Private equity-backed Knights is acquiring Darbys Solicitors in a deal that will create a top 100 firm with more than 300 professionals across seven offices and a total turnover of around £40m.
The acquisition is expected to complete in early January, with Darbys transferring to the Knights Professional Services brand.
The deal is the first major acquisition by Knights since it received a cash injection from Hamilton Bradshaw, the private equity house backed by entrepreneur and former Dragons’ Den investor James Caan, in 2012.
The deal is thought to have been the first into a purely commercial law firm, with earlier private equity injections such as Quindell Portfolio’s £19.31m acquisition of Liverpool firm Silverbeck Rymer constituting investments in firms with significant consumer practices.
“Culturally we felt this was the perfect fit for both businesses in terms of client services, expertise and geographical coverage,” Knights managing partner David Beech said. “It’s our first major stepping stone, it puts us on the radar and by acquiring another business clearly demonstrate what we can do with our platform.”
Both Knights and Darbys feature in this year’s UK 200: the Independents report, which focuses on the second 100-largest law firms in the UK, with a turnover range of between £7.5m to £20.9m.
Last year Darbys was number 144 in the revenue table while Knights was joint 119th. As a result of this deal Knights, which is targeting an organic 2015/16 turnover of around £25m, will enter next year’s top 100 ranking at around number 65.
Knights’ revenue stood at £9.4m in 2012/13 but rocketed to £12.36m in 2013/14, a rise of 31 per cent. Growth was even more impressive in 2014/15, with revenue hitting £16.5m last year, a 33.4 per cent increase. Four-office firm Darbys’ turnover has grown from £7.5m in 2009 to £12.85m in 2014.
Average revenue per lawyer (RPL) at both firms was similar in 2014/15. At Knights RPL was £168,000 last year while at Darbys it was £177,000.
Last year Knights had a total of 175 fee-earners of whom 98 were qualified lawyers while Darbys had 109 fee-earners of whom 73 were qualified.
Property and landed estates work is a major component of both firms’ practices, with real estate being the single largest contributor to both firms’ income.
Notably Knights worked with Hogan Lovells for 11 years on the Mexican Wave property-related project for the Prudential as well as similar real estate and commercial assignments for other law firms looking to outsource matters to lower-cost regional outfits.
Knights’ clients last year included Amey, Chester Zoo, Hanson UK, M&G Real Estate, Merlin Entertainments and Paddy Power while Darbys’ included the Blenheim Estate, Longharbour, MITIE Built Environment and MITIE Technical Facilities Management, the National Crime Officers Association, Oxfordshire County Council and Oxford University.
Darbys currently has four offices: in Oxford where it is headquartered, Thame, Manchester and Colchester. The latter office is home to advice helpline Legal Assistance Direct, which Darbys acquired in 2012, while in 2014 the firm moved its headquarters to new offices in Oxford. Beech said all four offices would be incorporated into Knights.
In the UK 200: the Independents Darbys managing partner Simon McCrum predicted that 2016 would be a “year to watch” for Darbys, adding that the firm’s main growth would be most likely to come through making inroads into new UK regions.
Knights’ Beech said that the merger discussions with Darbys had shown the two firms had “a similar ethos” in respect of working practices. Beech also confirmed that his firm’s deal with Darbys was being seen as a catalyst for the firm’s next period of growth.
“We’ll be looking to continue our acquisition programme throughout 2016 and beyond to pursue our passion to be a leading regional professional services business,” added Beech. “It’s an important part of our strategy to provide integrated solutions to our clients with legal services being part of a wider offering. Future acquisitions and increased recruitment of professionals who seek to join a functional business and cohesive culture are integral to our growth plans.”
As part of this Knights is actively seeking professional services businesses to add to its core law offering including regional accountancy groups, tax specialists and real estate advisory organisations located outside of the major cities of Birmingham, Manchester and Leeds. The firm has also been building a management consultancy arm which Beech said focuses on helping clients to become investor ready.
“That’s gone so well we’d like to expand it quicker by bolting on other businesses,” added Beech.
The firm also hired around half a dozen chartered town planners in Stoke in June 2013 which added to its planning lawyer team and is marketed as a one stop shop for developers.
On 1 May 2014 Knights incorporated the business, moving from LLP to limited company status and rebranding as Knights Professional Services Ltd.