Ward: Structural under-supply of new housing in the UK
Listed law firm Gateley has made its biggest acquisition to date, and first of a law firm, with a £4.15m deal to buy Surrey property firm GCL Solicitors, while also announcing an 8% increase in turnover over the past year.
The deal brings in 79 new members of staff, including six partners, adding to the 119 property law staff Gateley already has. They will remain based at GCL’s offices in Guildford.
Gateley is paying £2.3m in cash and the rest in shares. The cash consideration is being funded by the extension of Gateley’s bank facilities, repayable over the three years from completion.
In addition, £1.3m of liabilities owed to the former members of GCL will be converted into loans of the same amount, repayable by Gateley over the next two years following completion.
GCL specialises in advising on residential developments and works with some of the UK’s top housebuilders as well as promoters and landowners. It also acts for overseas private investors buying new-build residential properties in the UK, primarily in and around London.
In the year ended 31 March 2018, GCL generated revenues of £6m, with earnings of £600,000.
Announcing the deal to the market, Gateley said: “The board expects the acquisition to generate operational synergies and be immediately earnings enhancing.”
It added: “Gateley currently works with 18 out of the top 20 national housebuilders providing support on planning, land acquisition and sales of plots.
“When GCL joins Gateley, the group’s enlarged plot sales team will advise on circa £2.5bn worth of plot sales annually.
“In addition, Gateley has been considering investment in technology to enhance further the plot sales service of its business. This acquisition will enhance its technological capabilities through GCL’s existing platform.”
The firm’s previous acquisitions were of surveyors Hamer Associates and tax advisory business Capitus.
Chief executive Michael Ward said: “The acquisition will further strengthen our leading position in the residential development sector nationally and provide us with a substantial presence in the southern market, which we see as critical in developing a full service offering for our clients.
“There is a structural under-supply of new housing in the UK and we see this as a market that will remain strong. The South East in particular will continue to be a significant engine for housing growth for the foreseeable future.
“The acquisition allows us to offer a greater depth of specialism and expertise in all aspects of the residential development market. We can now match our national office network to our residential development clients’ networks with seven residential development teams operating across the country.
“There are also clear opportunities across the Group from this strategic acquisition, not least for Gateley Hamer and Gateley Capitus.”
Separately, Gateley also issued an update on trading ahead of its audited results for the financial year ended 30 April 2018.
It said: “Trading in the second half of the financial year has remained strong and the group performance for the full year is in line with market expectations.
“The board is delighted with revenue and profit growth in the year which has enabled the group to not only increase its returns to shareholders, but also to further invest in the business.
“Subject to audit, revenue for the financial year ended 30 April 2018 will be not less than £84m (2017: £77.6m) and adjusted EBITDA is expected to be not less than £16m (2017: £14.9m).”
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