City law firm Speechly Bircham LLP has advised PA Consulting on the demerger of its Ventures Business, now known as Ipex Capital, from the main Consulting Business. PA’s venture programme is one of the most successful in the consulting industry and the demerger is intended to allow this success to continue and return value through venture realisations. The Consulting Business will continue to focus on delivering excellent client service and be able to recruit the best talent.
PA Consulting is an independent, employee-owned, global firm of 3,000 talented individuals, operating from offices across the world, in Europe, North America, Latin America, Asia, and Oceania. PA’s international employee shareholder base necessitated the issue of shares in numerous jurisdictions as part of the demerger. The transaction therefore involved a world wide review of the securities, share and option plan and tax implications of the proposals and included applications to local regulatory bodies and the introduction of additional share classes to avoid issues under US securities legislation. The structure was designed to achieve the best result possible for shareholders across the various jurisdictions and deal with the practicalities of a large and widespread shareholder base.
This intricate transaction involved a Court sanctioned Scheme of Arrangement under s899 of the Companies Act 2006, a demerger pursuant to section 110 of the Insolvency Act and various Court confirmed reductions of capital. The necessary shareholder meetings, Court Hearings and liquidation were successfully completed to fit in with the timetable for PA’s Internal Market and its option and bonus programmes.
The complexity of the transaction was a consequence of the multi-class share capital of PA, its multinational ownership and the requirement to cash out shareholders in certain jurisdictions, the position of the PA employee benefit trusts and the need to reclassify the shares in the various entities to track through to the finishing position. The next step that is envisaged is the contribution of the Ventures Business to a newly created fund structured to ensure the most efficient treatment of realisations.
The transaction was effected through the following steps:
- reorganisation of the various companies involved in the Ventures Business
- the reclassification of the Ordinary Shares in the previous PA holding company to introduce new share rights to provide for the position of the employee benefit trusts and overseas securities issues
- the Court sanctioned Scheme of Arrangement placing a new holding company over the PA Group (PAH2)
- the injection of further funding into the Ventures Business
- the transfer of the Ventures Business by dividend to PAH2
- the liquidation of PAH2 and transfer of the Ventures Business and Consulting Business to two newly incorporated holding companies; and
- reductions of capital of the new holding companies to create sufficient reserves for each group going forward to allow the implementation of their dividend policies and for other corporate purposes.
Kully Janjuah, Group Company Secretary of PA Consulting:
"The demerger is a key milestone for PA Consulting, which we have been working on with Speechly Bircham for over a year. It has been an exceptionally challenging and complex project and we have been continually impressed at the way Speechlys has demonstrated both their depth and breadth of knowledge and their skills in managing this complex transaction to a tight timetable. I would also praise the hard work and dedication of the team at Speechlys and their ability to anticipate our needs. My PA colleagues and I have really enjoyed working with the team from Speechlys on both a personal and professional level."
PA Consulting transforms the performance of organisations by putting together teams from many disciplines and backgrounds to tackle the most complex problems facing their clients, working with leaders and their staff to turn around organisations in the private and public sectors.
The Speechly Bircham team was led by Corporate partner, Tom Shaw, with Corporate assistants David Hicks and Paul Arathoon. Tax partner James Carter led the tax aspects of the transaction assisted by Charlotte Strouts. The property elements were led by Property partner George Awty assisted by Claire Raddan and Matthew Hind. Nicholas Tall (IPCT) dealt with the commercial contracts between PA Consulting and Ipex Capital.
Speechly Bircham instructed Martin Moore QC, of Erskine Chambers, to settle the Scheme of Arrangement and Court documentation, provide related advice and present the various applications to the Court. Stephen Brandon QC, of 15 Old Square, Tax Chambers, was instructed to provide further advice on the tax implications of the transaction.
BDO Stoy Hayward LLP provided accountancy and valuation advice to PA Consulting. Samantha Keen and Richard White of Grant Thornton UK LLP acted as joint liquidators of PAH2 for the purposes of its voluntary winding up to effect the demerger.
The trustees of the Butten Trust (a trust established for the benefit of current and former employees of PA Consulting) were advised by Travers Smith, who instructed Daniel Hochberg, of Wilberforce Chambers, to provide further advice for the trustees.
Patricia Allen, Tax partner, led a team including Jeremy Bell, Gemma Chinniah and David Dowding at Ashursts advising Ipex Capital on the transfer of the Ventures Business and establishment of the Ipex Fund.
For more information, please contact: Tom Shaw, Corporate partner, on 020 7427 6509 or tom.shaw@speechlys.com
Sarah Gerard, press office, on 020 7427 6679 or sarah.gerard@speechlys.com