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CMS global private equity head reports huge amounts of activity in the sector this year

In May this year, CMS underwent the biggest tripartite merger in legal history in the UK, combining with Nabarro and Olswang to create a law firm with the third biggest footprint and 4,500 lawyers working globally.

James Grimwood (pictured) is a Partner and global head of Private Equity at the newly merged firm, and reports that the global team is driving huge amounts of activity with over 100 private equity deals so far in this calendar year.

Grimwood believes that it is a range of different things driving the private equity business growth. “Within private equity we have a strong and very good reputation. We know how private equity clients like to transact and we can leverage the specialists within the rest of our firm and, as lots of deals have international elements these days, we can be global and niche at the same time.”

Grimwood observes that clients have become more sophisticated over the years and are no longer just using the default option of instructing the firm with whom they did the last 10 deals with. “Clients want full sector coverage and a  wide geographical spread.”

He reports that he can’t remember a year as busy as 2017 for private equity, saying that there has been a lot of activity in the UK and much of Europe, naming Poland, France and Germany as particularly busy. “The only area where we see less activity is southern Europe where everyone is waiting for deal volumes to pick up,” he says.

Activity has been across all sectors too, from leisure to technology, pharma and also business services.

“Business services are a big sector for the UK, with a lot of inbound activity as foreign buyers are coming here, partly because of the fall in the pound post Brexit,” Grimwood says. “But that’s only part of it. People don’t do deals because of the currency shift. I find it quite reassuring that despite the political turmoil, the international investor community regards the UK as a good place to put money.”

Vast amounts of money have been going into the private equity asset class over the past few years, Grimwood says, and high-quality assets have frenetic competition. “There is certainly more money around,” he says. “People have raised vast funds across the whole industry. Some have come out of the hedge fund community and it’s also due to the low interest rate environment. Private equity funds have big war chests and are prepared to spend for the right quality assets, while a less top-quality asset can be a struggle to get away.”

Private equity is getting a bigger slice of the mergers & acquisitions pie at the moment, with fewer corporates on the buyside. “They may be outpriced or busy over the last few years integrating businesses they have already bought.”

Another phenomenon of the new world for Grimwood is that he finds that there is more of an emphasis on sector knowledge from clients. “Clients are more sophisticated and looking for us to put management teams in touch or originate opportunities through our sector groups who are immersed up to their necks in their sectors and industries.”

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