The vendors of PI firm Colemans-CTTS, acquired by listed legal services business Fairpoint Group in August 2015, look set to receive much less than they expected from the deal.
In a statement to the London Stock Exchange today, Fairpoint, which also owns national firm Simpson Millar, said it was cutting deferred payments on the acquisition. These were originally stated at £7m in two stages 'subject to the achievement of certain financial and integration performance criteria'.
Today's announcement reveals that the company has entered a deed of variation to the terms, adjusting the price payable in the second earn-out period to £1m in cash plus 500,000 new ordinary shares.
The announcement said that payment in the first earn-out period, based on the 10 months to June 2016, will be £1.6m in cash, plus 1,540,000 ordinary shares.
A spokesperson for Fairpoint declined to comment on the announcement but said its annual results were due next month and will include an update on the performance of its subsidiaries.
Fairpoint shares are currently trading at 12.7p, down more than 90% from a 12-month high of £1.67.
Fairpoint notified the London Stock Exchange in December that its full-year results for 2016 were likely to be ‘materially below market expectations’.