AIM-listed Frenkel Topping has increased its presence in the costs market by acquiring Bidwell Henderson Costs Consultants, a legal aid focus firm based in Derbyshire and Newcastle upon Tyne.
Following the £9m double acquisition of Partners in Costs and A&M Bacon in February, Frenkel is paying £1.48m, representing 5x normalised EBITDA for the last financial year.
Half is payable on completion and the rest in two equal tranches on the first and second anniversary.
In addition, the sellers – Costs Lawyer Mark Bidwell, Rebecca Bidwell and Ann Henderson – will receive an earn-out of 2.5x the EBITDA generated in the year to 31 December 2023 over £296,000, capped at £2m. The trio are remaining within the group.
Frenkel Topping offers professional and financial services focused on asset protection for clients and said the deal was “firmly in line with the company’s strategy to pursue quality opportunities in, and to drive consolidation of, the pre-settlement professional services marketplace in personal injury and clinical negligence”.
Bidwell Henderson, which opened in 2014, currently employs or retains 55 people across two offices and specialises in high-cost case plans and claims, and legally aided matters where an inter partes costs order is made.
For the year ended 31 March 2021, it generated revenues of £1.6m, reported a £400,000 profit before tax and had £400,000 net assets on the balance sheet.
Frenkel Topping told investors Bidwell Henderson “challenges the traditional legal aid costs firm model and has built its success on developing ancillary services in legal aid processing, legal cashiering and costs training.
“As a result, Bidwell Henderson is highly integrated into law firms’ back-office systems. So, while litigation is transactional, the business model deployed by Bidwell Henderson means the nature of the revenues are of a repeat/recurring nature.”
The close links Bidwell Henderson has with law firms “represents a clear opportunity for Frenkel Topping to offer its other services such as expert reports in addition to the Court of Protection work and traditional legal costing that both the group and Bidwell Henderson undertake”.
Further, with a number of legal aid-funded cases resulting in large awards, the deal “offers the prospect of access to additional meaningful opportunities to secure assets under management for Frenkel Topping”.
The company’s chief executive, Richard Fraser, said: “This acquisition is in line with our strategy of maximising touch points in the personal injury and clinical negligence space with the added benefit of being able to sell Frenkel Topping services into existing Bidwell Henderson clients.”
Ms Bidwell said: “We could not be more delighted to become part of the Frenkel Topping Group. Bidwell Henderson is a growing business providing an array of legal services to lawyers. We have strategic and ambitious plans for the future.
“Becoming part of the Frenkel Topping Group will help us achieve those goals quicker and provide additional opportunities for our team. With the help of our bespoke and comprehensive in-house training programme and our exceptional team members, we are looking forward to bringing new opportunities to the market and being able to support more lawyers.”