Alternative business structure, ABS. It is hardly a snappy name. It means nothing to the general public. It doesn’t mean much more to the business community. But, for private equity firms, it’s a chink of light – a way in to a £25bn market. So, is this a gold rush? Are we likely to see high levels of PE activity? Nick West, director of legal markets at Legal Futures Associate LexisNexis considers the possibilities.
There is in excess of £1bn of private equity money available for investment in the legal market, while at least one UK law firm will proceed to a public listing this year, one of the profession’s leading bankers, James Tsolakis of RBS, has predicted.
Large law firms should consider structures that allow them “to trade in the substantial value of their businesses”, a corporate advisory firm claimed yesterday. Europa Partners said that six of the top ten by value large enough to be included in the FTSE 100 if they were listed.
The Solicitors Regulation Authority is unlikely to start licensing alternative business structures (ABSs) until 2012, it has confirmed. The news comes as the authority spelt out the detailed level of information about investors in prospective ABSs that it will expect to see.
Law firms will need a turnover of at least £75m to list on the stock exchange, a leading investment banker said this week. This is because “the public markets prefer larger businesses at the moment” and smaller ones may struggle with liquidity.
Before we all get too excited by the thought of law firms floating next year (and I’m as bad as the next hack – I would donate a non-essential organ in return for breaking the story of the first firm here to do it), it took Slater & Gordon seven years from starting to look at its options to reach the point of listing. That doesn’t mean every firm would take so long, but it does indicate how deeply firms need to examine it. Has anyone being doing that for nearly enough time to allow them to push the button in the next year?
Australian law firm Slater & Gordon – the first in the world to go public – is keeping a close eye on developments in England and Wales and would consider entering the market, its managing director has revealed. Andrew Grech also gave an insight into the lengthy process they went through to float.
In the final part of his series on external investment in law firms, Jeremy Black of Deloitte explains that private equity firms have one goal – to make money – and briefly looks at the implications of raising funds through listing.