Listed business make major move with £30m law firm acquisition

Foulston: Transformative deal

RBG Holdings, the listed business that owns City law firm Rosenblatt, has more than doubled in size after announcing the £30m acquisition of London practice Memery Crystal.

It adds corporate and commercial focus to Rosenblatt’s litigation specialism, as well as 146 employees to its existing 92.

Memery Crystal – which will continue to operate with its own management, brand identity and office – had revenues of £23m and profits of £8m in the year to 30 April 2020.

RBG, most of whose revenues come from Rosenblatt, recorded turnover up 8% to £26m in 2020, according to results published today. Profit before tax rose marginally to £7.7m.

Memery Crystal has 29 partners and 66 other fee-earners and RBG told investors that the acquisition was in line with its strategy to diversify the group’s revenue streams.

Consideration for the acquisition comprises £12m in cash, £11.2m in shares and a further £6.8m in cash deferred across the next year.

Memery Crystal’s key management and employees have agreed to a long-term lock-in for shares and lengthy non-compete clauses.

RBG has extended its revolving credit facility to £15m and taken out acquisition finance of £10m.

Nicola Foulston, RBG’s chief executive, predicted that the deal would be “transformative in terms of the scale of our business”.

She added: “Memery Crystal is a very successful firm, which combined with our commercial focus on margin and cash, can be even more profitable.”

Nick Davis, chief executive of Memery Crystal, added: “The strength of the combined group will mean we can offer enhanced services to clients and provide a stronger entity for staff to develop their careers.”

Rosenblatt’s revenue was up 15% to £21m, and it said its average revenue per fee-earner of £425,800 put the firm in the top 10% of the 100 largest firms.

Its litigation funding arm LionFish, which last year launched to the wider market, invested £1.8m in seven of the 240 enquiries for finance that it received, meaning it has made a total capital commitment of £4.9m to litigation to date.

Convex Capital – the specialist sell-side corporate finance boutique RBG bought in September 2019 – was significantly impacted by Covid with deals delayed or cancelled. As a result, it only completed two deals in 2020, generating revenues of £1.6m.

This year, however, Convex has completed seven deals generating revenue of £4.5m and it has a pipeline of 33 deals more, with six currently at various stages of completion

Ms Foulston said the results demonstrated the resilience of RBG’s evolving business model, “and how our diversified revenue streams can deliver robust and sustainable financial results, despite the challenges of the pandemic”.

RBG’s share price has been rising sharply this year. Since listing in May 2018 at 105p it has rarely been above that figure and ended 2020 on 58p. However, it has been on the up since mid-January and closed yesterday at 120p.

At the time of writing, news of the Memery Crystal deal and the results had pushed the shares up 10% to 131p.

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