National law firm Gateley has already made presentations to 30 investment funds and has to convince them that it has learned the lessons of other professional services firms that have listed, the firm’s chief executive has told Legal Futures.
Speaking in the wake of the firm’s announcement that it intends to list on AIM, Michael Ward said he had another 25-30 presentations to make as it sought to attract institutional investors.
He described them as “a stony faced bunch”, making it difficult to tell how enthusiastic they were to invest in the first law firm to go public in the UK, but that a key issue was that “the people who have gone before in professional services businesses haven’t done so well”.
Mr Ward said Gateley had looked at these forerunners “and addressed all the issues” they raised.
He added that the firm had decided early on that seeking private equity was not the route to raise the money it intends to apply to diversifying its offering and revenue streams.
Such money was expensive, he explained, “comes with demands on investment horizons and returns” and does not provide the management with the same freedom as listing would.
Further, having been an LLP for a decade, Gateley was used to the greater demands of transparency that listing will impose, while clients have been expecting the firm “to operate to the highest corporate governance anyway”.
The firm told the stock exchange that it would look to buy law firms “which offer geographical expansion or specialist services”, and other businesses “offering complementary professional and other business services”.
Nick Smith, the head of Gateley’s London corporate team and also now its head of acquisitions, emphasised that it was not looking to become a multi-disciplinary practice. It would look to buy the likes of town and country planning, environmental or regulatory compliance consultancies, rather than accountancy or finance businesses. “You will still recognise us as a legal services business,” he said.
Mr Ward would not speculate on whether others would follow Gateley’s lead, but said he was “not short of e-mails from heads of other law firms asking to take me to lunch”.
He added that Gateley will be looking to sell its new-found expertise to other firms that want to list. “We’ve been working on it for a year and have built up a huge amount of intellectual property… Where’s there IP, there’s an opportunity.”