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Cooley sees continued US private equity interest in Europe

Headquartered in Palo Alto, California, law firm Cooley has grown on both US coasts in tandem with the technology and life sciences sectors; two areas of the market for which the firm is best known for. 

Cooley is a full service law firm but its growth has been influenced both by its location and its expertise in these two burgeoning areas of the marketplace.

In January 2015, Cooley took the decision to open up a London office where its two lead PE partners are Justin Stock and Stephen Rosen (pictured), Managing Partner and Head of PE. 

It would appear to have been a prescient decision. 

As at today, London has 27 partners and over 85 lawyers, with a headcount of over 160 in total. In December 2017, it was named London Office of the Year at the annual British Legal Awards.

“Cooley has had European clients and connections for a number of years now,” Rosen tells Private Equity Wire. “It got to the point where, as clients grew, it became increasingly obvious that Cooley really needed to have an office in London, being one of the world’s leading technology locations.” 

“We continue to grow and the signs are positive that 2018 will be a very busy year. We are already working on some very interesting deals. Not that every one of these is technology or life science-related but there is definitely an element of tech touching most of the deals.”

Cooley (London) has worked on over 100 venture capital deals over the last three years, with a total value in excess of GBP2 billion. Moreover, its partners have worked on 15-plus mid-cap (or larger) M&A deals with a total value of GBP4 billion. 

The latest example of this was the sale of Law Business Research by Bowmark Capital to Levine Leichtman Capital Partners, where Cooley acted for LBR’s management team

Cooley is an entrepreneurial-led firm with a strong bias towards companies that reflect this same entrepreneurial spirit. Both across the US and the UK, its corporate clients are a mix of private M&A and capital markets participants. Joe Conroy oversees the day-to-day business as CEO, based in New York, with Stephen Neal, Chairman, located in Palo Alto.  

One interesting point to note is that Cooley is one of few law firms able to help clients outside of the US with their NASDAQ IPO just as easily as it can their UK  IPO, for example. 

“A fair number of our UK clients are moving to list on NASDAQ – in 2017, more than 50 per cent of UK company listings on NASDAQ in the US were done by Cooley” says Rosen, who continues: 

“In the UK’s life sciences space, there is still a strong desire for UK companies to move to the US to take advantage of the fact that there is more capital available; it is a very buoyant market, in terms of capital raising. Our pipeline for 2018 already looks strong. We’ve got a number of UK-listed companies thinking about listing on NASDAQ and I think it’s a trend that will carry on through 2018.”

Cooley recently advised Atcore (a travel technology company) on its acquisition by Inflexion Private Equity and, notably, worked on the USD500 million funding by Japan’s SoftBank in UK virtual simulation firm Improbable; one of the largest European VC rounds ever.

Rosen confirms that the Atcore opportunity came about via the private equity network that Cooley has built over time and the numerous technology deals it has worked on. The transaction provided an exit for mid-market private equity firm LDC, which backed the management buyout of the business from its listed-parent Anite Plc in 2014. 

“These processes are super competitive, time critical and you’ve got to be able to focus on the key issues. We are well placed for that, not least because we have a more US-style approach to running transactions. In the US, one of the PE firms we work with is Clearlake Capital Group, LP. We’ve done a number of bolt-on acquisitions for them and their software and technology enabled portfolio companies here in the UK,” outlines Rosen.

With record valuations and markets hurtling north with no signs of abating, it is fair to say that 2017 was a seller’s market. Two deals that Cooley worked on to illustrate this include advising Primary Capital Partners and the shareholders of Leisure Pass on the sale of the company to Exponent Private Equity, and advising US investor Garnett & Helfrich Capital on the sale of MTI Europe B.V., the leading European IT storage infrastructure and security solutions provider, to Endless LLP.

“Global M&A deal volumes were down in 2017. The wall of money (dry powder) that everyone talks about is getting bigger because GPs have found it hard to deploy capital. Some of the larger PE houses are now doing smaller, growth-type deals in sidecar funds as a way to deploy capital – it has been more of a seller’s market than a buyer’s market over the last 12 months,” says Rosen.

He adds that interest among US PE groups in Europe is growing exponentially because the market is less competitive and the multiples are lower than they are compared to the US technology space right now.

“We see more and more US and international PE houses coming to Europe. A couple of years ago, if you were selling a UK company your buyers list would have predominantly been UK trade and UK private equity houses. Now, that buyers list is truly global. Even the corporate finance teams are having their contact lists stretched by the breadth of PE houses who might be interested bidders.” 

“Given our US network, if it is a US bidder the chances are we will have come across them at some point and that’s helpful for our clients,” confirms Rosen.

One example of this involved a deal in the beauty space where Cooley advised the company (not disclosed) on a major investment by a US private equity shop. The deal never touched UK private equity.

“That is something that people need to realise. There is a definite change in the market. The corporate finance world has a much bigger range of potential bidders,” says Rosen.

He concludes by saying that the general feeling on Europe for 2018 is broadly positive, not just for the UK but for countries including Germany, the Netherlands, and to a lesser extent, France. 

“We know of a couple of French life sciences companies that are looking to list on NASDAQ. We are positive we’ll see increased activity in Europe this year,” concludes Rosen.  

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