When top-50 firm Fieldfisher was last week reported to be considering listing on the stock market, one’s natural reaction was surprise when the firm rebutted the speculation. While the number of firms that have taken the IPO plunge is still in single figures, there is a sense the dam is about to burst.
The attraction is obvious, as solicitor-turned-barrister Alan Sellers explained as he floated his legal services and credit hire business Anexo Group last week (with £25m for business expansion and shareholders expected to make £10m).
‘We will have a Manchester office open by 1 September and 200 extra fee-earners a year later,’ said Sellers. ‘The money raised accelerates our growth by five to seven years.’
According to research by Thomson Reuters, one-fifth of finance directors at top-100 firms are considering an IPO. A year ago the proportion was nearer one in 10.
Samantha Steer, director of large law strategy at Thomson Reuters, said that listing is increasingly on the radar for UK firms as they seek external financing: ‘We may see more firms turn to capital markets in order to obtain the funding needed to expand and break away from the competition.’
Three years ago, commercial firm Gateley became the first UK firm to list in its own right: it took two years for Gordon Dadds and Keystone Law to join the party. This year, City firm Rosenblatt has listed on AIM, while global firm DWF is considering a float. DWF’s statement on the matter suggested this plan was part of a commitment to ‘doing things differently’.
The firm has stressed that the share sale, which could raise up to £1bn, is just one of a number of options available – but it is clearly a priority.
‘If we were to proceed with an IPO, it would enable us to achieve our strategic objectives more quickly, while also enhancing our ability to
attract and retain the best talent and to incentivise our people by aligning them through offering ownership within the business,’ the firm said.
A listing is not right for everyone: for example, large firms may have already achieved significant (and sufficient) economies of scale. Others may be put off by the chastening experiences of listed parent companies of law firms, including Quindell and Fairpoint, which struggled to retain investor confidence once profits slowed.