Bloomer: Highly attractive offer
The board of DWF, the only law firm listed on the main London Stock Exchange, has recommended shareholders accept the £342m offer from private equity house Inflexion.
Inflexion said today that “private ownership is preferable for DWF given the growth opportunities available to it”, while the firm said it would “rapidly accelerate management’s vision to become the leading global provider of integrated legal and business services”.
As well as DWF’s directors, 107 partners and senior employees have provided irrevocable undertakings to vote in favour of the deal, representing 41.5% of the firm’s shares in total.
Earlier month, Inflexion offered 100p for each of the 342m shares – the price was 65.5p on the day before the offer was made and was an average of 58p in the previous three months.
The proposal includes two additional options for shareholders: to elect to receive 65% of the consideration due as loan notes and/or preference shares, and the rest in cash; or to receive the cash and immediately reinvest 40% of it into loan notes or preference shares.
Giving its rationale, the investor said: “Inflexion has tracked the legal and alternative legal service provider sectors for a number of years and recognises the genuinely differentiated proposition that DWF offers through its integrated legal management approach, which provides integrated legal and business services to its clients globally.
“Inflexion believes private ownership is preferable for DWF given the growth opportunities available to it…
“With access to a significant amount of capital, the Inflexion funds are well-capitalised and able to support DWF in continuing its strategy of acquiring bolt-on businesses, which is core to the investment thesis.
“Inflexion intends to support DWF management to accelerate DWF’s organic and inorganic growth story.”
DWF chairman Jonathan Bloomer described the offer as “highly attractive not only for our internal and external shareholders, but also for our clients, employees and other stakeholders”.
He continued: “The DWF board of directors recognises the opportunities that could be delivered under private ownership with Inflexion, which includes access to significant capital to invest in staff and technology, accelerated lateral hiring and transformative acquisitions across jurisdictions.
“Inflexion has a clear ambition to support the management team to execute its strategy to create a global professional services business emanating from the legal sector and this will enhance the already exceptional and differentiated services that we deliver for our clients.”
Flor Kassai, head of Inflexion’s buyout fund, added: “We have followed DWF’s progress since IPO with interest and have been very impressed with the development of the business and expansion of its offering to date.
“We are excited to partner with DWF as we look to support the business in delivering on its vision to become the leading provider of integrated legal and business professional services, through continued strong organic growth and targeted acquisitions in the UK and international markets.”
Following a reorganisation on 1 May, DWF operates through three divisions: commercial services, combining legal and business services, including global entity management, forensic accountants, ESG consulting and regulatory consulting; insurance services; and legal operations, an alternative legal services provider.
For the year to 30 April 2023, it expects to report gross revenue of £452m and net revenue of £380m, growth of more than 8%.
The DWF directors told shareholders that they remained “confident” that their existing strategy would continue to deliver growth and further diversification.
“However, the acquisition provides an extremely compelling offer for all categories of shareholders, whilst also presenting an opportunity to rapidly accelerate management’s vision to become the leading global provider of integrated legal and business services.”
This included possible acquisitions of “legal advisory businesses in key markets, as well as increasing DWF’s scale in business services such as legal operations and claims management and adjusting businesses in the US and other new and attractive locations”.
The directors said there would be “challenges in securing funding for these transactions through the public markets”.
The deal would end the share schemes enjoyed by staff. The stock market announcement said it would in time “discuss and agree with DWF leaders and employees the provision of an alternative future incentive structure to give DWF leaders and employees the possibility of significant returns on future exit”.
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