Beckingham: Full integration is key
The private equity house that acquired Midlands firm Higgs last week is to adopt a different approach to its competitors in pursuing a ‘buy and build’ strategy, it has told Legal Futures.
Katie Beckingham, a director of August Equity, said full integration across the business – rather than creating a group of semi-independent law firms – was key to its vision.
We reported on Friday that Higgs, based in Dudley, had struck the deal with August and that it would use the investment to develop and recruit staff, and pursue merger and acquisition opportunities.
Higgs has 28 partners and more than 250 employees working across a broad commercial and private client practice. Its most recent accounts, for the year to 30 November 2023, show turnover up 2% to £20m, with profit before members’ remuneration and profit shares up 9% to £6.8m.
In a joint interview with Legal Futures, Higgs managing partner Nick Taylor said the main reason he sought funding was because he saw “a market opportunity” – consolidation was on the rise among £5-10m turnover law firms faced with the costs of regulatory compliance, cybersecurity, technology investment and recruitment.
More to the point, firms like this in the Midlands were approaching Higgs about being acquired, he added, and there were no doubt many others elsewhere in the country in the same boat.
Higgs needed financial backing to take these forward. Bank funding was not the answer – a bank would expect the partners to put a significant amount in too and Mr Taylor felt it would take 15 years to achieve that way what he hoped to do in the next few with August.
“The market opportunity is now. Being blunt, if you’re trying to consolidate in the market in 15 years, then there might be some firms left, but they’re not going to be the ones you probably want.”
He went on: “Higgs is a great people-based business primarily offering all sorts of relationship-based services to owner-managed businesses. We do that really well in the Midlands and we believe we can replicate that across the UK.”
Mr Taylor engaged Rothschild & Co to find the backing, leading to the introduction to August late last year (see our interview with Rothschild in April).
Some of the other ‘buy and build’ strategies in the market – such as Lawfront (backed by Blixt) and Adeptio (Horizon Capital) – aim to build groups of law firms nationwide that retain their management and cultures while having some centralised functions. Firms bought with August’s support, by contrast, will become part of Higgs in a ‘hub and spoke’ model.
Ms Beckingham said full integration across the business was key to their shared vision. She pointed to August’s recent exit from top-25 accountancy firm AAB, after it more than quadrupled in turnover to £130m, with staff numbers tripling to 1,000, in the four years August was involved.
This was achieved through a mix of organic and acquisitive growth – 13 deals in total, building regional hubs and additional service lines. “It was the integration that was a real game-changer and differentiator,” she said.
“We think we’ve got a fab technology platform on which to bolt-on hubs and then build from there,” Mr Taylor went on. “We can cross-sell all sorts of services out of where we are based at the moment and drive growth that way.”
From a practical perspective, Higgs offers the full range of services to SMEs that smaller practices cannot, but he said Higgs’ “secret sauce”, from which acquired firms would benefit, was its approach to relationships with staff and clients.
“Without sounding big-headed about it, we think, rightly or wrongly, that what we offer to owner-managed businesses is the best in the UK. So why can’t we apply that in other parts of the UK?”
Ms Beckingham said: “One of the things that’s really impressed us about Higgs throughout this process is also their ambition and their appetite to stay ahead of the market, and to invest in people and technology in building out the business.”
August generally invests for four to five years and she pointed out that Higgs was only the fourth investment in August’s sixth fund, meaning there was no time pressure to realise the investment.
The second and concluding part of this interview will be published tomorrow.
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