FEATURE TEAM SPIRIT: From SJ Berwin to Goodwin

Having been trail-blazers in private equity fund formation in raising a fund. “I joined in 2004 when it was more of an established team,” says Ed Hall, the late ‘90s, it is a story of care and collaboration that a partner at Goodwin and previously part of the large component of SJ Berwin’s team has held together despite SJ Berwin team. “It was an exciting time; we weren’t the size the merger and subsequent collapse with King Wood Mallesons or the scale of a firm but we were By Alice Murray top of the market for private equity. In 2004- 06 funds were raising quickly, new teams were spinning out almost every week – back then it “ here was tremendous excitement Berwin made a big name for itself in the private was about keeping on top of it all.” at that time. SJ Berwin was fairly equity market in the 1990s, thanks to co-found- new and it was doing things to er Jonathan Blake’s successful negotiation SJ blazing a trail challenge the Magic Circle firms; with the Inland Revenue and Department of Beyond working with a large proportion of the in some ways it was way ahead Trade and Industry that agreed statement and British private equity market, SJ Berwin was of them,” Michael Halford, now partner at guidelines on the use of limited partnerships as at the forefront of the industry’s geographical TGoodwin, says about what it was like working venture capital investment funds in 1986. expansion. “When I first joined SJ Berwin in at SJ Berwin’s fund practice in the mid-90s. Over the ensuing decade, SJ Berwin became the mid-90s, we had offices in the UK and in Despite being a relatively small firm, SJ the go-to for any team setting up or Brussels,” Halford says.

16 the-drawdown.com October 2017 “The defining moment for us was working on suitable organisations made it impossible. For to the partners, each made the decision to pan-European funds – getting the different Eu- 2011-12, SJ Berwin’s turnover was £180.1m, go to Goodwin independently. Halford had a ropean legal systems to work together; to bring whereas Proskauer generated $686m. Add long-standing relationship with the US firm and together the different rules around carry and so to that the fall in Sterling following the 2008 there had been plenty of overlap with Goodwin on. The expansion across Europe was major.” downturn, and achieving a sensible deal with a over the years. “I was always disappointed It was also around this time – as the market top performing US firm became untenable. we didn’t get closer to them when we were at was peaking – that Halford’s relationship with Instead, a tie-up with KWM, a top perform- SJ Berwin given Goodwin’s strong US funds Goodwin began. As private equity firms grew ing firm within its own market, was highly com- practice at the time,” he says. “The heart of our into continental Europe, naturally there was pelling at the time. For 2012, KWM’s combined practice was mid-market private equity, and also more interaction with the US. Australian and Chinese revenue was around that was similar for Goodwin in the US for their Consequently, the nature of the SJ Berwin £430m. private equity practice – putting it all together, team’s work became more global. “Then we By 2013, the $1bn merger between SJ Ber- for me it was the obvious choice.” were seeing private equity being taken to Chi- win and KWM was agreed. “The decision for na, Brazil, Turkey and so on; that huge diversi- us as partners was about where we saw the firm Culture survives King fication of geographies, but it was all coming going: do we take it global? Yes, we made that With Goodwin keen to grow its European op- out of . Because SJ Berwin was such an decision,” says Pathak. erations, it was in a position to take on a large established brand, people were coming to us to component of the original team as an agreed work on these funds,” says Ajay Pathak, former deal with the prospective administrators of SJ Berwin lawyer now partner at Goodwin. KWM: “Not just the six partners, they also The team recalls frenzied emails flying wanted to keep the associates, the trainees, the around the office asking if anyone knew any- assistants together as well,” says Hall. thing about fund formation in Pakistan or ‘has “There has always been Goodwin was so accommodating that in anyone ever set something up in Vietnam?!’ order to keep the entire team, it launched a Due to the team’s prominence in private a culture of helping each trainee programme to enable those still train- equity, the partners were doing much more other, even when there were ing from KWM to move over. Furthermore, than just fund formation. “We felt we were at Goodwin ensured a smooth transition, “Within the heart of the industry,” Pathak says. “We problems – that’s how we all 30 minutes of leaving one office we were back weren’t just interacting with clients, we were online and up and running in the next,” says active across the market; we were involved stayed together” Pathak. with associations and very much part of the Of course, it is only one faction of the origi- ecosystem.” nal SJ Berwin contingent that has held togeth- Collapse er. Other components have peeled off along East or west Fast forward three years and reports of part- the way: Matthew Hudson set up MJ Hudson In 2010, against a post-crash backdrop of thin- ners leaving the expanded firm continued to back in 2010, Perry Yam joined Reed Smith in ning deal volumes and fewer fundraises, the surface, many of which blamed a lack of proper 2012 and is now at Mayer Brown, Blake joined firm felt the need to expand globally in order to integration between the merged organisations. O’Melveny & Myers in early 2017, and a large survive the testing times, and rumours of var- For the fund team, the challenges were more group from various practices within KWM ious talks frequently swirled in the headlines. about the brand. “Because the team was so well joined Reed Smith. In October 2010, the managing partner known in Europe, the change of name meant it But what kept the core fund team from SJ election appeared to reveal a deep divide, was necessary to double up education efforts,” Berwin together over the last 15 or so years? with large swathes of the firm supporting the says Hall. “There has always been a culture of helping eventual victor Rob Day’s opponent Perry Yam, When the firms first came together, the each other, even when there were problems – in what was at the time labelled a protest vote group held the King & Wood Mallesons SJ Ber- that’s how we all stayed together and it fits well due to lack of transparency over merger talks. win moniker for just one year. Given the length with the culture at Goodwin,” says Halford. However, it would seem the heart of the conflict of private equity fund cycles, this meant many Drilling down into more detailed characteris- centred on whether the firm merged, and there- in the industry completely missed the merger tics, Halford says a culture of strong innovation fore expanded, into the US or Asia. and, when speaking to partners of what had has always been important, as well as having Despite a lot of talk and excitement around then been shortened to KWM, were unaware it an international mindset. the Asian private equity market back then, it was the original SJ Berwin team. However, what seems most compelling is the was still in its infancy and lacked substance, By late 2016 the writing was on the wall deep-rooted nature of nurturing greener team whereas the US market was the largest centre for KWM, with commentators attributing the members. “A large part of our team’s growth for the asset class. “There was lots of capital firm’s collapse to poor governance and man- has been organic; though associates rising up coming from Asia-Pacific but fewer managers, agement, succession issues, greed, lack of through the ranks, by proactively supporting so from a strategic point of view, a US merger strategic direction and major partner capital their growth,” says Pathak. might have been better,” says Halford. shortfalls. However much a US merger would have Though the team’s move from KWM to Alice Murray, Editor been preferred, the profitability gap between Goodwin was announced all at once, according [email protected]

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