Quindell Portfolio, the AIM-listed build and buy insurance business process services (BPS) provider, is making another bold move, to acquire personal injury law firm Silverbeck Rymer Solicitors (SRS) for £19.3m in cash and shares. Quindell is offering £10.25m in cash to part fund the deal, which it said would be handled by new debt agreements and existing cash. As we pointed out in Quindell boosted by recent M&A, QP's cash position at the end of December was £3.5m.
Silverbeck’s most recent full year to 30 April 2010, shows PBT of £6m and net assets of c£8m. Although revenue is not disclosed, Quindell said it continues ‘to trade positively to the current day’ and would be ‘significantly earnings enhancing’. The deal itself will require approval from the Solicitors Regulation Authority, due to it being ‘one of the first instances in the UK of a legal practice being acquired by a quoted plc’. This may take several months, so Quindell has secured exclusive rights on SRS until the end of 2012.
What makes this deal and Quindell's previous other ‘big deal’ of Mobile Doctors interesting, is that it is going after partner companies in the broader ecosystem of insurance BPS, that can give it access to the specialists who assess and advise on insurance claims. This makes it a different play from larger competitor The Innovation Group which acts as an intermediary and aggregator of insurance services (see here).
Quindell’s strategy with these two deals is to address the ‘claims leakage’ in the personal injury space. Owning a small ecosystem of assessors and advisors would seem to make sense, but we think at risk of restricting access to the broader opportunity. We hope to speak with Quindell management in the near future to find out more.