Knights bolsters North of England presence with two acquisitions

Listed law firm Knights is adding Newcastle, Carlisle and Lancaster to its 23-strong national network of offices with two more acquisitions, it announced today.

The consolidator – which describes itself as the UK’s largest commercial practice without an office in London – is acquiring Newcastle-based St James’ Square and Baines Wilson, which is headquartered in Carlisle and also has an office in Lancaster.

Both are at the smaller end of the 20 previous acquisitions Knights has undertaken since it listed in June 2018, with 23 and 27 fee-earners respectively. They follow January’s deal for Meade King in Bristol.

St James’ Square “provides entry into Newcastle, an important strategic location which complements the group’s existing Teesside presence”, Knights told investors. It is paying £1.75m over two years, with £500,000 up front and the rest subject to performance.

It will look to offload the debt recovery practice, which accounts for just under 20% of St James’ Square’s business, as it is considered “non-core”.

St James’ Square’s unaudited accounts for 2022 show revenue of £2.4m and a corporatised profit before tax (PBT) margin, excluding the debt recovery business, of c.5%.

Knights said: “Accounting for a typical 20% revenue churn post-acquisition, the board expects the acquisition to be immediately earnings enhancing, with St James’ Square expected to contribute an adjusted PBT margin of circa 15% post synergy savings.”

Baines Wilson saw revenue of £3.2m and a corporatised PBT margin of circa 20%, which Knights said it expected to rise to 25% in the same way.

The Cumbrian firm’s five equity partners will be paid £3.37m, with £2.35m up front and the rest subject to performance over three years.

Knights chief executive David Beech said the deals “provide us with entry into two important strategic growth markets in the North of England and complements our existing presence in the region”.

Paul Monaghan, managing partner of St James’ Square, said the acquisition would “allow us to enhance our client service offering and ability to recruit from Newcastle’s deep pool of talent”.

Sean Logue, head of partnership at Baines Wilson, added: “Having grown to become one of the leading firms in the North of England, we are thrilled to be joining Knights, a firm which champions client service and shares our vision.

“As part of a larger group, offering a wider range of services and scale, we are confident that we will be able to accelerate our growth in Carlisle, Lancaster and the surrounding region.”

Knights’ share price has had a bad 18 months or so. After years of strong growth, it saw a spectacular decline last year – having ended 2021 at 410p, it was just 107p a year later, in part because of a profits warning in March 2022.

This year, the price has been as high as 126p and as low as 64p. It was down slightly to 83p in early trading today.


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