Knights, one of the UK's fastest growing legal and professional services businesses, today announces that it has agreed to acquire Langleys Solicitors LLP (“Langleys”), a leading independent law firm in York and Lincoln.
Acquisition rationale and background
Langleys, established in 1890, brings a further 72 fee earners to Knights, significantly strengthening the Group’s presence in York. The acquisition will also allow the Group to further expand its operations in the East of England by providing entry into Lincoln, an attractive growth market for legal and professional services.
The acquisition of Langleys is in line with the Group’s strategy to accelerate its organic growth through carefully targeted acquisitions which are a strong cultural fit, with the firm’s real estate and corporate offerings being closely aligned with Knights’ existing services. Langleys has particular strength in private wealth, where there is significant growth potential.
Langleys also operates a legal aid child law (CL) business within Langleys LLP and a volume residential conveyancing business through a subsidiary, Home Property Lawyers Limited (HPL), which have 5 and 64 fee earners respectively. These businesses are included in the transaction perimeter but are non-core to Knights and as such the strategic options for them will be reviewed.
In its unaudited accounts for the year ended 31 March 2021, Langleys reported revenue of c£14m with a corporatised PBT margin of c5%. Approximately two thirds of revenue is in respect of the core Langleys business (excluding the HPL and CL businesses). Following full integration and realisation of all synergies, the Board expects the core business to contribute a PBT margin of c20% 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 Langleys from its four 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 £8m, made up of £5.25m in cash and £2.75m in 704,515 new ordinary shares in Knights, (the "Consideration Shares"), along with deferred cash consideration of £3.5m to be paid in equal instalments over the three years following completion. The cash consideration will be satisfied from Knights' existing facilities. Completion is expected to take place on 25 March 2022.
Commenting on the acquisition, David Beech, CEO of Knights, said: "We are delighted to announce the acquisition of Langleys, a leading firm that has a strong cultural fit with Knights and expertise closely aligned with our existing services. The acquisition sees us become the leading law firm in York and provides a strong base for organic growth in the East of England through Lincoln, as we continue to strengthen our position as the leading legal and professional service business outside of London.”
Tim Cross, Partner, Langleys commented: “Having built a strong reputation over a number of years, now is the right time to join Knights, whose growth journey we have followed in York and elsewhere across the regions. We believe Knights’ scale, ambition and ability to invest will enable us to unlock significant growth potential and we look forward to achieving this as part of a larger Group."