More top 100 UK law firms are interested in considering a listing on the stock market to raise funds, research says.
According to results from Thomson Reuters’ 10th annual research among Finance Directors (FDs) of the UK’s Top 100 law firms, the data reveals a rise of two-thirds in the number of FDs who would consider listing on the stock market. The figures have jumped to 20%, up from 12% the previous year. This figure has been increasing year-on-year, and up from just 4% in 2013/14.
The growth of interest in listing on the stock market reflects a broader trend of law firms seeking external forms of finance. The research shows that the percentage of FDs who would consider private equity investment as a source of funding tripled last year to 24%, up from 8% in 2015/16. Law firm Rosenblatt listed on the London Stock Exchange in May 2018, which was the largest UK law firm Initial Public Offering (IPO) to date. Other law firms that have listed on the London Stock Exchange include Gordon Dadds and Keystone Law, both in 2017, and Gateley in 2015.
For law firms, IPOs have become an increasingly attractive option as they allow the founding partners to extract cash from the firm or to put a value on their equity stakes, injects capital or paper currency for expansion plans such as the acquisitions, and, enables firms to open new service lines such as funding of client litigation. Funds raised can also help in upgrading IT systems and investing in new technologies. Samantha Steer, Director Large Law Strategy, at Thomson Reuters, says: ‘Listing on the stock market is increasingly on the radar for UK law firms as they look for external financing.’ Ms Steer added, ‘We may see more firms turn to capital markets in order to obtain the funding needed to expand and break away from the competition.’