Serial acquirer Quindell Portfolio is on the M&A trail again, this time making its second legal services acquisition, following IT industry first purchase of Silverbeck Rymer Solicitors in January (see Quindell buys again, in legal services). This time, Quindell is paying c£14m in cash and shares for personal injury litigation specialists Pinto Potts Solicitors (PPS), which focus on high value personal injury claims involving complex trauma cases. PPS is expected to deliver post-tax profits of £2m and operating cash flow of £1.5m for the year ending 31 August 2013.
Bringing legal services ‘in house’ like this is a strategic move to side-step the payment of referral fees between lawyers and other insurance claims partners, something which has caused an escalation in claims in recent years and forced up premiums. Quindell is making the move ahead of next year when lawyer referral fees are to be banned.
Once completed, PPS will sit alongside Silverbeck to make up a new division called Quindell Legal Services Ltd. However Quindell can expect the approval process from the Solicitors Regulation Authority and Financial Services Authority to take some time – the Silverbeck deal has taken quite a bit longer than anticipated, and won’t be fully part of the Quindell family until Q412.
Quindell also updated on progress for the nine months ended 30 September, and things are looking very encouraging. Revenue for the nine month period was ‘significantly ahead of expectations’ with revenue of c£95.7m, and adjusted earnings per share of c86 pence. Quindell said it also had an ‘exceptionally strong third quarter’, and is ‘extremely confident’ in beating expectations for FY12, and delivering at the upper end of guidance in 2013.
The management team has also been bolstered, with insurance industry heavyweight Steve Broughton coming on to Quindell's strategy and integration advisory board. Broughton has 30 years’ experience in the insurance industry. As a former MD of Royal Sun Alliance, he is currently alternate chairman of Tesco Underwriting Ltd, non-exec of insurer Ageas UK, and chairman of ingenie, Quindell’s anchor telematics client in the automotive sector. So plenty of contacts here for Quindell to mine.