Knights, the UK’s fastest growing legal and professional services business, today announces that it has agreed to acquire OTB Eveling LLP (“OTB Eveling”), an independent commercial law firm based in Exeter.
Acquisition rationale and background
The acquisition of OTB Eveling takes Knights into a new key market for legal services outside London, in line with the Group’s strategy to accelerate its organic growth through carefully targeted acquisitions which are a strong cultural fit.
Founded in 2012, OTB Eveling is an independent commercial law firm which will further extend Knights’ existing corporate, employment, dispute resolution and real estate offering to the South West region. The acquisition will bring an additional 17 fee earners to the Group and sees Knights enter Exeter, a key city in one of the largest regional markets for legal services.
In its unaudited accounts for the year ending 30 April 2020, OTB Eveling generated revenue of £2.1m with a corporatised PBT margin of c.16%. Since its accounting year end, OTB Eveling has traded in line with prior years, with no significant impact on debtors or cash collection. Following full integration, including the delivery of cost synergies, the Board expects OTB Eveling to deliver a PBT margin of circa 20%. The acquisition will be immediately earnings enhancing.
Terms of the acquisition
Under the terms of the acquisition, Knights will acquire OTB Eveling from its two existing members (“the Sellers”) on a debt free, cash free basis for a total consideration of £2.1m. This comprises an initial consideration of £1.4m, made up of £0.7m in cash and £0.7m in 164,336 new ordinary shares in Knights (the “Consideration Shares”), along with deferred cash consideration of £0.7m to be paid in equal instalments over the two years following completion, subject to certain conditions being met. The cash consideration will be satisfied from Knights' existing facilities. Completion is expected to take place on 14 December 2020.
Commenting on the acquisition, David Beech, CEO of Knights, said:
“We are delighted to enter a sizeable market for regional law today with the acquisition of OTB Eveling, an independent law firm with a strong cultural fit. Based in Exeter, the acquisition will provide us with a platform for future growth in the South West as we continue to build our position as the leading legal and professional services business outside of London.”
James Eveling, Partner, commented:
“We are excited to join Knights and delighted to be its first point of entry into the South West legal market. The deal enables us to accelerate our growth plans as part of an innovative and ambitious team who share our commitment to outstanding client service. We look forward to introducing the wider Knights capabilities and resources to our clients.”