Legal Business

Parabis founders take £4m loan to complete Plexus MBO

Parabis founders take £4m loan to complete Plexus MBO

A buyout team comprising the founders of the now-defunct Parabis Group has formally acquired its defendant insurance firm Plexus Law, in a deal that will see the transfer of over 900 staff, supported by a £4.2m loan.

The deal closed yesterday afternoon (24 November) and allows the acquirers to take on Plexus’ work in progress while safeguarding the jobs of over 900 employees after Parabis entered administration earlier this week.

The buyout team includes Parabis founders Andrew McDougall, Nick Addyman and Tim Roberts, who will take the roles of chief executive, consumer director and commercial director respectively at the newly-acquired firm.

The sale was facilitated by a £4.2m loan from British bank OakNorth, and is based on Plexus Law’s ‘predictable cashflow generation, supported by the strong net debtor and work in progress positions of the business.’ The deal took less than three weeks to complete.

A statement added: ‘Plexus Law’s strength in the defendant claims legal market leaves it well-positioned to grow revenues and cash generation in the future.’

This latest update on the Parabis saga follows yesterday’s news that Manchester firm Horwich Farrelly has taken a 43-strong personal injury team from the Parabis Group, including seven partners, just one day after it emerged Parabis is to be broken up and sold in a £50m pre-pack administration deal.

New chief executive McDougall said: ‘We had a unique opportunity to acquire Plexus Law, but needed to move fast. After approaching OakNorth, we were impressed with how quickly they got up to speed and gave a funding commitment, which allowed us to proceed with the transaction.’

Hogan Lovells advised AlixPartners on the £50m pre-pack administration with a team led by finance partner Deborah Gregory, while Squire Patton Boggs acted for Plexus Law with a team including corporate partners William Downs and Tim Stead, and restructuring and insolvency partner Cathryn Williams. Squire Patton Boggs employment partner Janette Lucas and tax partner Timothy Jarvis acted for Plexus.

sarah.downey@legalease.co.uk

Legal Business

Parabis enters exclusive deal with original founders for Plexus buyout

Parabis enters exclusive deal with original founders for Plexus buyout

The Parabis Group has confirmed the sale of its defendant personal injury firm Plexus Law to a consortium of private individuals, including the group’s original founders, Andrew McDougall and Tim Roberts.

The announcement comes after recent talks with LB100 firm Keoghs failed to result in a deal.

A spokesperson for Parabis said in a statement the board considered both the founders’ and Keoghs’ bids and, with the support of the group’s key stakeholders, has entered into exclusive talks with the founders.

‘The sale is due to complete in November 2015 and represents a positive outcome for our people and clients alike,’ Parabis said.

Legal Business reported in September that Parabis, which was purchased in 2012 by private equity firm Duke Street Capital, was in talks to sell off parts of its business after legal reforms reduced the value of insurance work in the UK, in particular personal injury. Duke Street Capital, which pumped £13m of extra capital into the firm in December 2014 did not receive the return it expected and sought 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.

In 2012 Parabis Law became the first private equity-backed ABS to be licensed by the Solicitors Regulation Authority, and was seen as one of the forerunners of the new legal landscape in the UK in which firms were able to welcome outside investment.

Defendant insurance law firms, Plexus Law and Greenwoods claimed their merger in May 2012 would create combined turnover of £90m. Since then, Parabis made a series of cutbacks, making a raft of redundancies in Croydon and closing offices in Bristol and Colchester.

kathryn.mccann@legalease.co.uk

Legal Business

ABS rising – Slater and Gordon and Plexus announce four law firm acquisitions in a day

Both sides of the volume insurance market saw significant Legal Services Act-themed developments today as two of the most touted investor-backed law outfits announced four proposed acquisitions in a single day.

Plexus Law today (7 May) confirmed it is to merge with insurance dispute resolution practice Greenwoods, creating a £90m defendant insurance litigation business. Plexus is the defendant arm of the Parabis Group, the legal outfit that last year sold a majority stake in its business to buyout house Duke Street in a move expected to fund a war chest for expansion.

 

The newly merged entity will have over 1,200 employees and aims to re-establish Plexus at the specialist end of the insurance law sector, particularly in the London market. Heads of terms have been signed and the deal is expected to complete in May. Group revenues for Parabis Law are now estimated at around £150m. Greenwoods focuses on defendant work in the property, construction, general insurance and catastrophic loss area.

Under the deal, Greenwoods partner Malcolm Henké will become senior partner of the combined firm. Both Henké and fellow partner Richard Houseago will join the executive management team of Plexus.

Greenwoods senior partner Paul Parsons, who will take an integration role after stepping back from senior management, said: ‘The insurance market is consolidating with fewer firms emerging as a result. A merger with Plexus has given us something no other merger could – a wired-in connection to a multi-disciplinary insurance services group with insurance law at its heart. It’s a great move for us and for the future.’

Tim Oliver (pictured), chief executive at Parabis and senior partner of Plexus Law, said: ‘By joining forces with Greenwoods, and on the back of our merger announced in 2011 with Everatt & Co, we have high-end specialist expertise and in-depth strength capable of running the biggest and most complex of cases.’

The move comes as Slater and Gordon announced it is to acquire national firm Simpson Millar, Liverpool outfit Goodmans Law and Taylor Vinters’ Cambridge personal injury practice. The Australian law firm became a global pioneer when it listed its shares publicly in 2007.

The Australian-listed ABS also announced plans to raise A$64m (£42m) to fund its UK expansion. The personal injury specialist already last year agreed a take-over of Russell Jones & Walker in a £53.8m deal.

The three acquisitions will add more than £20m in annual revenues to Slater and Gordon’s UK business and include offices in London, Manchester, Cardiff and Birmingham.

Taylor Vinters’ chief executive Matt Meyer commented: ‘We are in talks with Slater & Gordon but there are a number of matters to be finalised. The sale is subject to due diligence and binding acquisition agreements, but both Taylor Vinters and Slater and Gordon are committed to making this happen.

‘We believe that Slater and Gordon offers the best platform for the personal injury business to continue to grow and prosper in a very dynamic marketplace for injury claims. We are very proud that we have created a business that is attractive to a firm such as Slater and Gordon.’

The latest deals from two of the most high-profile players in the post-Legal Services Act landscape come amid a stream of ABS licences being awarded since the Act’s full implementation last year. Currently the momentum is clearly with the Tesco Law players.

jaishree.kalia@legalease.co.uk