11 October 2013Print This Post

Kain Knight eyes up multiple acquisitions in bid to consolidate costs market

Petyt: have to make a step-change

Kain Knight, already one of the UK’s largest costs firms, is planning up to six acquisitions in a strategy to consolidate the highly fragmented costs market, Litigation Futures can reveal.

The first deal is likely to be announced this month as Kain Knight takes the lead in reshaping the post-Jackson costs market.

Chief executive Peter Petyt said the goal was to have “resources in the right parts of the UK to service law firms” and grow Kain Knight from a £6m business to one with a turnover of £12m-15m. He said this probably meant five or six acquisitions.

The firm – which has offices in Hertfordshire, London and Kent – is eyeing up expansion to the west country, north-west and north-east.

Kain Knight is also talking to potential investors to help fund both the acquisition programme and the development of new products and services, as well as assist in the firm’s expansion into “other markets”, Mr Petyt said.

While Kain Knight is already a “profitable, well-run organisation”, he explained that “we’ve got to make a step-change to take the firm to a new level if we want to interest investors”. Costs firms in the post-Jackson world need to be “cleverer in developing value-added services”, he suggested.

This financial backing will enable Kain Knight “to show goodwill by putting a reasonable amount of money on the table upfront” for acquisitions, with the rest of the purchase price paid over time through earn-out arrangements. Potential sellers have responded well to this, Mr Petyt said.

“Because of all the changes it is pretty difficult for small, independent entities to find a way forward. It is understandable that they would want to become part of a larger group,” he explained.

As part of its strategy, Kain Knight has appointed Mercer & Hole as its new auditors and tax advisers on the back of the accountants’ experience and reputation in helping SMEs and family-run businesses to grow.

By Neil Rose