Mergers: Joined up thinking
Zoe Holland, managing director of consultancy ZebraLC, explains: ‘Mergers and acquisitions in the PI sector started in earnest in 2012, largely based around WIP [work in progress] book deals in the run up to LASPO. Essentially, the market started with Neil Hudgell’s “webuyanyfiles.com”.’
She adds: ‘What we have seen since is a number of new entrants into the sector, some successful, and others high-profile failures, together with consolidation by larger practices acquiring smaller practices and/or departments.
‘As 2016 unfolds, the pace of M&A instructions in the PI sector has continued, but these have been largely focused around niche areas such as serious injury and clinical negligence – rather than volume-based road traffic accident work. There is certainly more caution around M&A deals, with future financial modelling more difficult, due to proposed fixed fees.’
In the past 18 months, Holland has seen a number of talks involving organisations that are considering entering the PI legal market that ‘have not come to fruition’. ‘With the number of high-profile failures from scenarios like Parabis, the new entrant market is undoubtedly more cautious. Combine this caution with the threat of fixed fees, and PI acquisition isn’t for the faint-hearted… The outcome of Slater and Gordon also has the potential to significantly impact on M&A in the PI sector. It’s a watching brief.’