Listed company Knights has pledged more than £5 million to buy two companies in the north of England as it continues to pick up practices across the country.
The plc announced today that it has closed deals to acquire Newcastle firm St James Law Limited and Baines Wilson, based in Carlisle. The acquisitions, financed from existing bank facilities, involve a total of 50 fee earners, although Knights said St James’ collections business is considered ‘non-core’ and consultations are underway over its future.
Knights will pay £2.35 million upfront to Baines Wilson’s five equity partners, with a further £1 million in installments over the next three years. The company’s most recent accounts with two offices, for the year to 31 March 2023, show a turnover of £3.2m with a profit margin of around 20%. Knights said the acquisition will be immediately earnings-boosting, with its profit margin increasing to 25% after what it describes as “synergic savings.”
The commercial company St James Law Limited, trading as St James’ Square, is purchased for £1.75 million. Four existing owner-managers will receive £500,000 initially, with deferred payments of £1.75 million over the next two years.
In the year to 31 December 2022, St James’ Square reported a turnover of £2.4 million and a profit margin, excluding collections, of approximately 5%. Knights’ board expects profit margin to increase to 15% post-acquisition.
Upon completion, Knights will have five offices in the North West and two in the North East of England, in addition to three existing offices in Yorkshire.
Knights CEO David Beech said the new additions ‘give us access to two key strategic growth markets in the North of England and complement our existing presence in the region’.
He added, “Both operate in key centers in their respective regions and offer significant organic growth opportunities through the acquisition of high-quality talent.”
Paul Monaghan, managing partner of St James’ Square, said: ‘We already have strong relationships with the respected Knights team in Teesside and look forward to working more closely together to take advantage of the significant market opportunities in the North East.’
The announcement did little to excite the stock market, with Knights shares falling nearly 2% to 83p by 11am. This year, the group’s share price has fallen from 125 pence in January to a low of 64 pence at the end of March.