M&A Across The Pond

Editor: I understand you have just been accorded another honor, "Deal-Maker of the Year." Which of your endeavors contributed to this honor?

Francies: Although these awards delve into individual matters, you have to look at them as awards for the office. No deal is done by one person. On some of these complex cross-border deals there are huge teams of lawyers. In the London office I am lucky because we have a great team of people, from the receptionists you first see when you walk through the door to all the other people who help get the clients' work done, secretaries, facilities and post and print room, the people who make the technology work and the office a pleasant place to be in. Everyone contributes to our firm's history of success, which makes me look good and my job easy.

If you look at the record of success of this office, we have had a year where we did a lot of good things. We recruited a lot of very good people - we just made a fine new partner, Michael Nicklin, and we have done some great deals both in the UK and across borders.

Editor: As head of the London Office, what is the scope of your duties in overseeing the firm's several offices in Europe?

Francies: Each office has its own managing partner and management structure and there is a firm-wide management committee which oversees all offices. I am a member of the firm-wide management committee as are the heads of our Paris and our German offices. There is also a committee on which I serve together with partners from Boston, Germany, London, New York and Paris that makes sure we are maximizing our resources in Europe and integrating properly. My role in London is to help make the office as successful as possible. Part of that involves working with other offices.

We draw upon the resources of more than 1,200 (950 in 2002) lawyers in our offices in London, Brussels, Budapest, Frankfurt, Munich, Paris, Prague, Shanghai, Warsaw and across the U.S. Our London office is among the largest U.S.-based international law firms in London and the second largest in the firm after the New York office.

Editor: Why has the office benefited by having both U.S. and UK M&A lawyers working side-by-side, sometimes with Weil lawyers in France and Germany?

Francies: We gain because of the dual set of experiences, something that other people do not have to the same extent. A lot of the new techniques that come to Europe are adaptations of things done in the U.S. A lot of the investment bankers we deal with have worked in the U.S, so having the best of both jurisdictions is to our advantage. It gives us the ability to think laterally in solving problems.

We focus a lot on private equity, and our French and German offices are both at the top of their markets in that area. There are many reasons to work together on a lot of cross-border deals. It is a big advantage to have people, who are the best in their jurisdiction, giving us the ability to introduce clients and to do deals with total confidence.

Editor: How did you come to build the M&A practice in London into the juggernaut it is today?

Francies: Like all of these things, it has a lot to do with having the right people and being in the right place at the right time - being in a position to take advantage of the Firm's platform. Many of the transactions involving continental Europe are financed out of London. A lot of hard work goes into our recipe for success as well. A lot of people in the office over the last 10 years have worked very hard to get us to where we are today. It did not just happen. It is a product of our relentless commitment to client service and excellence in legal advice. Our job is to give the best and most constructive legal advice to our clients at all times.

As you do more and more deals, not just in London, but in Germany, France, and Central Europe, you get better known and have a broader wealth of experience to rely on. Clients have more confidence because they see that you have done a good job in the past. They are happy to have you do a great job for them again.

Editor: Are your private equity deals on the execution side as well as on the fund formation side? Is this also true of venture capital deals?

Francies: We do the execution side in Europe. We do not really do the fund formation work. Sometimes we help out on regulatory or tax matters but nearly all our work is transactional.

We do less venture capital today than we did in January 2002 when we were also interviewed by your newspaper. At the time we had a strong biotechnology practice but now we are more focused on private equity. We previously focused a lot on just the bigger private equity deals whereas we have started over the last eighteen months to try to get more into the mid-market deals to have a bigger, more regular deal flow stream. That effort has been very successful.

Editor: Are club deals as prevalent in the UK as in the U.S.?

Francies: I think so. It is hard to tell at any given time. Until the recent flurry of huge deals in the U.S., it looked as though the European M&A market was going to be bigger than the U.S. market this year, but that is probably not the case anymore.

When you get to deals of the size we are seeing, they have to be done in clubs because one person cannot put in all the equity for a deal of that size.

Editor: Is there a difference between the club deals in Europe and those in the U.S.?

Francies: We have some European houses that play a huge role in shepherding European deals. Houses like Premier or CVC that play a huge role in Europe have not really gotten into the big U.S. deals in the same way that the U.S. houses have gotten into the big European deals. Another difference is that we have less litigation and of course different regulation, financing, and competition rules than you have in the U.S. Some of the practices, like certainty of financing, are converging.

Editor: Is there more of an impediment to getting deals through the European Commission than in the U.S. in terms of the antitrust or competition problems with getting acquisitions approved?

Francies: I do not think it is more of an impediment than you see in the U.S.; it obviously depends very much on the particular issues of a specific deal. You have to be sensible and do your homework. If you start off on the wrong foot, dealing with European regulators is the same as dealing with the Department of Justice in the U.S., and it is difficult to recover from a misstep. If you do the proper homework, you will be able to determine what will work and what will not. You can achieve a sensible result by taking that approach.

Editor: Is there a major difference in the UK when structuring a stock or asset purchase agreement?

Francies: Looking at the U.S., there are more formal rules in terms of how assets get transferred. There are some differences of how to measure damages and what is a standard indemnification within general commercial principles.

You have to remember that you also need to consider the laws of each individual jurisdiction when structuring a deal. The deals that have a European jurisdiction are reviewed by the EU Competition Commission but the on-the-ground M&A work is usually at the country level.

Editor: What governmental bodies oversee takeovers in the UK?

Francies: The EU Takeover Directive is in force in the EU so that governs acquisitions of certain publicly listed companies throughout Europe and has been implemented in the UK.

In former times the UK had a self regulatory basis for takeovers, but now it has a statutory basis - the UK Takeover Code from which there are rights of appeal. Some believe that this will result in a system similar to the U.S. which is very litigious. The first thing people do when considering a transaction is often to choose a forum for bringing an action.

Editor: Are the rules of the London Stock Exchange as stringent as those of the NYSE or NASDAQ?

Francies: No, to my thinking. Some may disagree. The London Exchange has a principles basis so in some cases how stringent the regulations are is based on principles. In the U.S. the system is more based on rules.

Editor: Why should a U.S. general counsel seek help from your London office if he/she is looking to do a transaction in the UK or Western Europe?

Francies: We provide an excellent tie-in of top quality legal advice and client service, providing value for a client's investment. The first thing that general counsel should look for is who is going to do the best job for them. Looking at it that way it should not matter where the firm lawyers originate. When working with American clients, we understand what happens in the U.S. and can walk them through the differences. We have more experience dealing with what is normal and what is not.

Editor: Is there anything that you would like to add?

Francies: There seems to be a tendency to look at U.S. firms as a whole, as one entity, in London and Europe. I do not think that is a sensible approach. If you look at U.S. firms in the U.S., they are following a number of different strategies. The same is true of them in London and Europe. We have been so successful because we focus on what we are good at as a firm. We do private equity because we are good at it. We do litigation and restructuring because we are good at it. We do not try to be like every other UK (or indeed U.S.) firm. That combined with the quality of our people is why I am very comfortable that the services we offer to anyone who wants to work with us are more than a match for those that are available elsewhere.

Published January 1, 2007.