Macfarlanes rides record deal markets to post £2.5m PEP
Revenue rises by 16% but top London independent warns it is entering 'more uncertain economic times'
Record deal markets have powered top London independent law firm Macfarlanes' profits per equity partner (PEP) to just shy of £2.5m, up by 19.1% from last year.
The jump in PEP to a new high of £2,484k was achieved off the back of a 16.4% increase in revenue to £ 303.7m. Operating profit increased by 15.4% to £164.2m.
The results are all the more striking as they come off the back of a strong 2021, when PEP and revenue rose by 9.2% and 10% respectively.
However, they reflect near-perfect market conditions for the firm, given its focus on private equity and public M&A markets that broke record after record during the reporting period.
“Our results in 2021/22 reflect an active approach by our clients as the world emerged from the pandemic," said senior partner Sebastian Prichard Jones. “We were fortunate that we operate in areas of the market in which our clients were very active. Our thanks go to our clients for continuing to entrust us with their mandates and our people who rose to the challenge of increasing levels of demand.”
However, like several of his peers at leading UK firms, Prichard Jones warned that markets were now less favourable for the firm.
"As we enter more uncertain economic times, we are already beginning to see more caution in the market,” he added.
Macfarlanes has outperformed the two Magic Circle firms to have reported their results to date – Clifford Chance and Allen & Overy – in terms of revenue and PEP growth (see table). That has allowed the firm to extend its lead in terms of PEP although it is dwarfed when it comes to size and international reach and its rivals will argue they are better placed to weather a downturn.
|Rev (£m)||% Change||PEP (£k)||% Change|
|Allen & Overy||1,940||10%||1,950k||3%|
Highlight M&A work included advising Terminix on its $6.7bn acquisition by Rentokil Initial; private equity firm JC Flowers on the £1.49bn sale of Interactive Investor to Abrdn; and cybersecurity specialists NASDAQ-listed Norton LifeLock on its $9.2bn merger with FTSE100 outfit Avast.
The firm also notched up an array commercial property deals, which included advising Legal & General on the sale of office building Central Saint Giles in London to Google in January for $1bn.
Looking beyond its legal work, Macfarlanes was one of eight founding firms to launch the initiative Legal CORE last November to tackle the underrepresentation of black, Asian and minority ethnic groups in the UK legal profession.
Earlier this year, it unveiled a set of diversity targets before conceding it had a ‘way to go’ when two out of eight partners unveiled in April were women.
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