Partners who moved to Slater & Gordon (S&G) as part of its acquisition of Pannone are to be locked into the firm for three years under the stringent terms imposed on the new joiners.
The partners have also agreed to performance-related salaries and restricted share options.
The consideration for the takeover by the Australian-listed firm is made up of £25.5m in cash and the issue of £7.5m S&G shares, which are subject to restraints on sale. A portion of the cash, £7m, and shares, £4m, will be deferred and subject to performance. Sources said that instead of receiving cash, legacy Pannone partners would have their capital loans paid off.
Pannone’s LLP filings for 2012/13 are yet to be published but it is understood that it’s debt position had created a need for additional cash injections from partners.
Australian-listed S&G finally completed its acquisition of the Pannone consumer business earlier this month (14 February). The announcement was posted on the Australian Securities Exchange (ASX) last Monday morning (17 February 2014).
In late November S&G confirmed it would pay £33m (A$55m) for the Panone consumer business, which includes the personal injury, family, wills and estates, and private client books (28 November 2013).
The announcement also noted that the cash component would be funded using a multi-currency (AD/GBP) syndicated debt facility. Existing debt facilities, which are due to expire in 2015, have been refinanced to the tune of a total debt facility increase of A$67.5m to A$215m.
The firm will be known as Pannone, part of Slater & Gordon over an 18-month integration period (28 January 2014), during which time Pannone’s Manchester staff will remain in their original offices and the London staff will move into S&G’s Chancery Lane building.
According to S&G UK chief executive Neil Kinsella the acquisition has created the UK’s largest dedicated sexual abuse team, to be led by legacy RJW partner Liz Dux and legacy Pannone partner Richard Scorer.
Kinsella said: “Once the initial challenges of integration are dealt with, we look forward to turning our attention to building our depth of services across the UK.”
Pannone was the firm’s fifth merger in a year, following the acquisitions of the personal injury practice of Taylor Vinters (19 August 2013), Goodmans (30 August 2013), Fentons (21 August 2013) and John Pickering and Partners (24 October 2013).
The firm also planned to merge with Simpson Millar but in August it announced that the talks had been deferred alongside its results statement to the ASX and Simpson Millar subsequently confirmed talks had been called off altogether.
The deal for partners is similar to S&G’s first UK acquisition of Russell, Jones & Walker (RJW) two years ago (30 January 2012).
The lock-in period for legacy RJW partners brought into the firm via the S&G acquisition will end as the integration project for this year’s series of mergers comes to a close.