Quindell announces its second law firm acquisition

Quindell Portfolio has agreed to acquire high-end consumer claims law firm Pinto Potts for around £14m, subject to SRA and FSA consent.

This represents the second acquisition in the space by Quindell, the first being its acquisition of specialist personal injury practice Silverbeck Rymer earlier this year (a deal which is still awaiting SRA approval).

A consideration of £1.5 million will be paid initially by Quindell, with a further £1.5 million in 12 months time, together with 87.5 million shares in AIM listed Quindell (worth just under £11 million at today’s share price), subject to lock-in provisions. This part cash part share offer is a similar structure to that used in the £19.3 million Silverbeck deal, one of the first instances of a legal practice being acquired by a quoted plc. 

 Pinto Potts has warranted a profit after tax of £2m and operating cash flow of £1.5m for the 12-and-a-half month period ending 31 August 2013.

At the same time, a partnering agreement has also been confirmed which will see Quindell, Pinto Potts and Silverbeck provide a joint-outsourcing offering to the UK insurance claims market, primarily in the areas of personal injury and also other consumer related services including wills, probate, and conveyancing.

Whilst these deals are not huge in financial terms, they are of interest to the wider legal community because, being acquisitions by a listed company, they provide a far greater insight into the financial aspects of the transaction that is normally the case.  In a market where the valuation methodology for law firms is still very immature, these transactions give some interesting benchmark data.