Gordon Dadds has made its first acquisition after its float on the London Stock Exchange (LSE) earlier this year.
The firm will has acquired CW Energy (CWE), a tax advisory business focused on the energy sector. Gordon Dadds has initially set the price for the company at £4m.
The law firm, which
listed on the junior Alternative Investment Market (AIM) of the LSE in August, is only the second law firm to list on the London market.
Gordon Dadds said that it paid £300,000 upon completion of the deal. The further £3.7m will be split in annual payments.
However, Gordon Dadds will pay more based on certain conditions.
The law firm said that if the business exceeds £13m in earned and collected fees in the five years after completion of the deal, it would increase its payments up to a cap of £8m. If the event CWE fees are less, additional consideration at lower rates will be paid based on the fees earned between the fifth and tenth anniversaries of the acquisition.
CWE lost £4,000 in the 12 months to the end of March 2016 after paying its partners. However, Gordon Dadds said that if members’ pay were adjusted according to the pay structure it has agreed with CWE going forward, the company would have had an EBITDA of £1.3m.
The acquired business has “since then continued to trade at materially the same level” and the acquisition is expected to be immediately earnings accretive.
Adrian Biles, Gordon Dadds chief executive, said that the acquisition will enhance the group’s activities and provide more opportunities for cross-selling services.
“I am delighted to have completed our first acquisition after Gordon Dadds' successful IPO in August,” he said. “Since the flotation, we have received a number of approaches to make acquisitions and also for lateral hires. We have a good acquisition pipeline which will enhance earnings and the reach of the group.”
Phil Greatrex, CWE managing partner, said that the acquisition enhances the business’ long-term sustainability. CWE has 3 partners and 6 employees.
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