Irwin Mitchell has taken out an additional £29m in bank borrowing that it may be required to repay within the next two years, the firm’s LLP accounts have revealed.
The cash was used to fund the firm’s merger with Thomas Eggar in December 2015. Irwin Mitchell’s LLP accounts showed that the firm paid £23.6m to acquire the south east firm.
The £29m was obtained through Irwin Mitchell’s existing bank lending facility. The firm uses a £45m revolving credit facility and a £15m overdraft to meet its day-to-day working capital requirements. These lending facilities are due to be renewed in March 2018.
Previously, Irwin Mitchell had been working to decrease its level of bank borrowing. In 2014/15 the firm halved its bank borrowing to £6.6m, down from £14.8m the previous year.
Turnover at the firm increased by 7.3 per cent, from £185.6m in 2014/15 to £199.2m last year. The increase in turnover was attributed to the Thomas Eggar merger.
However the acquisition was also blamed for Irwin Mitchell’s plummeting profits. Profit available for division among partners fell by 59 per cent from £20.6m in 2014/15 to just £8.4m last year. Operating profit also fell by 16 per cent to £44.8m.
Group chief executive Andrew Tucker said: “The board took a deliberate decision to fast-track the integration of Thomas Eggar which has led to a short-term impact on profitability in FY16, but which we view as being the right decision longer term to enable us to maximise the return on synergies between Irwin Mitchell and Thomas Eggar as soon as possible.”
The merger, which was the largest in Irwin Mitchell’s history, granted the firm another six offices and gifted it its first major footing in the south east outside of London.
The combination also allowed Irwin Mitchell to grow in the private wealth sector. Following the merger the firm has become one of the top five private wealth teams by headcount in the country.
In 2014 Irwin Mitchell grew its private client capability after it acquired boutique Mayfair-based firm Berkeley Law.
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