Lloyd: It looks like a market that needs capital
Private equity firm Blixt Group is looking at up to five more acquisitions to reach its target of building a £100m national legal services business, its chief executive has revealed.
Neil Lloyd, chief executive of Lawfront – the vehicle for Blixt’s legal operation – told Legal Futures that the long-term aim was to have 60% of turnover coming from consumer legal services and 40% from advice to SMEs.
Earlier this month, East Midlands firm Nelsons became Lawfront’s third major acquisition, after Essex practice Fisher Jones Greenwood and Farleys in Lancashire. Lawfront’s revenue will hit £45m with this latest deal.
Mr Lloyd joined last November, having been CEO of Dental Partners, a private equity-backed chain of dental practices, where he led a rapid buy and build growth strategy. He was previously chief executive of logistics business Yodel.
He said there were similarities between working with dentists and lawyers – “You’re dealing with very professional, highly ethical people who want to do their jobs in a supportive environment” – and that key to Dental Partners’ success was creating such an environment.
In a market where recruitment and retention were especially tough, Mr Lloyd developed a ‘best place to work’ strategy that he said appealed to Blixt for Lawfront too.
Lawfront’s strategy is to buy between five and eight “regional leaders” and then invest in their growth in those regions, he explained. This meant up to five more deals over the next two to three years.
“We’re going fairly cautiously. We want to ensure we are integrating properly,” he said.
Though growth will primarily be organic, Blixt will provide funding for “tuck-in” acquisitions – both Fisher Jones Greenwood and Farleys announced small acquisitions after they joined Lawfront. Mr Lloyd said there was “quite a pipeline” of these.
For Blixt, he said, the “consolidation opportunity is within general legal services”, where there is stable 2-3% annual growth, rather than more specialist firms – Lawfront’s strategy is not to have more than 20% of turnover coming from any one practice area.
“We’re looking for very well-run firms with a good spread of services that have a history of growth.”
They will be “synergistic savings” through Lawfront’s central operations, such as IT, but the firms will not be operating on a single practice management system, for example. “It’s very much about what we can add at the centre,” Mr Lloyd explained.
He said there were three recurring themes in the discussions he was having with prospective targets: succession, how to achieve full value for their businesses, and how to access the capital they need to invest, particularly in technology.
Private equity offered a solution: “It looks like a market that needs capital,” Mr Lloyd said. “We’ve had a surprising number of very good conversations and we seem to be in the right place at the right time with our proposition.”
While consolidation in the law was “still relatively immature”, Mr Lloyd said Lawfront has no ambitions to dominate the market and there are no plans, at least for the next five years, to bring the firms together under a single consumer brand (Lawfront is aimed more at the profession).
This would “not be sensible from a business perspective”, given the local strength of each firm’s brand.
Mr Lloyd added that there were no plans either to expand into complementary professional services. “We’ve got enough to do with our core strategy. We are having lots of really good conversations. We can achieve our ambition within that…
“One of the ways you do succeed is to keep your strategy pure and simple.”
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