There is more to FFW’s corporate practice than prominent client BBC Worldwide to make it an attractive partner for Osborne Clarke. A deal could create a serious mid-market contender
It would be going a bit too far to say that Osborne Clarke’s attempts to merge with Field Fisher Waterhouse (FFW) are all about one client, but there is little doubt what the chief corporate client is that the Bristol firm has its eye on.
BBC Worldwide, the £1bn commercial subsidiary of the state broadcaster, has turned to FFW on a number of occasions, including for its investments in Slim Film & Television and Burning Bright Productions, and for advice over the tender process for the TV licence fee collection earlier this year.
FFW corporate head Andrew Blankfield insists BBC Worldwide - which also uses Olswang for its core legal work - is nothing more than one of its “key media clients” and that it is “by no means” its top-biller. But there is no question that it is seen externally as a premium member of the firm’s corporate clientele.
Indeed, the BBC is a standout client for a firm whose corporate practice leans heavily on AIM, where it is comfortably in the second tier of advisers. At the latest count, based on Morningstar’s October data, FFW had 26 AIM-listed clients, putting it behind leaders such as Lawrence Graham (LG), Pinsent Masons and Memery Crystal, but marginally above the most recent figures available for Berwin Leighton Paisner, Nabarro and Travers Smith.
FFW’s AIM strength dates back to the hire of a team led by corporate partner and AIM specialist Anthony Brockbank from Faegre Baker Daniels legacy firm Hobson Audley in 2000. Since then it has developed a strong practice that, on the face of it, eclipses Osborne Clarke’s.
Osborne Clarke’s 18 AIM clients consist mostly of energy and technology companies such as bioplastics group Biome Technologies, surveillance technology provider Digital Barriers and gas and oil group Forum Energy. Majestic Wine, the beverage merchant, features too.
FFW’s AIM roster is much broader, with its 26 clients covering energy, technology and banks, although there are no household names. FFW’s strongest sector by revenue firm-wide is TMT, but energy and resources is the dominant one in corporate.
Yet the premium nature of Osborne Clarke’s AIM client list is much more obvious. It does not appear in Morningstar’s ranking of the top 20 firms by AIM client count but when it comes to market capitalisation, it features in seventh place, ahead of Eversheds and Norton Rose. By this measure, FFW does not figure on the top 20 leaderboard.
The Bristol firm’s performance among the AIM 100 is much stronger, with four clients, putting it joint seventh with offshore firm Ogier (eighth place by market capitalisation). In the AIM 50 it is beaten into third place by client numbers only by Pinsents and Eversheds. LG is the sole firm to nudge ahead of Osborne Clarke based purely on AIM 50 market capitalisation. Its other hotspots are in telecoms, where it places third for AIM market capitalisation, and consumer services (second behind LG).
Osborne Clarke’s position higher up the pecking order than FFW is perhaps more apparent in M&A. Corporate finance and M&A head Ray Berg says the firm’s simple strategy of bringing its corporate deal value gradually up the food chain is working, with particular success coming in the firms’ ability to move away from its local roots advising owner-managed startups to winning buy-side mandates for larger corporates. Its deal count acting for acquirers on major deals, especially public takeovers, is increasing.
“It’s a fairly balanced practice between sell-side and buy-side mandates,” Berg notes.
“It’s important to be acting buy-side because that’s where the growth is going to be.”
It is hard to speak to an Osborne Clarke partner these days without them mentioning the firm’s sector approach, and Berg is no different - he highlights the industry focus as a key factor in bringing in buy-side mandates, with digital business a particular success. As The Lawyer’s recent ranking of public M&A deals by legal fees found, Osborne Clarke has retained its strength acting for targets and advised on a number of the top 50 deals between September 2011 and September 2012 by fees, including Kewill, Alterian and GTL.
While Osborne Clarke’s biggest clients are from the telecoms and digital business sectors - notably Carphone Warehouse, Motorola and United Business Media - the firm has made inroads in the past year in the investment banking and equity capital markets (ECM) sphere. It has developed relationships with mid-market banks and brokers such as Investec, on whose legal panel it sits, and Canaccord Genuity, while corporate finance partner Jonathan King recently advised broker Peel Hunt on a £6m placing and associated acquisition by Stanley Gibbons.
Buy and large
But the area it really wants to grow is on the buy-side, where fees are higher. Thomson Reuters data shows it is doing a decent job here, with M&A mandates for buyers increasing from 23 in 2010 to 37 in 2011. However, this has dropped to just nine so far this year.
Its target-side deal count, meanwhile, grew from 20 in 2010 to 38 in 2011, but dropped to 13 in 2012. The firm will be want to nudge buy-side deals ahead of sell-side, as in 2011.
FFW’s M&A record is much thinner, with the firm advising on 34 deals between 2010 and 2012, according to Thomson Reuters data, including 18 for acquirers and 16 for targets - compared with Osborne Clarke’s 69 and 72 respectively. Its focus appears to have shifted from sell-side to buy-side, with the firm advising on eight deals for a target in 2010, four in 2011 and four so far in 2012, although the size of the data makes any trend inconclusive.
Remarkably, no deals included in the Thomson Reuters list going back to 2010 included both firms on the same deal, suggesting they have locked horns - or shared clients - on few occasions and would have relatively few commercial conflicts in corporate.
The merger might be a conflict of a different type given that Osborne Clarke’s Berg is a supporter of Tottenham Hotspur FC, an FFW client in IP/IT. FFW’s corporate team also acts for Alisher Usmanov, a major shareholder in north London rival Arsenal FC, but this relationship is at risk given the exit of relationship partner Alex Woodfield to SJ Berwin earlier this month.
Blankfield says the firm is looking to expand its ECM practice, probably the firm’s top practice within the corporate realm. It is not one of Osborne Clarke’s strengths at face value, but a combination of FFW’s AIM breadth with Osborne Clarke’s smaller but more upper-crust AIM client roster and developing broker ties would produce an impressive mid-cap ECM shop.
Add BBC Worldwide to this, and you have a serious corporate contender in the upper mid-market.