LONDON: Knights Group Holdings today announced that it has agreed to acquire IBB Law LLP, a premium service law firm based in the South East, representing a compelling acquisition with a strong strategic and financial rationale.
IBB brings a team of 140 fee earners delivering premium legal services to both business and private clients, significantly increasing Knights’ scale in the South East, an attractive market with a significant concentration of corporates and private wealth.
In its audited accounts for the year ended 30 April 2024, IBB reported revenue of £23m and a corporatised PBT margin of 6%. Prudently assuming 20% revenue churn post-acquisition and excluding the non-core Crime business, and following full integration and realisation of synergies, the Board expects it to contribute a PBT margin of circa 26%.
The acquisition is expected to be immediately earnings enhancing.
IBB’s four locations in Uxbridge, Beaconsfield, Reading and Ascot provide proximity to areas of inward investment, major corporate clusters, affluent communities and existing Knights offices in Oxford, Weybridge and Newbury, further enhancing our scale in this market.
IBB has a very good fit with Knights’ existing services, given its strengths in corporate, real estate and private wealth, whilst bringing additional specialisms which Knights can build on across the Group, such as in franchising. An exception to this is that the business currently includes a legal aid funded crime business (accounting for c 10% of revenues). Strategic options for this business, which is considered non-core to Knights, will be reviewed following completion.
The core IBB business has grown strongly in recent years and is high-performing, with many cultural and operational similarities to Knights – a crucial aspect of Knights’ acquisition model, giving confidence that it will integrate well.
As part of Knights, IBB will be able to accelerate growth through the team being able to offer clients a wider range of services and utilising the strength and resources of Knights’ well-invested central infrastructure, without the increasingly onerous regulatory and technology burden faced by independent firms.
The acquisition is, therefore, well-aligned with Knights’ strategy to bolster its future organic growth through selective, value enhancing acquisitions.
Under the terms of the acquisition, Knights will acquire IBB from its twenty-nine equity partners for a total consideration of £30m, subject to working capital adjustments and on a cash and debt free basis.
This comprises an initial cash consideration of £21m and deferred cash consideration of £9m to be paid in three equal instalments on each of the first, second and third anniversaries following completion, subject to certain conditions being met. The consideration will be satisfied from Knights’ existing banking facilities. Completion is expected to take place on 4 April 2025.
Commenting on the acquisition, David Beech, CEO of Knights, said: “We are delighted to welcome the high quality IBB team to Knights, significantly increasing our scale in the attractive South East region. IBB’s premium service offerings in corporate, real estate and private wealth are an excellent fit, and their culture and operational model are very aligned to Knights. We are confident that the acquisition will provide a strong platform for organic growth in the region.”
Joanna DeBiase, Managing Partner of IBB, commented: “We are excited about joining Knights at a time of structural change in our industry, where being part of a business of scale with a premium, national reputation is ever more important for all of our stakeholders – allowing us to provide broader services to our clients, strong career opportunities for our people, and to capitalise on our momentum, with the benefit of strong central support.
“We look forward to working closely with the team to unlock the significant market opportunities in the South East as part of the larger group.”