Knights splashes £16.6m on another acquisition

Listed firm Knights has made one of its biggest acquisitions to date, agreeing £16.6m to bring on board an Essex practice.

Knights will pay £10m cash up-front to acquire Birkett Long LLP and a further £6.6m in instalments over the next three years, subject to financial performance. The deal includes the separate legal entity Birkett Long IFA LLP, giving Knights an opportunity to add a 15-strong financial advisory business to its service offering.

Knights said it will bring across a team of 91 fee-earning professionals but there was no confirmation on how many other staff will be retained. The announcement said clients of Birkett Long, which currently operates from offices in Colchester, Chelmsford and Basildon, will benefit from the ‘strength and resources of Knights’ well-invested central infrastructure’.

In the year ended 31 May 2024, Birkett Long reported that operating profit fell slightly to £3.3m after turnover had increased by 6% to £14.8m. Net assets had fallen by 86% to £1m and cash reserves were down from £1m to £638,000.

Knights said that following what it described as the ‘full realisation of synergies’ it expects the business to operate at a low double-digit profit margin and be immediately earnings enhancing. The group turnover has now passed £200m and the number of offices has reached 31.

David Beech, Knights chief executive, said the acquisition gives Knights a greater presence in a relatively affluent area of the south east and adds a complementary wealth advisory service that had long been earmarked by the company. He added: ‘We are confident that without the constraints of independent ownership and building on its growth in recent years, the acquisition will deliver further organic growth in the region.’

Martin Hopkins, Birkett Long managing partner and one of nine members in line for a windfall from the sale, said the deal can bring benefits for clients and lawyers alike.

‘Being part of a business of scale will allow us to build on our track record by continuing to grow revenues across both the law firm and the IFA business, allowing us to provide a broader range of services to our regional clients along with even more career opportunities for our professionals.’

The Birkett Long acquisition comes on the heels of the biggest purchase to date, a £30m deal announced in March to buy IBB Law.

Knights listed on the alternative investment market in 2018 and has since bought more than 20 firms across England and Wales. Shares in Knights Group Holding plc rose by 5.26% to 150p following today’s announcement.