Listed City firm Rosenblatt has continued its strategy of diversifying beyond legal services by announcing the £22m acquisition of a business specialising in financing mergers and acquisitions. Rosenblatt said the acquisition of Manchester-based Convex Capital would also create opportunities for the cross-referral of business.
Convex Capital Ltd, incorporated last year from an LLP dating back to 2010, specialises in financing the sales of start-up businesses to large corporates. It claims to have delivered transactions adding up to £2bn. According to today's announcement, in the year ending 30 June, Convex generated revenues of £8.7m and profit before tax of £4.3m. As of 30 June, the director-owned business had net assets of £3.7 million and no net debt.
In its last annual results, for calendar year 2018, Rosenblatt reported profits of £3m on revenues of £12.5m.
Rosenblatt said the acquisition is expected to help generate a regular flow of fee-based work for Rosenblatt’s corporate division. It will also create a new regional business hub at Convex’s Manchester base.Manchester firm Freeman Fisher acted for the sellers and management of Convex Capital.
The total cost of the deal, in Rosenblatt shares and cash, is £22m. Of an initial consideration of £13.6m, £7m will be paid in cash from the existing resources and £6.6m by the issue of 5.5 million new Rosenblatt shares. Key managers and employees of Convex have agreed to a long-term lock-in and non-compete clauses, the announcement said.
Shares in Rosenblatt Group plc rose 4.5% to 92.5p on the news, down from a peak of 123.5p in June this year.