Following a number of restructurings and a Christmas-time capital injection from its private equity owner, insurance-focused law firm Parabis Group is in talks to sell off parts of its business.
Parabis, which was purchased in 2012 by private equity firm Duke Street Capital, has suffered from a raft of legal reform and regulation that has reduced the value of insurance work in the UK, in particular personal injury.
The first private equity-backed alternative business structure (ABS), Parabis has been undertaking a strategic review of its business over the past six months and is now seeking offers for sections of its practice. The decision marks a U-turn from its private equity owners, whose investment plan centred on creating a one-stop shop for insurance work.
A spokesperson for the firm said: ‘This review has had a wide remit but two clear objectives to identify our core service offering as the market continues to work through change to ensure we have sustainable business model in the longer term and to determine how best to structure the business to deliver such services.
‘In thinking about the future, we took the strategic decision to have discreet discussions with other like-minded businesses to weigh up all options properly. Some of these discussions are continuing. Both our investors and financial stakeholders fully support the Board’s strategic approach.’
Duke Street Capital, which pumped £13m of extra capital into the firm in December, has not received the return it was expecting and is now looking for an exit strategy. Indeed, Parabis’ income fell from £12.1m to £8.9m in the year to 31 March 2014 according to filings on Companies House. Keoghs has emerged as potential suitors for the group’s personal injury firm Plexus Law.
At the time of the capital injection, Charlie Troup, a partner at Duke Street Capital, said: ‘The changes to the legal services sector through liberalisation and increased competition have been more profound than anyone anticipated in 2010.’
In 2012 Parabis Law became the first private equity backed ABS to be licensed by the Solicitors Regulation Authority, and is seen as one of the forerunners of the new legal landscape in the UK with firms now able to welcome outside investment. Defendant insurance law firms, Plexus Law and Greenwoods, merged in May 2012 but since then, Parabis has embarked upon a number of cuts, making a raft of redundancies in Croydon and closing offices in Bristol and Colchester.