Knights, the fastest-growing firm by headcount in this year’s UK 200: The Independents report, has secured a multimillion-pound debt financing from Permira Debt Managers (PDM).
In a deal that is likely to preface more consolidation in a crowded market segment, PDM’s direct lending fund Permira Credit Solutions II has agreed a financing facility designed to fund acquisitions and hires at Knights.
Knights CEO David Beech refused to confirm the precise value of the financing but said it was in the “multiple millions”.
Beech said the Permira investment, thought to be the first by the fund into a UK law firm, would provide Knights with significant capital support without any change of ownership. Beech added that the debt funds would allow it to continue to grow significantly via both future acquisitions and organic recruitment.
“Both approaches to growth require funding,” said Beech. “This enables us to maintain and accelerate that growth. We think there is a great opportunity in the UK to dominate the regional secondary locations that we’re focused on.”
Beech added that strategically, Knights was not planning tread the “well-trodden path” taken by many firms, from the regions to London and then to overseas.
“I’m going Stoke, Chester, Derby,” said Beech. “It might not sound as sexy, but it works.”
Knights’ business model has seen it grow rapidly in recent years to around 500 staff providing legal services from six regional offices in Newcastle-under-Lyme, Chester, Cheltenham, Derby, Hale and Oxford.
Last year Knights’ revenue grew by 24 per cent from £16.5m to £20.5m. The largest contributor to income in 2015/16 was property-related work, accounting for 36 per cent of turnover, while litigation brought in 18 per cent and corporate 15 per cent. The firm’s clients include Chester Zoo, Hanson UK, Henry Boot, Longharbour and Paddy Power.
Total fee-earners for the private equity-backed firm now stand at 330 while lawyer numbers have almost doubled to 183. This compares with a total fee-earner and lawyer headcount of 100 and 57 respectively in 2012/13.
Knights became a legal market pioneer in that same year when it took outside investment from high-profile London-based fund Hamilton Bradshaw, owned by former Dragon’s Den entrepreneur James Caan.
At the start of 2016 the firm merged with Darbys Solicitors, its first major acquisition since the Hamilton Bradshaw cash injection.
The lower half of this year’s UK 200 generated a record total revenue of £1.407bn in 2015/16, a rise of 7.5 per cent on the previous year’s £1.308bn.
The threshold to enter the Independents rose by 13 per cent from £7.5m to £8.5m, the highest entry point ever into the UK 200 ranking.
To buy the full UK 200: The Independents report, please contact Richard Edwards on richard.edwards@centaurmedia.com or 0207 970 4672
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