Following Work Group’s conditional £18.8m reverse takeover bid for West-End firm Gordon Dadds, Work Group confirmed it has successfully raised £20m, as the firm gears up to publicly list in August.
Work Group said in a statement that it had raised £20m through the conditional placing of new ordinary shares in Work Group, at a post-consolidation price of 140 pence per share, which would give the enlarged group a market capitalisation of £40m, based on the placing price on admission to AIM.
Adrian Biles, chief executive of Gordon Dadds Group Limited told Legal Business that the fundraising was designed ‘to strengthen the balance sheet, to raise £18m net of expenses, £4m is to pay off debt – which on a business with an annualised income of £30m is not very much.’
‘We have spent a lot of money on technology and infrastructure which has been fully expensed through the profit and loss account. Now the firm is well-placed to grow,’ Biles said.
‘There will be £14m of cash on the balance sheet to fund both legal and non-legal acquisition,’ he added.
On the rationale for the buyout of the firm, Biles said the acquisition was a significant opportunity to create a substantial legal practice in the UK and position Gordon Dadds as a ‘major consolidator in this fragmented market.’
Once the purchase has completed, Work Group will change the firm’s name to Gordon Dadds Group plc.
Gordon Dadds aimed to ‘integrate mid-market law firms’ under the Gordon Dadds brand and buy smaller firms through its Prolegal acquisition vehicle, according to a statement.
Biles added: ‘Through the Gordon Dadds and Prolegal business units, the Group will provide an attractive platform for legal practices to gain the necessary scale to compete in the current market environment.’
The takeover will give Gordon Dadds shareholders a total of around 46.9% of the enlarged market share of the listed company.
Biles said the admission to AIM will provide the necessary capital for the Group’s next phase of development. It will also serve to enhance the Group’s profile with clients and potential acquisition targets, he added.
‘We have a clear strategy for creating a strong, fast growing business and we look forward to delivering value to our shareholders and partners,’ added Biles.
Gordan Dadds posted revenues of £25m for the financial year ending March 2017, up 24% from last year’s figure of £20.2m.
According to Work Group’s announcement, since 2013, Gordon Dadds LLP has grown from £2.7m to £22.8m, equating to an annual growth rate of 70.7%.