Comment: Camerons Double Merger Adds Up But Will It Multiply?

Pity the poor pundit obliged to come up with an opinion on the obtusely-forged union of CMS Cameron McKenna, Nabarro and Olswang. Despite representing one of the largest legal mergers in the UK, taking a view on the tie-up, good, bad or indifferent is challenging, not least because the trio have so far been strikingly gnomic over the whole thing.

The union combines three brands with impressive industry credentials across real estate, media, technology, financial services, energy and life sciences. That is a lot of sector to focus but in those areas, these outfits carry potency.

Where the brands bring less juice is as a whole (or three wholes). This trio has clocked up more than its fair share of strategic flip-flops and reverses over the years, including a bewildering range of merger bids, particularly Camerons. None of the three has excelled at organic growth for years or looked like a natural home to more ambitious partners, in part because of the lack of strong generalist teams in corporate and disputes.

In the case of Olswang, the curate’s egg nature of the practice and the combination of public strategic dissent and partner departures meant it plainly needed a deal. Nabarro, meanwhile, has been a byword for solid respectability without achieving much of the pace and drive displayed over the last five to ten years by many of its peers in the City mid-tier.

Camerons has been the most ambitious of the three by some way, even if few neutral observers would be satisfied by its attempt to position the CMS grouping as equivalent to a single global law firm. With practical limits on what can be achieved within the CMS alliance beyond marketing, Camerons in 2010 moved for an ambitious back-office deal with Integreon with mixed results as well as pursuing a string of merger bids before striking opportunistically but happily on its 2014 takeover of Dundas & Wilson.

The other big success Camerons can point to – backed by the astute property deal behind its Cannon Place move which should ultimately save it tens of millions of pounds – is a dramatic hike in profitability achieved in the last five years. Here the branding is an issue, since the £439,000 profit per equity partner figure for the CMS group is far lower than Camerons’ core equity ladder.

And the creation of a £450m national UK business on the rock of Camerons’ tightly-managed finances is not a bad place to be, especially with the additional asset of the CMS network, which has matured nicely over the last decade.

Certainly, it is hard to see the three businesses being worse off under the union (though support staff should be feeling a little nervous given Camerons’ battle against proliferating back-office teams).

But by the same token, neither is it a given that the trio will gain a new momentum. These are three firms with a growth issue and reputations for laidback collegiality – galvanising the much larger whole will be trying, even if the Dundas union proved solid business in similar circumstances. The early view: you could not argue against the deal but neither will the firms’ rivals be feeling nervous just yet.

SOURCE
LEGAL BUSINESS
Alex Novarese

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