Private-Equity Firm Fights Adviser Over $1.3 Million Phone Call

Nicholas Mockett, a director at Moorgate Capital Partners, describes himself as “old-fashioned.” But in the modern world, that may mean he ends up in court more often than he likes.

For the second time this year, the London-based advisory firm has sued a private-equity company, alleging that a customer failed to honor a verbal agreement for a 1 million-pound ($1.3 million) services contract.

On Monday, Moorgate was in court against Sun European Partners. According to Moorgate’s legal filings, Sun was looking to buy a packaging maker eight years ago, and consulted Mockett for informal advice. He says he and Sun’s Paul Daccus discussed a bolt-on acquisition of Austria’s Unterland Flexible Packaging GmbH during a lunch.

A few months later in May, Mockett and Daccus spoke on the phone, when Mockett says it was agreed that he would be paid as an adviser on the deal. Daccus denies making any promises.

Mockett later sent an email with a formal proposal, including the 1 million-pound fee. According to London-based Sun’s legal filings, Daccus didn’t read the proposal and didn’t become aware of it until after the purchase went through in October.

Officials at Moorgate and Sun declined to comment on the lawsuit.

Moorgate had a similar U.K. case in dismissed in June. It had sued another private-equity firm, H.I.G European Capital Partners, for not honoring a similar 1 million-pound success fee made over the phone.

According to Moorgate’s court filing in the Sun case, Mockett was taken to a company presentation for Unterland and his expertise was called upon. Sun says that this doesn’t imply that Mockett’s services were being formally paid for and in any case, Moorgate didn’t originate or advise on the deal.

Mockett told the court that verbal contracts made over the phone are common in the private-equity industry.

“There’s always an opportunity cost of time, and it takes time to put a formal engagement letter in place,” he said. “Maybe I’m a bit old-fashioned.”

Source: Bloomberg

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