Adding Muscle—Or Fat?
Our valuation formula can be used to determine whether the merger of certain firms has had the desired effect in generating additional value. The following chart compares the current values of three transatlantic vereinsDLA Piper, Hogan Lovells, and SNR Dentonwith the combined valuations of their premerger components.
|VEREIN||CURRENT VALUE||COMPONENTS||COMBINED |
|DLA Piper||$2.249 Billion||DLA Piper (US);DLA Piper (Intl.)||$1.69 Billion||$557 Million ↑|
|Hogan Lovells||$1.97 Billion||Hogan & Hartson;Lovells||$1.98 Billion||-$16 Million ↓|
|SNR Denton||$431 Million||Sonnenschein;Denton Wilde Sapte||$321 Million||$110 Million ↑|
DLA, the most mature of the three firms (it was formed in 2005, compared to 2010 for Hogan Lovells and 2011 for SNR Denton), has seen the greatest increase. Its current valuation of $2.249 billion is more than 30 percent higher than the aggregate figures for its U.S. and international arms in 2009the last year in which we treated them as separate entities in our surveys.
After just one full fiscal year of operation, SNR Denton also fares well, having seen its net worth rise 34 percent. The new firm's increased size gave it a higher starting multiple and diluted the poor performance of U.K.based Denton Wilde Sapte, which in the 2010 fiscal year needed almost $4 of revenue to create every $1 of valuefour times as much as the Global 100 average.
Hogan Lovells, on the other hand, has seen its value fall $16 million since its combination, due to a slowing in growth rates lowering its total multiple from a premerger average of 7 to the combined firm's 6.5. This equates to a fall in value of less than 1 percent, however.
This article has been archived, and is no longer available on this website.
Not a LexisNexis® Subscriber?
LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via lexis.com® and Nexis®. This includes content from The National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.
ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.
For questions call 1-877-256-2472 or contact us at firstname.lastname@example.org