Waldie: Significant opportunity
Pioneering listed law firm Gateley has stepped up its diversification push with its largest acquisition to date, the £20m purchase of chartered surveyors Smithers Purslow.
It is the 12th acquisition – 10 of which have been non-legal services businesses – since Gateley became the first law firm to list in June 2015.
Gateley is paying £12m upfront, 56% in shares and 44% in cash, for the multi-disciplinary practice, which comprises building and quantity surveyors and civil and structural engineers.
Employing 130 staff across 10 offices, Smithers Purslow’s core market is high-value property insurance claims in the UK.
The initial £5.4m cash consideration will be funded from Gateley’s new £30m revolving credit facility with Bank of Scotland and HSBC, which was announced on Tuesday.
Up to a further £7.9m could be payable subject to Smithers Purslow achieving at least £4.5m of EBITDA over the 24 months to 30 September 2023.
The renamed Gateley Smithers Purslow’s management team will continue to lead the business, which recorded turnover of £12m and adjusted profit before tax of £2.5m in its last financial year and compound organic growth of at least 20% per annum in revenue and EBITDA over the last five years.
Gateley has been growing its property platform rapidly – last September, it bought Tozer Gallagher, a firm of chartered quantity surveyors and construction consultants, to add to Gateley Vinden, its property and construction consultancy acquired a year earlier.
Rod Waldie, Gateley’s chief executive, said: “Smithers Purslow’s growth over the last decade has been impressive and it is a highly regarded market leader in the property insurance claims sector, in which we see significant opportunity to develop broader and deeper relationships with insurers and insurance intermediaries.
“The existing synergies between Smithers Purslow and Gateley Vinden, across a number of their multi-disciplinary service lines, extend the depth of our expertise and provide additional capacity to maximise on the opportunities presented in this sizeable and growing market and the wider built-environment consultancy space.
“This is our largest acquisition to date and is a clear demonstration of our commitment to invest and grow our market-facing platforms, as well as to continue to strengthen our resilience through diversification.”
The new revolving credit facility replaces the group’s existing £8m overdraft facilities with Bank of Scotland and HSBC. Gateley told investors it would “support future growth and expansion via acquisition”.
Property is one of Gateley’s four platforms, the others being business services, corporate and people. The firm brings together complementary legal and consultancy services on each one.
In January, the firm bought trade mark and patent attorneys Adamson Jones, the first addition to the business services platform.
In the half-year results announcement made at the same time, Gateley said providing other professional services alongside legal advice was bringing in work from new and existing clients.
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