LAW At Work, the employment law, human resources and health and safety specialist, has been sold to a London firm in a deal worth up to £10 million, putting chairman Magnus Swanson in line for a bumper pay day.
The Scottish firm, which Mr Swanson, Jane Wright and Donald MacKinnon bought out of Maclay Murray & Spens in 2012, has been acquired by Marlowe Group for an initial £6.3m. The sum could rise to more than £10m if profit targets are met over the next three years.
Mr Swanson, the biggest shareholder in Law At Work (LAW), will continue to lead the business alongside the current management team under the terms of an earn-out agreement. All 70 staff of LAW, which has offices in Glasgow, Aberdeen, Edinburgh and Inverness, will remain in post.
Speaking to The Herald, Mr Swanson said the deal had come about as LAW was looking to establish at base in London to serve the market in the UK capital and the south-east of England, noting that it was important to be on the ground to serve a market 10 times bigger than Scotland.
Marlowe specialises in the regulatory compliance and safety of commercial premises, and had a gap in its portfolio for the employment law, HR and health and safety services LAW offers. LAW provides its services on a fixed fee basis.
Mr Swanson said: “One of the best aspects of this transaction is we will now be partnered up with their existing, much smaller HR business down in London. They had a wee taster, and decided they liked the HR and EL (employment law) world. They had been looking for a partner to become the hub of their base and to take it forward.
“It was an off-market deal and we ended up talking to each other about how we could progress things in London and the south east. We hadn’t put the company up for sale in any way, but it was clear it was their ambition for us to become part of their group.”
LAW made a pre-tax profit of £1m on revenue of £5.4m in the year ended May 31 and Mr Swanson is confident the deal will provide a springboard for growth for the Scottish business, which will retain its name. Mr Swanson said: “We are very positive about it. It is a very exciting development for the company.”
He added: “The message to the world, and clients and staff, is that it is business as usual.
“All the senior team and shareholders are staying on, and committed to staying on in terms of the deal for several years. We think we will continue to grow and push on over that period.”
Asked if there was an earn-out clause built into the deal, he replied: “Exactly. We are aligned by an extensive contractual earn-out arrangement to be rewarded further if we can grow the business. So we are definitely here to stay.”
Mr Swanson said acquisitions would continue to be part of LAW’s growth strategy under the Marlowe umbrella, noting that Marlowe has a “strong track record” of successful deals. It has made around 20 acquisitions in its “short life”, he added.
According to the most up to date information at Companies House, Mr Swanson held 30,000 ordinary shares in Law At Work (Holdings), parent company for Law at Work Limited, and fellow wholly-owned subsidiaries Square Circle HR Limited and Law At Work Empire Limited, which were acquired in 2016 and 2018.
Mr MacKinnon, group legal director, held 8,750 shares in Law At Work (Holdings), group managing director Steve Cook held 4,804 and group operations director PJ Chalmers had 3416.
Ms Wright resigned as a director of Law At Work (Holdings) on August 31, 2017. The 11,250 shares she held were bought by the company on the same day.
Alex Dacre, chief executive of Marlowe, said: “By acquiring Law at Work, a business which helps clients to mitigate their employee-related risk and assure their health and safety, we are strengthening Marlowe’s leading health and safety operation but more significantly advancing our capabilities to work with clients right across their essential compliance requirements.”
He added: “The acquisition is a major step in strengthening our position as the UK leader in regulated compliance services to commercial organisations of all shapes and sizes.”
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