Clinical negligence: Consolidation play
Frenkel Topping – the listed business building a full-service offering to personal injury and clinical negligence claimants short of actual legal advice – is raising £10m to fund further acquisitions.
A specialist independent financial adviser and wealth manager focused on asset protection for seriously injured people, Frenkel Topping has bought several different businesses in recent years, including three costs law firms.
It announced an accelerated bookbuild yesterday through placing more than 14m shares to institutional and other investors at a price of 70p per share – a 10% discount on Tuesday’s price.
Frenkel Topping’s share price reached an all-time high of 83.5p in February.
The company said the money would be used to accelerate its vision of becoming the market leader in supporting claimants.
It told investors that, during the litigation process, more than 30 different expert witness reports could be required.
“In the course of preparing these expert witness reports, professional service firms develop a working relationship and rapport with claimants. The directors believe that these relationships are key to securing the financial advisory mandate for any settlement monies paid out in the event of a successful claim.”
The aim was to consolidate “the heavily fragmented pre-settlement professional services market by targeting acquisitions that have clear synergies in the PI and clin neg sectors in order to scale routes into growing assets under management (AUM) mandates from successful claims”.
The company estimated that the personal injury and clinical negligence markets combined represent “a total opportunity of £2.6bn of AUM mandates per annum, in addition to the professional services required for such claims”.
There are three acquisitions focused on care and case management already going through due diligence, including “one of the largest expert witness providers in the UK”.
The company said it would also “further invest in the integration of existing acquisitions to capture additional margin and allow for faster integration of future acquisitions”.
In 2019, Frenkel Topping launched its accountancy arm, Equatas, to assist clients with tax planning, and in 2020 bought specialist forensic accounting services business Forth Associates, which it said made it the largest independent provider of financial expert witness reports to the claimant market.
Then, in 2021 – having raised a £13m warchest from investors – it spent £9m to acquire costs firms Partners in Costs and A&M Bacon and a further £1.5m on legal aid costs firm Bidwell Henderson, as well as buying Daniel Lewis Law, a recruitment firm specialising in personal injury and clinical negligence.
An attempt to take over NAHL plc, the owner of critical care company Bush & Co, was called off, however. NAHL’s claims management business and law firm would probably have been sold off.
At the start of this year, Frenkel acquired Cardinal Management, which works with a number of NHS major trauma centres to provide a major trauma signposting partnership support service. This cost an upfront £5m with a possible further £5m earn-out.
The investor circular said Frenkel Topping’s directors believed that the majority of expert witness firms were struggling to grow due to the longer working capital cycles of expert witness report work “and that these firms could benefit from the balance sheet strength and the financial acumen of Frenkel Topping”.
Whilst care and case management firms did not have the same restraints, “the directors believe it to be one of the most attractive subsectors due to their revenue profiles and also represents a significant opportunity to consolidate due to its heavily fragmented nature”.
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