£6m acquisition aimed at helping to diversify DSW Capital revenues

Daresbury-based DSW Capital, the mid-market, challenger professional services licence network and owner of the Dow Schofield Watts brand, has acquired DR Solicitors, based in Guildford, Surrey, for £6.1m.

DSW describes the deal as “significantly earnings-enhancing and transformational.”

The deal involves £4.3m in cash and £1.8m of new ordinary shares of £0.0025 each in DSW Capital.

The cash consideration is being funded from the group’s cash reserves and a new £3m revolving credit facility with OakNorth Bank.

The facility, at an interest rate of 4.5% above the Bank of England base rate, is for an initial three-year term until October 31, 2027, and has been fully drawn down.

Following admission of the new shares, DR Services Holdings (DRSH), parent of DR Solicitors, will hold an interest in 3,204,748 ordinary shares each, equal to approximately 12.75% of the enlarged issued share capital of DSW.

DRSH is controlled by ex-Magic Circle lawyer, Daphne Robertson and Nils Christiansen, founders of DR Solicitors.

The firm provides services to GPs, consultants and other primary care providers in the UK.

It operates on a platform model, employing eight staff, distributing work across a growing network of consultant solicitors, which currently totals 18.

In the financial year ended March 31, 2024, the business achieved organic revenue growth of 11% to generate revenue of £3.1m and profit before tax of £1.2m. As at March 31, 2024, DR Solicitors had net assets of £1.6m.

Co-founders Daphne Robertson and Nils Christiansen will continue to lead DR Solicitors post-acquisition, collaborating with, and supported by, DSW Capital’s experienced senior management team.

DSW says the acquisition brings a highly scalable, cash generative, and profitable legal platform to the group.

Importantly, and in line with the board’s stated diversification strategy, the acquisition materially reduces the group’s reliance on the cyclical SME M&A market from 68% of revenue to around 30%.

The acquisition is expected to be immediately and significantly earnings enhancing and it is the board’s intention to maintain the group’s progressive dividend policy. 

James Dow, Chief Executive of DSW Capital, said: “This is a game-changing acquisition. Not only is it immediately and significantly earnings enhancing, but it also diversifies our revenues, building resilience, and provides an opportunity to expand into new professional markets.

“Working with DR’s inspirational management team, we believe we can accelerate the growth of the business using the strength of the Dow Schofield Watts brand, and resources and, over time, build a substantial platform of diversified, niche legal services.”

He added: “This is truly a meeting of minds. We are committed to supporting Daphne, Nils, and the DR team in the holistic growth and development of the business and welcome everyone warmly to Dow Schofield Watts.”

Daphne Robertson said: “We were one of the first legal firms to own a niche, one of the first to develop a consultant-based operating model, one of the first to embrace alternative business structures, and now we are one of the first to integrate into a truly multi-disciplinary professional services group. 

“The entrepreneurial culture of DSW Capital is a strong fit with our own, and this transaction will provide DR Solicitors with the scale and resources to continue building on our successful operating model for the benefit of all our clients.

“We are looking forward to this exciting next step, as we accelerate the growth of both our firm and the wider DSW group.”