Private equity enters the law as Wagamama owner buys Parabis Group

Oliver: management team stays on

Duke Street has become the first private equity company to buy a legal practice after acquiring “a significant stake” in the Parabis Group, whose law firm Cogent Law sits behind both the AA and Saga’s legal services websites.

Duke Street, which says it always takes a majority stake in its investments, aims to transform Parabis into a business process outsourcer and indicated that further acquisitions were likely as part of a ‘buy and build’ strategy.

The deal values Parabis, the insurance services group of which claimant law firm Cogent and defendant practice Plexus Law are part, at between £150m and £200m. In the year to March 2012, the Parabis Group is expected to generate revenues of around £160m.

Completion of the transaction is subject to receiving an alternative business structure (ABS) licence, which Duke Street said it expected this quarter.

It is the third significant ABS move in the personal injury sector in as many weeks after Liverpool law firm Silverbeck Rymer and Australia’s Slater & Gordon signed a deal to .

Duke Street’s interest in Parabis has long been talked about – see our Legal Pioneers profile of Parabis last year – and the company said it has been interested in the legal services market since 2006. It looked for “highly automated and industrialised service providers to the private and public sectors, including the insurance industry” and said Parabis stood out as “the most attractive platform in the market”.

In the subsequent years, Duke Street remained close to Parabis’s founder management team and secured exclusivity in an off-market

deal in the first half of 2011.

Duke Street partner Iain Kennedy said: “Parabis presents a unique opportunity to invest in a fast-growing, dynamic and fragmented sector. The attractions of Parabis are clear: a market leader with an unrivalled track record of revenue and profit growth, a differentiated business model, and the best management team in the industry.

“The intention is to support management with Duke Street’s operational expertise in transforming the business from a professional services firm to a business process outsourcer, and to drive the continued consolidation of the legal services industry via Duke Street’s successful buy-and-build model.”

The Parabis management team, led by chief executive Tim Oliver and commercial director Tim Roberts, will remain with the business and continue to be significant shareholders. Duke Street operating partners Paul Lester, former chief executive of VT Group, and Bob Scott, former group CEO of Aviva, will join the Parabis board as non-executive directors. Mr Lester will become chairman of Parabis on completion.

Duke Street has a diverse portfolio across the business services, healthcare, consumer and financial services markets, including Asian food chain Wagamama, debt purchasing company Marlin and wealth management business UKWM. Any business it acquires is restructured and managed in the same way as a FTSE 250 company, no matter what the sector.

The company says its strength lies in “rapidly accelerating the growth of companies by transforming their operating performance and by supporting ambitious management teams”.

Parabis provides personal injury litigation services for a large number of insurers in the UK, running around 200,000 cases a year. It has diversified its services to cover a broad range of other areas, including claims management outsourcing, rehabilitation, loss adjusting, and health and safety assessment and audit.

A Duke Street statement explained: “Through its unique and innovative proactive claims-handling process, Parabis has delivered demonstrable and material cost savings for its clients, which has resulted in robust and long-term customer relationships with large insurers. In addition, it has pioneered claims management outsourcing in South Africa.

“The group’s strong innovation and expansion into new areas has helped it to deliver revenue growth in excess of 25% per annum in the last four years, with continued significant growth forecast.”



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