Deals



Gordon Dadds Group PLC Acquires CW Energy LLP


Posted: 1st November 2017 08:58

Gordon Dadds Group PLC, the acquisitive London-based legal and professional services business, is pleased to announce that it has completed the acquisition of the corporate tax advisory business and certain assets of CW Energy LLP for a total initial consideration of £4.0 million, payable in cash over a 5 year period. Additional consideration may also be payable, and is dependent on the performance of the business.  The acquisition will be funded from existing cash resources. 

This acquisition is in line with the Company's strategy for acquisitions as set out in the August 2017 admission document and will further the Company's intention to expand its tax advisory business which touches all of the Group's business divisions.

The board expects that the acquisition will be immediately earnings enhancing.

Summary of CWE's business

CWE is a corporate tax advisory firm based in the City of London. It was established in 1990 by a team of professionals who had previously worked together in the corporate tax department of one of the Big Four accounting firms.  It specialises in the oil and gas industry, working with blue chip clients, as well as advising on other aspects of UK and international taxation.

In the year ended 31 March 2016, a loss of £4,000 was reported after partners' remuneration.  If the arrangements for members' remuneration had been included on the same basis as that agreed for the future, CWE's EBITDA for the year would have been £1.30m. CWE has since then continued to trade at materially the same level.  CWE has a total of 3 partners and 6 employees.

CWE will continue to operate from its existing City of London offices under its well established name.  CWE's administrative and support functions will move onto the Group's systems. This mirrors the approach successfully adopted with the Group's successful acquisition of the Alen-Buckley LLP business in June 2017.

Summary of the acquisition terms

The total initial consideration for the business will be £4 million in cash, of which £300,000 has been paid upon completion with the balance payable in equal annual instalments over five years.  Additional consideration on a similar but not identical basis will be payable to CWE for the goodwill of the business where the CWE Fees (being fees of the business earned during the five years after completion and collected) exceed the warranted minimum of £13,000,000 and the consideration will be proportionately reduced in the event that CWE Fees are less. Additional consideration at lower rates will be payable on fees earned between the fifth and tenth anniversaries of completion.  These provide a real incentive for the key CWE personnel to remain closely involved. The consideration for the debtors and work-in-progress (which had a value of £550,000 at 31 March 2016) will be the amount realised therefor, payable following realisation.  The total consideration is capped at £8,000,000.

 

Commenting on the acquisition Adrian Biles, Chief Executive Officer of Gordon Dadds, said:

"I am delighted to have completed our first acquisition after Gordon Dadds' successful IPO in August. CW Energy LLP is a highly regarded and highly profitable business which will enhance the Group's activities and will provide further opportunities for cross-selling services within the Group. Such acquisitions ensure that Gordon Dadds is always providing a premium service which caters to all our clients' needs."

"Since the flotation, we have received a number of approaches to make acquisitions and also for lateral hires.  We have a good acquisition pipeline which will enhance earnings and the reach of the Group."

Phil Greatrex, Managing Partner of CWE, added:

"We are delighted to join the Gordon Dadds group. We believe this enhances the long term sustainability of our business.  We are excited to be working with Adrian and his team to broaden our client base and develop new commercial opportunities."


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