City firm Theodore Goddard has pulled out of merger talks with international firm Richards Butler, a mere week before both firms’ partners were scheduled to vote on the deal.
The surprise move followed an extraordinary meeting of all Theodore Goddard partners, lasting two days, which concluded on 11 January.
A joint press statement gave no reasons for the collapse of the talks, saying only that “the advantages were not sufficient to outweigh the disadvantages”. The names of the partners leading opposition to the merger, and the precise nature of their objections, are understood to be subject to a confidentiality agreement.
The setback will be a severe embarrassment to the leading partners of both firms. The merger had the unanimous backing of Theodore Goddard’s ruling policy committee and Richards Butler’s partnership board. But, after completing its due diligence and circulating a consultation document, Theodore Goddard’s leadership failed to swing a majority of the firm’s 51 partners behind the deal.
Ian Guthrie, director of business development at Richards Butler, said: “It is in the nature of partnerships – there is always a stage at the end when you have to posit a deal to the partners. It is difficult to know how they will respond to the unanimous recommendations of the leadership. Clearly we didn’t think there was a serious risk that they’d reject it – we didn’t spot it on the radar from very far off.”
Peter Kavanagh, managing partner of Theodore Goddard, added: “A consensus view was reached on Monday evening not to proceed. But the partners were very supportive of the policy committee and thankful for our work in developing the proposal.”
The talks date back to June 1998, when the firms began discussing an ambitious tripartite merger with Denton Hall. When the latter pulled out in October after a dispute concerning its Hong Kong office, Richards Butler and Theodore Goddard continued talks. Discussions had reached an advanced stage, with both partnerships scheduled to vote on the merger on 18 January.
Both firms insist that they remain interested in merging with other firms as a route to growth.
PLS News 13/1/99
