It would
be true to say there has not been a flood of private equity houses seeking to
back legal businesses in the wake of the Legal Services Act reforms, but there
have been a small handful of deals done, and a number (such as Irwin Mitchell
and Keoghs) are believed to be interested.
Today, Midlands-based
commercial law firm Knights Solicitors, become the latest to attract PE
investment, from Hamilton Bradshaw, a PE house headed up by ex-Dragons' Den
star James Caan. The deal is still
subject to regulatory approval from the Solicitors Regulation Authority, and if
the experience of others is anything to go by, then they can expect some significant
delay before the green light is officially given to the deal.
Knights,
which specialises in commercial and wealth management advice currently has 23
partners and 150 staff working across offices in Newcastle-under-Lyme,
Cheltenham and Alderley Edge in Cheshire, but has ambitious growth plans,
aiming to be in the top 100 of revenue earners within a 3 year time frame. This would mean the firm needs to be
generating revenues of roughly £22 million, a more than doubling of its current
£9.2 million.
Entrepreneur
Caan will join Knights' board as part of the deal, working alongside managing
partner David Beech. It will be
interesting to see whether an person from a strong business/entrepreneurial
background will thrive in a professional services environment – in my
experience, the politics of getting things done in a law firm are very
different than in many conventional businesses, and whilst many lawyers like to
describe themselves as entrepreneurial, very few truly are.
Knights
are following a path trodden by Parabis, who obtained investment from Duke
Street earlier this year, in the first leveraged PE deal in the sector, by Quindell
Portfolio’s acquisition of Silverbeck Rymer, and by QualitySolicitors, the High
street law firm franchise, which secured investment from Palamon Capital
Partners. Knights seek to differentiate
this deal on the basis that it is the first commercial, as opposed to consumer,
focused PE investment – although Parabis for one would not be happy to be
labelled as a consumer business.
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