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LEGAL FIRM Knights Group is to enter Leeds with the acquisition of independent law firm Shulmans for up to £20m.
Knights has announced a placing to raise gross proceeds of £20m to fund the acquisition and to provide the group with additional financial resources as it aims to build the leading legal and professional services business outside London.
The law firm said the acquisition will significantly increase its footprint by providing an entry into Leeds, in line with its strategy to accelerate growth through carefully targeted acquisitions which are a strong cultural fit and strengthen existing offices, add new geographies or bring complementary business services.
Founded in 1981, Shulmans is one of the longest established, independent commercial law firms in Leeds. It has 130 fee earners operating from a single office, offering a full range of commercial legal services including corporate, litigation, employment and real estate.
Knights said the deal will give it a platform for growth in one of the largest regional markets for legal services in the UK. The Yorkshire market is estimated at £437m. It also said the acquisition will give it access to city relationships for its recently established York office. It also brings the opportunity for material organic growth through recruitment as it has the capacity to expand to up to 225 fee earners.
David Beech, CEO of Knights, said: “We are delighted to announce the acquisition of Shulmans today, marking our entry into a new and important market with the addition of this quality full service commercial law firm which is recognised as a Top 200 UK law firm by revenue.
“With their ambitious team and progressive approach to law, the firm has a strong cultural fit with Knights and provides an exciting platform for growth in Leeds, in line with our strategy to build the leading legal and professional services business outside London.”
Tim Halstead, managing partner of Shulmans, added: “We have achieved significant growth in recent years to become a leading
Acquisitions should provide a platform for further organic growth.
Rachel May, analyst at Shore Capital
independent law firm in the North. Having worked alongside Knights previously, we believe its collegiate approach, range of services and broad client base will provide an excellent match for us to continue to grow as part of the wider group.”
In its audited accounts for the year ending March 2019, Shulmans achieved revenue of £17.6m, with a corporatised pre-tax profit margin of 12.3 per cent.
Following full integration, including the delivery of synergies, the board expects Shulmans to deliver a pre-tax profit margin in excess of 20 per cent by the financial year ending April 2021, particularly through the modernisation of a business that has operated under a more traditional model to date.
Knights also announced the acquisition of ASB Law based in Crawley and Maidstone for up to £8.5m.
Analyst Rachel May, at Shore Capital, said: “Knights has announced two significant acquisitions following what has been a very active period for the group. Having previously expressed an interest in Leeds, the group has announced the exchange of contracts to acquire Shulmans, an independent law firm based in Leeds, for up to £20.1m. Combined, the two acquisitions will add 219 fee earners to the group, bringing the total number of fee earners to over 900.
“The acquisitions should provide a strong platform for further organic growth through enhanced recruitment in the new regions, investment in people and technology, client wins and cross selling.”
Knights expects the acquisitions and placing to be earnings enhancing by a high single digit percentage in the year to April 2021.
Ms May said: “The group has also confirmed current trading gives management confidence it will meet its expectations for the full year.”