đ°ď¸ DWF's turning back time
Idin Sabahipour
July 19, 2023
TOGETHER WITH...
In todayâs email:
Your weight in Corgis
Itâs National Hotdog Day
When your lecturer cites themself
A&O made more revenue but less profit
Kirkland & Ellis and K&L Gates get hacked
The actual size of a large language model
DWF is going from private to public back to private
How to improve your global commercial awareness
Students are suing their unis for ÂŁ5,000 per student
⌠and more!
If you take just one thing from this emailâŚ
Being a public law firm can be tough. You have to publish everything â good or bad â and the market doesnât react well to lower-than-expected profit announcements. Sometimes, it's better to keep things private and simple. That way, you have more control and less drama to deal with.
EDITORâS RAMBLE đŁ
Apparently, today is National Hotdog Day. đÂ
Happy National Hotdog Day to those who celebrate.
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- Idin
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FEATURED REPORT đ°
đ°ď¸ DWF's turning back time
Whatâs going on here?
DWF, the largest law firm listed on the stock market, confirmed itâs in talks to be acquired by private equity firm Inflexion Private Equity Partners in a buyout reportedly valued at around ÂŁ342m.
Why did DWF go public in the first place?
DWF went public four years ago.
Historically, law firms have been private partnerships. But going public gives you benefits like:
đ Access to capital: When it went public, DWF raised around ÂŁ95m by selling new shares.
đ° Liquidity for partners: Public listing can provide liquidity to partners who wish to sell their equity in the firm.
đ Better governance: Public companies have more reporting and accountability obligations, which could be attractive to potential clients and investors who value transparency and good corporate governance.
So, why might it be going private again now?
Well, it hasn't been going all so well for DWF (donât forget what happened to Ince Group - another public law firm).
After a series of financial issues and a game of musical chairs in the management team, their share price plunged to 48p last month.
But now, Inflexion Private Equity Partners has come in with a shiny offer of 100p per share. It seems they might just be DWF's knight in shining armour pinstriped suits.
If they buy the company, theyâll take it private and itâll come off the London Stock Exchange.
Who are Inflexion Private Equity Partners and why do they want DWF?
Inflexion are a London-based private equity firm that invest in businesses, including those in the professional services sector - like DWF.
So, why do they want DWF? Probably because they think itâs potentially valuable. After all, itâs a well-established global law firm with a presence in 19 countries.
Inflexion also isn't new to the legal world. They previously acquired Chambers and Partners, the legal directories company.
The funny thing is that private equity firms typically buy companies with the intention of holding them for a period of time and eventually âexitingâ them. âExitingâ means selling them to another buyer or, more often, making them public â so we might see DWF go public again in a few years!
Why should other law firms care about this?
Private equity is licking its lips: Well, itâs a bad sign for listed law firms generally. DWF isnât being acquired because itâs in a position of strength â itâs really the opposite.
Not so long ago, Ince Group, another listed law firm, also went into administration.
This could be taken as a lesson: law firms donât do well as public companies.
Some people are suggesting that this move could prompt a shopping spree of private equity firms buying underperforming public law firms.
Weâre about to see a super-DWF: Law firms should also keep an eye out for DWF becoming a stronger firm as a result of the buyout.
Jeff Zindani, a managing director at Acquira Professional Services and an adviser to law firms, said that the acquisition could âpower upâ DWFâs growth and be a âreal worryâ to rival firms.
This is because Inflexion could be ready to invest heavily in the company to improve it (e.g. with renewed tech or strategic growth plans).
Whatâs next for DWF?
For now, DWF is playing the waiting game. The private equity firm has until 5 August to make a firm intention to buy DWF.
On Monday, when the news of the potential sale announced, DWFâs share price rose up to 40% to 92p in morning trading.
The offer is supposed to come in at 100p per share which DWF has said that it would unanimously recommend to its shareholders (theyâre the one with the decision-making power).
And it's clear why DWF wants to recommend the deal. If it goes ahead, a bunch of DWF lawyers are in for a big pay day of over ÂŁ1m.
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A BIT OF FUN đ
IN OTHER NEWS đ
đŚšââď¸ Two major law firms, Kirkland & Ellis and K&L Gates, have been hacked. Hackers gained access to the law firmsâ data by exploiting a third-party software named MOVEit Transfer (a file transfer company).
đ Allen & Overy's leading man, Gareth Price, made his dramatic exit from the firm. This surprise departure is supposedly "for personal reasons" just as the law firm was warming up for its big merger with Shearman & Sterling.
đŚ Amazon's challenging the EU's new Digital Services Act. They're complaining about being âunfairly singled outâ by the rules which are designed to police hate speech, disinformation and counterfeits. The argument is that Amazon shouldnât be categorised as a âvery large online platformâ or VLOP which get strict treatment under the Act. The other VLOPs, like Google and Meta, make their revenue from advertising so âdisinformationâ is more of a problem for them â Amazon argue that retail is different.
đď¸ Allen & Overyâs profits slightly decrease despite its revenue increasing. Profits fell from ÂŁ900m to ÂŁ892m despite its annual revenue being over ÂŁ2bn for the first time. The reason for profits falling have been because of:
inflation causing higher costs for A&O which canât be passed on to clients, and
the âsalary warâ for junior lawyers meaning that staff costs have gone up.
đď¸Â A group of students have started a High Court claim against their universities saying that they were not given the tuition they had paid for during Covid-19. They claim that their unis failed to meet their teaching obligations between 2017 and 2022 because of strikes by staff and the Covid pandemic. Each student may be entitled to up to ÂŁ5,000 each. The claimâs just been put on hold for 8 months to see if the parties can settle out of court â hereâs a good legal analysis of the process.
AROUND THE WEB đ
âď¸Â Fun: Forget metric or imperial measurements. Now you can weigh stuff in bananas, Corgis, grand pianos and more. For example, I weigh 0.2% of an airplane â I donât know how to feel about that.
đď¸Â News: Want another good source for commercial news? The Daily Upside can help. It covers business news with no fluff and is written by an investment banker who knows their stuff inside out. No more sifting through endless articles â just quality insights and captivating stories to level up your commercial awareness.*
đťď¸Â Tech: You might have heard that ChatGPT is built on large language model technology (or LLMs). But how large are these large models? Well, hereâs your interactive answer (spoiler alert: very large).
Credit: r/internetisbeautiful
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