Knights, one of the UK’s fastest growing legal and professional services businesses, today announces that it has agreed to acquire Archers Law LLP (“Archers”), a leading independent law firm based in Stockton-on-Tees.
Acquisition rationale and background
Established in 1860, Archers is one of the leading full-service independent law firms operating in the Teesside area. The acquisition sees 38 fee earners joining Knights and will be Knights’ seventeenth location, expanding Knights’ presence into the North East region, one of the largest markets outside of London for legal and professional services in the UK.
The acquisition of Archers is in line with the Group’s strategy to accelerate its organic growth through carefully targeted acquisitions which are a strong cultural fit.
In its unaudited accounts for the year ended 31 March 2021, Archers reported revenue of £4.0m with a corporatised PBT margin of circa 20%. Following full integration and realisation of all synergies, the Board expect Archers to contribute a PBT margin of circa 30% which, combined with a typical level of revenue churn post-acquisition, means the acquisition is expected to be immediately earnings enhancing.
Terms of the acquisition
Under the terms of the acquisition, Knights will acquire Archers from its four existing equity partners (“the Sellers”) on a debt free, cash free basis for a total consideration of £5.2m, subject to working capital adjustments at the time of completion. This comprises an initial consideration of £3.7m, made up of £2.1m in cash and £1.6m in 395,060 new ordinary shares in Knights, £0.2m of which will be issued to fixed share members (the “Consideration Shares”), along with deferred cash consideration of £1.5m to be paid in equal instalments over the three years respectively following completion. The cash consideration will be satisfied from Knights’ existing facilities. Completion is expected to take place on 26 November 2021.
Commenting on the acquisition, David Beech, CEO of Knights, said:
“We are delighted to announce the acquisition of Archers, a leading law firm in Teesside which further expands our footprint into the North East, a region currently undergoing significant public and private investment. The acquisition allows us to build on the existing strong presence we have established in Yorkshire in recent years and provides a compelling platform for future organic growth in the North East, as we cement our position as the leading legal and professional services business outside London.”
Chris Todd, Partner, Archers commented:
“After over a century of growth to become one of the leading law firms in Teesside, we are delighted to join Knights, whose culture is closely aligned to ours. We look forward to executing on the significant growth opportunities in the North East as part of a larger group, which will allow us to offer greater resources and capabilities to our clients in the region and beyond.”