paula Riedel; and debt finance partner Michael Steele from Freshfields Bruckhaus Deringer; as well as tax partner Jonathan Kandel also from Weil, Gotshal & Manges.

However, the London office has also seen a fair few departures recently including the notable exit of a six-partner team to Sidley Austin at the end of February, and the exit of capital markets partner Andrew Hagan to Freshfields Bruckhaus Deringer.

jaishree.kalia@legalease.co.uk

Legal Business

Travers Smith and Kirkland take lead roles as Micro Focus agrees $540m acquisition of Serena Software

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Corporate Kirkland & EllisTravers Smith
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Against sluggish levels of transactional activity of late, Travers Smith and Kirkland & Ellis have landed lead advisory roles on the $540m acquisition by Micro Focus of US firm Serena Software.

UK software firm Micro Focus will acquire Serena Software on a cash and debt free basis for $540m in cash, to be settled through the repayment of its net indebtedness (estimated at approximately $252m) and the purchase of Serena Software’s entire share capital for approximately $288m, subject to customary working capital and other adjustments.

To fund the bid, Micro Focus will raise about $216m through a placing underwritten by Numis Securities.

Travers Smith corporate head Spencer Summerfield advised the firm’s longstanding client Micro Focus on the deal with Serena Software, which provides software that can track and make changes to other application systems during the development process.

Summerfield was supported by tax partner Simon Yates, while US advice was provided by Wilmer Cutler Pickering Hale and Dorr. A team led by Summerfield also acted for Micro Focus on its high-profile merger with the Attachmate Group in 2014.

Kirkland & Ellis corporate partner Travis Nelson led a team based in Palo Alto advising Serena Software.

The deal is conditional on competition clearances in the USA and Germany and is expected to take place in May 2016.

Summerfield said: ‘Micro Focus’ acquisition of Serena Software is a significant development, demonstrating the continued success of Micro Focus in executing its buy-and-build strategy. We are very pleased to have assisted Micro Focus on this important transaction, which will help consolidate Micro Focus’ position as a global leader in the software marketplace.’

sarah.downey@legalease.co.uk

Legal Business

Exit strategy: Kirkland & Ellis doubles notice period for equity partners

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Partnership Kirkland & Ellis
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US firm Kirkland & Ellis has doubled the notice period for all of its global equity partners from 60 days to 120, while introducing a 30-day notice period for all non-equity partners.

The new notice requirements came into effect this week, so all those that departed the firm prior to the announcement have avoided being held to the new notice periods.

Typically, US firms do not have gardening leave so the new constraints will give outgoing partners less leverage in an exit discussion, and will make it harder for other partners and associates to depart with them.

The new notice requirements have not affected the recent departures in London which saw Kirkland lose capital markets partner Andrew Hagan who quit to join Freshfields Bruckhaus Deringer within days of the firm losing a six-partner team to Sidley Austin.

Hagan will join the Magic Circle firm in April this year and is a boost for Freshfields which is steadily building its debt markets team. Last year, Freshfields hired high-yield expert Ward Mckimm after it lifted the cap from the top of its lockstep to include a higher pay band offering competitive compensation.

The six-partner team set to join Sidley Austin includes city private equity partners Christian Iwasko, Erik Dahl and Fatema Orjela alongside banking partner Bryan Robson, corporate partner Sava Savov and tax partner Oliver Currall.

jaishree.kalia@legalease.co.uk