Deals Boutique Targets Middle Market M&A, Land of Giants (1)

Private equity deals boutique Massumi + Consoli’s founders are plotting growth as the law firm nears the 10-year mark.

“We can take bigger bets, we can expand more aggressively,” Peter Massumi said in an interview.

The firm guides mid-market deals for clients like Oaktree Capital Management and Monogram Capital Partners. Co-founders Massumi and Anthony Consoli launched their own shop after leaving private equity powerhouse Kirkland & Ellis.

They’re looking to peel off a sliver of the high-volume deals work that has fueled rapid growth at Kirkland and some of the legal industry’s other top players. Those firms, which employ thousands of lawyers and bring in billions of dollars in revenue, use their scale to blanket the M&A market.

Massumi + Consoli has more than 40 lawyers, including about eight equity partners, according to Massumi. It pitches its slimmer approach as a selling point to potential clients in the middle market, where transactions generally range between $5 million and $1 billion in value.

“We saw a clear gap in the marketplace for private equity M&A counsel where sponsors were being under-serviced on middle market deals and needed a better solution, and we perceived a real opportunity,” Massumi said.

The firm is bulking up to try to take on more deals and handle a wider range of the work in adjacent areas like debt finance, tax, and executive compensation. Lawyers from larger firms Simpson Thacher & Bartlett and Morgan, Lewis & Bockius have joined within the last month.

The ‘A Team’

Here’s Massumi + Consoli’s pitch: We care more about your deal than the larger firms do.

Big Law firms that handle slews of deals often give smaller transactions—say, in the $200 million range—to the “B Team,” according to Consoli. At his firm, the “A Team” works on every deal because of its small roster of lawyers. And they charge lower rates than their larger competitors.

“We’re not a volume shop because we don’t have enough people to be a volume shop, and it’s just not our approach philosophically,” Massumi said. The firm covets sticky, exclusive relationships in which clients think of them as “exclusive deals counsel or one of maybe two law firms they use for deals,” he said. It relied on referrals from other firms in its early days, but the bulk of its work now comes from organic origination, he said.

The firm’s lawyers include alumni from Kirkland and other leading firms, like Weil, Gotshal & Manges and McDermott Will & Emery. It matches the “Cravath scale” for associate pay, with salaries starting at $225,000, according to the firm.

Middle market deals are an attractive target. Transaction volume climbed to more than $331 billion in the first three quarters of this year, according to Bloomberg data. That value may exclude some unreported private deals, which are more typical in the middle market than in larger transactions.

“This may be a source of optimism for companies and M&A practitioners, since, at the start of the year, the share of deal volumes for this market segment had decreased,” said Emily Rouleau, a Bloomberg Law analyst. “Maybe this market segment is getting a little stronger as we head into the end of the year.”

Major law firms continue to dominate the mid-market space. Latham & Watkins, the country’s second-largest firm by gross revenue, handled nearly $40 billion worth of middle market deals in the last quarter. It was followed by Kirkland ($39 billion) and Wall Street’s Simpson Thacher & Bartlett ($22 billion), Bloomberg data show.

Massumi + Consoli has no plans to try to scale up to those behemoths. It’s making targeted additions to try to increase its piece of the pie.

The firm in October hired former Morgan Lewis partner Joyce Cowan in Washington, D.C., to work on more health care deals. That followed the firm’s addition of Los Angeles private equity lawyer Jonathan Conigliari from Simpson Thacher.

The founders want to dive deeper into deals-adjacent court fights. Massumi + Consoli in June officially launched a litigation group, aimed at post-closing disputes, indemnification claims, and purchase price adjustments.

Massumi hopes to build out the firm’s litigation practice as a buoy for firm profits when there is a lull in deals activity.

Michael Huttenlocher joined the firm in April after more than a decade as a partner at McDermott. He previously defended Apple in multiple cases, including one where the company is fending off anti-competitive allegations.

Massumi and Consoli say they’re also eyeing the lucrative private equity fund formation. That’s another space already occupied by many of Big Law’s elite dealmakers.

“We’re barely scratching the surface in terms of the kind of the level of market share that we can acquire just from pure private equity,” Massumi said.