Bracebridge Corporate Finance talks to Andrew Lawton-Smith, M&A lawyer and Head of Enterprise at Gowling WLG (UK) LLP.
Tell us a bit about your career in law
I started my career at Evershed & Tomkinson where I met the lady who was to become my wife, so on qualification as a solicitor, she had me marched off the premises! Fortunately, Wragge & Co were hiring! Through the 1990’s, I did a mix of public and private company M&A work and worked for private equity clients. I became a partner in 1998 and by the mid noughties, I started to focus mostly on working for entrepreneurs and privately or family owned businesses, supporting them in their growth, their day-to-day legal needs and ultimately their exit transactions. Hence the Enterprise team was borne!
In what we are now calling my sabbatical, I left Wragges in 2009 to run a software company I had helped form as a spin-out from an IT Value Added Reseller group. It was a transformational experience for me in so many ways. Perhaps the greatest legacy for me is that I acquired a wholly new, and now well-founded, understanding and admiration for entrepreneurs and the value they bring to our society.
After achieving a strong exit in 2013, the old Wragges team (which has, through an acquisition and then an international merger, become Gowling WLG) lured me back on the promise of a rapidly improving entrepreneurial M&A market after the 2008/9 slump. My spell away reminded me of how much I enjoyed the client-facing part of being an M&A lawyer and I managed to negotiate that this (rather than internal management roles) would be front and centre of my role back at the firm. And so, very much to my delight, it has proved!
What aspects of your role do you enjoy the most?
My aim is to achieve “trusted business advisor” status with my clients. This is where they consult me on all business and personal questions relating to their business as they arise. When I get to that stage, this is when I get the greatest sense of fulfilment as I get a strong feeling of adding proper value for them and “making a difference”.
Tell us about the Corporate M&A team at Gowlings in Birmingham and some of your deal highlights in 2018 so far.
Gowling WLG in Birmingham (formerly Wragge & Co and Wragge Lawrence Graham) has the strongest M&A legal practice outside the City. We have 6 partners and a team of 30. I have completed 3 deals just since August, being the sale of Aston Manor for the Ellis family to Agrial (more below); the £14m equity fund raising for Oxbotica, a spin-out from Oxford Uni, which leads the world in the software to drive autonomous vehicles; and the £10m investment into my client, ReBOUND Returns (the #1 international software platform helping online retailers manage their sales returns), by BGF.
What is your most memorable transaction and why?
My career transaction tally is now 127 deals! Acting on the sale of Tomkins plc to Doughty Hanson (at over £1bn), acting for management on the first sale of Phones4U and the sale of Riviera Travel for Michael Wright and family are all highlights. But the recent sale of Aston Manor to Agrial (a €1bn French agricultural co-operative) has marked a waypoint in a 20 year relationship with the Ellis family and their professional management team. It started with helping them get out of a hole (not of their making!), to the acquisition of Devon Cider in 2009, through to detailed share incentives arrangements for management and family succession questions (as we sadly lost Peter Ellis, the Exec Chairman, in December 2017 and we lost Sir Doug shortly after the deal completed). It has been a pleasure to have been given a key role in helping both the business and the family achieve their goals over so many years.
What was the most difficult legal issue you have encountered on an M&A transaction?
I have been asked on a number of occasions to help both families and management teams/co-owners to sort out their inter-personal issues and which, if not sorted, would have led to a significant erosion of value for all. It is always among the hardest tasks to help people see through their (very understandable) emotions to allow them to agree to the best outcome. I have offered objective and non-emotional insights in these cases and then been ready to spend the time getting people to the best place we can. As you might imagine, things have got pretty fraught from time to time, but patience and calmness under fire has seen us all through.
What are the three most topical legal issues in M&A deals?
There are many issues that arise time and time again but could be avoided with preparation. These issues differ by sector and include unresolved disputes with suppliers, customers or former senior people, inadequate insurance cover for businesses where professional negligence is a theme, and property leases being too close to their expiry date.
The wide availability, recent innovations on coverage and the comparative low cost of Warranty & Indemnity insurance is a big current theme. Particularly on deals where a private equity company and management are selling their business together, we are seeing the benefits of this being taken up almost every time. Gowling WLG are market leaders in this area, advising the market generally and giving us the best cover on the best terms for our clients.
For businesses with a large number of younger employees (retail, leisure etc), we are seeing issues regularly on compliance with both minimum and living wage rules and how their employers accrue for holiday pay on bonuses and commissions. An odd one, but one that is a recurring issue currently!
What challenges do you see in getting deals done in the run up to Brexit?
No idea! We soldier on and try to keep on our toes. There has been a clear spike in deals coming to the market (and transacting) where selling entrepreneurs are concerned about the wider effect of this on deal sentiment and possible future capital gains tax changes!
What makes a good corporate M&A lawyer?
A willingness to listen and identify the key objectives of the client is key for me. No two clients are alike. Some will know exactly what they want and are experienced enough to know how to achieve it. For others, though, a large transaction will be the most significant transaction they and their families will ever undergo and they can often be life changing. If they’ve not done anything like that before, they need wise and thoughtful counsel so they get no surprises and they understand the key immediate and future points in detail. I get a lot of enjoyment, even excitement, from meeting new clients in these early stages and working through with them the ways we can best work together to get the job done well.
What activities do you enjoy outside of work?
Now my kids have grown up to the point where they can drive, I have used the additional time not used ferrying them around, to join Blackwell Golf Club, which I am enjoying hugely. Skiing is a favourite winter pastime, as is helping run a small farmers’ shoot near Barford along with 10 of my great friends.
If you would like to get in touch with Andrew, please email him directly at Andrew.LawtonSmith@gowlingwlg.com.