Listed law firm Gordon Dadds has made its third acquisition in a month in buying Cardiff firm Thomas Simon.
The acquisition vehicle is paying £1.875m – made up of £187,500 on completion and 20 quarterly instalments thereafter – plus an amount related to that realised for debtors and work-in progress, payable quarterly as realised, and other net tangible assets.
The vendors of Thomas Simon have warranted that the fee income will be not less than £12.5m over those five years and any shortfall will reduce the consideration on a pound-for-pound basis.
The deal follows last month’s acquisitions of Bristol firm Metcalfes Solicitors and specialist technology and corporate firm White & Black, and corporate tax advisory business CW Energy last November.
There are similar arrangements for additional payments if targets are met and, if they are, Gordon Dadds will have paid around £20m for the four firms combined.
Thomas Simon has a broad practice encompassing property (predominantly commercial), corporate, dispute resolution, private client and family law.
For the year ended 31 July 2016, it achieved unaudited profit before tax of £0.43m on fee income of £2.09m.
Its business will be merged with Gordon Dadds’ existing Cardiff business and trade under the Gordon Dadds name.
Cardiff is the back-office hub for the group – providing a ‘near shore’ service for the other firms that Gordon Dadds has acquired – but the firm has also been growing its front-office services in Cardiff, focused on property, family and private client work.
Gordon Dadds told investors this morning that it expected the acquisition to be “earnings enhancing for the first full year, to 31 March 2019”.
Chief executive Adrian Biles said: “We have been looking to expand our Cardiff front office operation so as to become a significant player in the Cardiff community, and we are delighted to have been able to merge our Cardiff office with Thomas Simon’s, blending different skill sets to enhance the Gordon Dadds’ offering and grow the enlarged business.
“In addition, we should achieve economies of scale from merging the support functions over time.”
“This is the fourth acquisition we have made since Gordon Dadds’ successful IPO in August 2017 and each of them should enhance next year’s earnings.”
“We shall be focussing over the coming months on realising the benefits of these acquisitions and, in particular, on driving the cross-selling activity which grows the revenue and profitability of the existing and acquired businesses”
Rupert Thomas, chairman of Thomas Simon, added: “This is a rare opportunity to create a new force in the solicitor’s market in Cardiff and I am looking forward to working with Adrian and his team to realise the opportunity.”