YORKSHIRE-based Simpson Millar Solicitors is set to be acquired by a financial services firm, following revolutionary changes that allow non-lawyers to enter the legal sector for the first time.
Fairpoint Group, which is one of the UK’s biggest providers of advice and services to “financially stressed” consumers, has reached an agreement to acquire Simpson Millar, together with associated companies.
The planned acquisition is for an initial consideration of £9m payable in cash and shares; along with a further “earn-out consideration” of up to £6m payable in cash and shares,
In a statement, Fairpoint said the proposed deal is in line with its strategy to diversify into new sectors, such as legal services. The acquisition is expected to accelerate the growth of the group.
Simpson Millar provides consumer-focused legal services, with its areas of specialism including: family, personal injury, and clinical negligence. It is headquartered in Leeds and has more than 250 staff based in 13 offices around the UK. It was founded more than 150 years ago.
Fairpoint’s statement said: “The firm, led by an experienced and well regarded senior management team, has been responsive to changing market dynamics, capitalising on opportunities to develop new service lines and acquire further caseloads, teams and firms. .. The business has a strong track record of growth and profitability with revenues rising over 40 per cent in the period 2009-13.”
In the financial year ended June 30 2013, Simpson Millar generated consolidated revenues of £16.9m. The business is being acquired on a cash free and debt free basis. Once the deal is completed, Simpson Millar will continue to be run by the current management team using its existing trading brands, It will operate as a business unit within the Fairpoint Group.
The statement issued by Fairpoint said: “The board believes that, as part of the Fairpoint Group, Simpson Millar will accelerate its focus on improved customer service and value while enjoying greater access to capital, which is expected to enable the firm to increase its consolidation activities in the legal services market..recent changes to the legal services regulatory environment are expected to continue to encourage industry consolidation in this highly fragmented market.”
Fairpoint’s board believes that the combination of the two business will yield synergies to further drive growth.
Fairpoint highlighted Simpson Millar’s strong business stream with trade unions. The proposed acquisition has come about following the introduction of Alternative Business Structures in the Legal Services Act in 2007. This legislation allows non-lawyers to own regulated legal services businesses. The acquisition remains subject to approval by the Solicitors Regulation Authority. Fairpoint said it was expected that this approval will be received, and the acquisition completed, in Fairpoint`s first half ended June 30 2014. Chris Moat, Fairpoint’s chief executive, said: “The proposed acquisition of Simpson Millar presents us with an opportunity to accelerate the diversification of our income streams into the legal services market place. Simpson Millar has already made significant progress in developing a powerful consumer offering, through the combination of strong legal skills with the innovative application of technology and legal processes.”
Peter Watson, the managing partner of Simpson Millar, added: “Together, we are considerably stronger and better placed to help more consumers with their legal requirements.”