It’s Raining IPOs: Mishcon de Reya looks into public listing

August 9, 2019

2 min read

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What's going on here?

Mishcon de Reya is preparing to either list itself on a public stock market or sell off a stake to a private investor, which could value the firm over several £100m.

What does this mean?

Mishcon believes the legal market is becoming challenging and unpredictable. In reaction to this, the London outfit plans to hire bankers within the coming months to explore options to raise capital. The firm is yet to make any formal decisions, but it believes that an initial public offering (IPO) will attract new investors, which will help diversify its professional services portfolio.  

If Mishcon decides to list publicly, they will join a growing list of firms tapping into the London stock market. After Gateley floated in 2015, Gordon Dadds and Keystone Law in 2017, Rosenblatt Solicitors, Knights Law and DWF followed suit.

The firm’s IPO valuation is dependent on the amount it can raise from the sale of new shares, but if successful their market value could generate massive payouts for its 156 partners.

What's the big picture effect?

IPOs became possible for law firms after the passage of the Legal Services Act in 2007. The statute meant firms could convert to an alternative business structure, and secure investment from non-lawyers.

Firms have considered and completed IPOs for numerous reasons. They could, for instance, raise large sums of money without needing loans or relying on capital from partners. The money can be used for various  things, like paying off debts, acquiring companies or offering employees better pay. It could also improve the firm’s reputation, because of the requirement to disclose more information, so clients can check on how well a law firm is performing.

However, there are disadvantages. Firms are usually reluctant to share performance data. IPOs are also expensive, because a partnership model would need to be restructured, advisors must be hired and there are more stringent regulations imposed. Shareholders can also scrutinise how a firm is run, which could conflict with the partnership. Finally, investors don’t like the fact that a firm’s value relies on its people.

Mishcon will need to consider all of these points over the coming months before deciding to move away from its partnership structure. So, watch this space for updates.

Report written by Evania D’souza

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