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Pannone deal should see Aussie upstart become the UK’s top legal consumer brand
Due diligence is almost complete and Slater & Gordon has confirmed that a sale agreement has been reached for the £33m takeover of Manchester’s most talked-about firm – Pannone.
The high-level talks have been dogged by unrest among Pannone partners and the big challenge for the firm’s management was to keep the partnership united as leaders discussed the break-up of the firm.
The problem was that Pannone is a firm of two halves. It prided itself on its diversity, moving early to tap into new revenue streams with white-label arm Affinity and network Connect2Law, but the brand was always stronger on the consumer side.
When the Slaters deal came up – offering not a straightforward merger, but a partial acquisition – the rift between the consumer and commercial sides widened and key partners vocalised concerns.
Pannone’s debt level is thought to have contributed to the unrest. The firm put debt at £13.9m for 2012/13, but some sources place that figure nearer £16m. Either way, partners would have had to decide what side of the firm was responsible for what.
By all accounts, Pannone managing partner Emma Holt never wavered in her commitment to the deal. Internal challenges delayed progress and created new problems, but there was never a sense that the deal would be knocked off the table.
In return for £25.5m cash and £7.5m of Slaters shares the Australia-headquartered firm picks up Pannone’s consumer business in full. The firm is deferring payment of £7m in cash and £4m in shares subject to performance, but is expecting the acquired business to turn over an annualised income of £34.5m by the end of 2013/14.
What of the commercial business? There are few surprises there either. Pannone dispute resolution partner Paul Jonson and senior partner Steve Grant are to head up a 50-lawyer independent B2B spin-off, Pannone Corporate.
Since entering the UK market though the acquisition of Russell Jones & Walker in January 2012 Slaters has been snapping up personal injury practices in its mission to become the top legal consumer brand. The Pannone deal could see it achieve that aim.