Davies Arnold Cooper (DAC) and Beachcroft are in merger talks to create a £175m insurance giant, The Lawyer can reveal.
The two firms are understood to be voting on the proposal next week.
Confirming the talks, Beachcroft managing partner Paul Murray said in a statement: “Our merger discussions with Davies Arnold Cooper are driven by the opportunity to enhance how we work with clients in industry sectors in which both firms specialise, and in particular the insurance sector.”
DAC senior partner Danny Gowan said: “In addition to creating a stronger offering to the insurance sector and increased investment internationally, a merger would provide significant advantages to our real estate, corporate and employment teams, which have grown significantly over recent years.”
Despite the January 2008 takeover of KSB Law, which added £8m to the firm’s top line, DAC has struggled to grow organically. In 2010 turnover dropped by 2 per cent from £45m to £44.1m, with profit per partner (PEP) falling from £361,000 to £278,000.
Beachcroft has added £10m a year to its revenues over the last three years, with PEP hovering around the £310,000 mark in the same period.
A merger will strengthen the combined firm’s London offering as well as giving Beachcroft a foothold in the key insurance markets of South America. With an existing office in Mexico, DAC has lately established associations in Chile (29 November 2010) and Brazil (6 September 2010). Beachcroft’s most recent international foray was Singapore (3 January 2011).
Murray said: “The combination of Beachcroft’s leading volume and UK insurance practice with Davies Arnold Cooper’s strong insurance and dispute resolution team in London, Spain and Latin America could create a distinctive full-service offering for our insurer clients.”
This is the second major combination under discussion in the legal insurance sector, coming hot on the heels of the talks between Clyde & Co and Barlow Lyde & Gilbert (6 June 2011). If that deal goes through the resulting firm will have a turnover of some £307m , based on 2010-11 revenue figures.
How the financials stack up:
Beachcroft £131m turnover PEP £314,000 and profit margin 19 per cent, 148 partners
DAC: £44.1m turnover, PEP £278,000 and profit margin 18 per cent, 77 partners
Beachcroft: £121m turnover, PEP 301,000 and profit margin 21 per cent, 135 partners
DAC: £45m turnover, PEP £361,000, and profit margin 24 per cent, 75 partners
Beachcroft: £114m turnover, with PEP £310,000 and profit margin of 23 per cent, 133 partners
DAC: £37.3m turnover, with PEP £357,000 and profit margin 27 per cent, 70 partners