DWF Targeting US Acquisition After Completing Deal for Spain's RCD

DWF is on the lookout for a US law firm to acquire after completing a deal to buy Spanish law firm RCD for €50.5 million.

Posted mardi, décembre 17 2019
DWF Targeting US Acquisition After Completing Deal for Spain's RCD

Andrew Leaitherland

It is understood that the firm is planning to spend even more than that sum on a US firm as it looks to secure a slice of the lucrative US litigation market. In particular, the firm is targeting growth in financial services, insurance and real estate-related litigation, the three “global sectors” the firm is focusing on.

DWF currently has an exclusive association with US firm Wood Smith Henning and Berman – which has 300 lawyers in 26 offices in 15 states and annual revenue of around $80 million – but DWF has acknowledged that the tie-up is not sufficient to satisfy its ambitions stateside.

Though an acquisition of a US firm would be likely to dwarf the RCD deal, DWF is confident it has the strategy and resources to make any such transaction a success.

In addition, the firm is also considering the acquisition of law firms in Poland, Canada, Hong Kong and the Netherlands.

DWF announced the acquisition of RCD earlier this month. The initial consideration consisting of €7.4m in cash and €27.6m in newly issued DWF shares that will be paid at completion. An additional cash consideration of up to €15.5m will be partly deferred and partly contingent on performance.

RCD is a full-service law firm with a strong focus on corporate law, tax, insurance, financial services, real estate and energy. The firm is led by founders and co-managing partners Adolf Rousaud and Ignasi Costas.

The acquisition means DWF will establish offices in Madrid, Barcelona and Valencia, with all 40 of RCD's partners and more than 400 people joining DWF. RCD announced it had agreed an exclusive association with DWF in June this year.

Biggest acquisition to date

The transaction represents DWF’s largest acquisition to date. A DWF statement said: “The deal adds a leading independent law firm and a connected services business in Spain to the company’s international footprint as well as a strong network of connections in the Iberian Peninsula and Latin America. Following the acquisition, DWF will have offices in 12 European cities including Warsaw, Brussels, Dublin, Paris, Milan and four in Germany.

RCD’s reported revenue for the 12 months ended 31 December 2018 was €35.7m, with pro forma EBITDA of €8.1m. RCD's gross assets at 31 December 2018 were €15.9m. As part of the transaction, the group will be assuming €5.6m of net debt (including amounts payable to RCD shareholders of €2.5m).

DWF has reached an agreement to acquire full ownership of RCD from its equity partners for an initial consideration of €35m, of which €7.4mis payable in cash and €27.6m is payable in new shares issued by DWF at completion. Contingent consideration of €2.3m is payable in cash one year post transaction provided RCD meets agreed performance targets. Additionally, deferred cash consideration, subject to continuing employment, of €13.2mwill potentially be payable over a two-year period following completion. The maximum potentially payable to the RCD sellers is €50.5m.

Earlier this year, raised £95 million in an initial public offering (IPO). It was subsequently admitted to the main board of the London Stock Exchange after issuing 300,000 shares. With a valuation of £366 million, DWF is the largest law firm to have ever listed in the world. 

Andrew Leaitherland (pictured), group CEO at DWF, said: “RCD will sit within the international division which remains one of the priority growth opportunities and therefore priority areas for the group's capital allocation. RCD has a range of potential synergies with DWF, with significant capabilities and sector overlap in our three global areas of insurance, financial services and real estate. The transaction also builds on our recent acquisition in Poland, displaying our international expansion ambitions and continued delivery on our IPO priorities.”

Adolf Rousaud, co-managing partner at RCD, said: “DWF is one of the most innovative legal businesses in the world, and what really attracted us was the cutting-edge approach to providing legal services, supported by leading people and technology.” Our values and culture, as well as our strongly aligned sector focus, provide the ideal platform for our future success with DWF." Meanwhile, fellow RCD co-managing partner Ignasi Costas said: This represents another step in our development, which we started only 16 years ago with a commitment to innovation and entrepreneurship. Since then, and thanks to the trust placed in us by clients and our people alike, we have grown to become one of the main law firms in the Spanish market with a transformative approach to law.”