Knights today announces that it has agreed to acquire Coffin Mew LLP ("Coffin Mew"), a leading independent law firm in the South East.
Acquisition rationale and background
With a 130 year history operating in the South East of England, Coffin Mew is a leading independent law firm based primarily in Portsmouth with offices in Southampton, Brighton and Newbury. The acquisition brings 102 new fee earners to Knights, significantly expanding Knights' presence in the South East, an attractive growth market for legal and professional services, while providing entry into a number of new locations.
The acquisition of Coffin Mew is in line with the Group's strategy to accelerate its organic growth through carefully targeted, high quality acquisitions with a strong cultural fit, that provide entry into new markets or bring complementary services. Coffin Mew is a full service law firm with particular strength in commercial real estate and private wealth, adding scale to Knights' existing offering.
In its unaudited accounts for the year ended 31 March 2022, Coffin Mew reported revenue of £11.3m with a corporatised PBT margin of circa 8%. Following full integration and realisation of all synergies, the Board expect Coffin Mew to contribute a PBT margin of circa 16% which, combined with a typical level of revenue churn post-acquisition, means the acquisition is expected to be immediately earnings enhancing.
Terms of the acquisition
Under the terms of the acquisition, Knights will acquire Coffin Mew from its 12 existing equity partners ("the Sellers") on a debt free, cash free basis, for a total consideration of £11.5m subject to working capital adjustments at the time of completion. This comprises an initial consideration of £6.5m made up of £5.5m in cash and £1m of new ordinary shares in Knights, along with deferred cash consideration of £5m to be paid as to £2m on each of the first and second anniversaries and £1m on the third anniversary following completion. The cash consideration will be satisfied from Knights' existing facilities. Completion is expected to take place on 8 July 2022.
Commenting on the acquisition, David Beech, CEO of Knights, said:
"We are delighted to announce the acquisition of Coffin Mew, a well-reputed firm in the South East which has a strong cultural fit with Knights. The acquisition allows us to significantly expand our presence in the South East, by entering a number of key new locations, as we continue to make good progress in achieving our ambition to become the leading legal and professional service business outside of London."
Miles Brown, Partner, Coffin Mew commented:
"Having built a leading position in Portsmouth and the South East, we are excited to be joining Knights, an ambitious firm with a strong and growing reputation as it expands across the UK. In particular, we are looking forward to benefitting from the Group's scale which will allow us to more fully meet the strong demand, and need for broader technical skills, we are seeing from our clients, while greater central resource and support will better enable us to fulfil our growth potential, as part of a larger Group."