Leading accident management company Helphire Group plc has acquired alternative business structure (ABS) pioneer NewLaw in a deal that could ultimately be worth more than £40m.
Cardiff-based NewLaw was the fourth ABS licensed by the Solicitors Regulation Authority and has since put together a series of joint venture ABSs with insurance and fleet management businesses.
As well as the law firm – which mainly handles personal injury but also other consumer-related services including wills and probate – the NewLaw Group includes companies involved in the provision of medical reports, costs drafting and employment law advice.
Helphire said it has worked closely with the NewLaw team over the past five years in processing PI claims and “has been impressed with the high quality and ethical standards of their work and the integrity of their people”.
Unaudited management accounts for the year ended 31 December 2013 indicate that the NewLaw Group achieved a profit before tax of £7m on sales of £29.4m. Its net assets were £14.7m.
Helphire said it intends to continue to expand NewLaw’s joint venture model “in conjunction with its own strategy to develop its legal services offering to a larger customer group”.
The consideration will be satisfied by the payment at completion of £24.5m in cash and, subject to the achievement of EBITDA targets for the years ended 31 December 2013 and 2014 respectively, the issue of new Helphire shares with a value of up to £10.5m.
Helphire will also acquire net external working capital debt and shareholder loans of approximately £8.2m, most of which will be settled on or after completion.
The first tranche of Helphire shares and a proportion of the second will be subject to a 12 month lock in followed by a 12 month orderly market arrangement.
Helphire told the Stock Exchange that in addition to supporting its strategy of widening its range of legal services, the acquisition is expected to be earnings enhancing and cash generative.
Martin Ward, chief executive of Helphire, said: “After working with NewLaw for many years, we are delighted to have secured a first class and well-established legal services business together with its management team.
“This addition to the Helphire group supports our strategic direction to broaden the scope of services we offer in related markets and we look forward to building on our more recent success.”
Helen Molyneux, chief executive of NewLaw, added: “We chose Helphire as a partner because it has established quality credentials, the right approach to business, both strategically and culturally, and a shared vision of the future.
“The legal services market has undergone enormous change over the last two years which has opened up new opportunities for different businesses to work together in this sector. The combination of Helphire and NewLaw represents a rewarding and exciting opportunity for the combined businesses.”