Beech: Significantly expanding presence in South-East
Listed consolidator Knights has scooped up another well-known regional law firm in its 18th acquisition since listing almost four years ago, South-East firm Coffin Mew.
It is spending £11.5m to buy the Portsmouth-headquartered firm, which also has offices in Southampton, Brighton and Newbury, adding 102 fee-earners to the ranks.
Coffin Mew is a full-service law firm with particular strength in commercial property and private wealth. It reported revenue of £11.3m for the year to 31 March, with a profit before tax margin of 8%, which Knights said it expected to double once fully integrated.
The 12 equity partners will receive an initial £6.5m – made up of £5.5m in cash and £1m in shares – with the remaining £5m to be paid with £2m on each of the first and second anniversaries and £1m on the third anniversary following completion, which is expected to take place on 8 July.
Knights, whose strategy is to target secondary legal markets across the country, first entered the South-East two years ago with the £8.5m acquisition of ASB Law [1], which had offices in Maidstone and Crawley.
Knights chief executive David Beech said: “The acquisition allows us to significantly expand our presence in the South-East, by entering a number of key new locations, as we continue to make good progress in achieving our ambition to become the leading legal and professional service business outside of London.”
Coffin Mew partner Miles Brown added: “We are looking forward to benefitting from the group’s scale, which will allow us to more fully meet the strong demand, and need for broader technical skills, we are seeing from our clients, while greater central resource and support will better enable us to fulfil our growth potential, as part of a larger group.”
Knights last week made a much smaller acquisition – such that it did not make a stock market announcement – of Globe Consultants, a four-strong town planning and development consultancy based in Lincoln.
It bolsters Knights’ existing chartered town planning offering and its presence in Lincolnshire, which the firm entered in March by buying Langleys Solicitors [2].
In March, Knights’ share price crashed [3] on the back of a profits warning and, in a separate trading update issued today, the firm confirmed that it anticipated that revenue for the year to 30 April would be up 22% on the previous 12 months at £126m, with underlying profit before tax down slightly to £18m.
Net debt was expected to be £29m, up from £21m in 2021 but £2m ahead of analyst expectations, “reflecting our continued focus on cash conversion and maintaining industry leading lock-up and debtor days”, Knights said.
Mr Beech said: “The group has performed as anticipated in our update in March and we are encouraged by the positive trading momentum we are seeing in the current year.
“Our reputation, culture and model continue to resonate with top industry talent and we are pleased to see an increased proportion of new recruits joining us from the top 40. We have a strong pipeline of acquisition opportunities of quality independent law firms.”
The share price was 365p before March’s update and bottomed out at 92p this week, but at the time of writing it was up 17% today at 110p.