Outsourcer seals second law firm acquisition in post-LSA push

Software and outsourcing business Quindell Portfolio is set continue its post-Legal Services Act push after agreeing to acquire personal injury (PI) law firm Pinto Potts for around £14m.

The purchase, which is subject to approval from both the Solicitors Registration Authority (SRA) and the Financial Services Authority, follows on from the Alternative Investment Market-listed company’s acquisition of PI claims law firm Silverbeck Rymer, announced in January this year.

Pinto Potts, which has offices in Aldershot and Reading, will join Silverbeck in a similar deal under Quindell’s legal arm Quindell Legal Services, once the latter receives its alternative business structure licence.

The packaged deal will see a payment on completion of £1.5m in cash and a further £1.5m in a year’s time, together with the issue of 87.5 million Quindell shares, which will be subject to lock-in arrangements ranging from 12 to 36 months. At the time of writing, Quindell shares were valued at 12.49p.

In return, Pinto Potts has warranted a profit after tax of £2m and operating cash flow of £1.5m for the 12-and-a-half month period ending 31 August 2013.

In addition, a partnering agreement has also been confirmed which will see Quindell, Pinto Potts and Silverbeck provide a joint-outsourcing offering to the UK insurance claims market, primarily in the areas of personal injury and also other consumer related services including wills, probate, and conveyancing.

Quindell chairman and group chief executive Rob Terry said: “We are delighted to have reached this agreement which represents another key step in the building of our combined insurance outsourcing offering.”

He added: “With the significant volume of business we already have in pilot, the board have no doubt that this acquisition will be significantly earnings enhancing from completion and will assist with our ability to scale the business to a level of growth beyond our previously stated plans.”

Quindell’s purchase of Silverbeck, which is still awaiting approval from the SRA, valued the business at £19.3m and was one of the first instances of a legal practice being acquired by a quoted plc.