Episode Transcript
[00:00:01] Speaker A: Welcome to the Dealmaker Uncut podcast where we speak to some of the UK's most exciting entrepreneurs and hear their investment journeys. We'll discuss the challenges, successes and lessons they've learned along the way with expert deals commentary from Jonathan Boyers, head of Alvarez and Marcel Corporate Finance, and me, Chris McGuire, executive editor at Business Cloud.
Welcome everyone to the latest episode of the Dealmaker Uncut podcast, powered by Alvarez and Marcel. My name is Chris McGuire and and I'm the executive editor of Business Cloud. As always, I'm joined by the still multiple award winning deal maker himself, Jonathan Boyers. Jonathan's been involved in deals totaling 5 billion, probably more now during his long and illustrious career. And he's the managing director and head of Alvarez and Marcel's corporate finance practice in the uk. Big welcome to you, Jonathan.
[00:00:48] Speaker B: Thanks, Chris. Great to be here. Really looking forward to this.
[00:00:50] Speaker A: Today, before we introduce our first guest, a quick shout out to what media who produce the Dealmaker Uncut podcast. They're the kings and queens of video creation. We're delighted to be working with them. I should just wish our belatedly, our producer, ellis, a happy 26th birthday. Albeit it turns out that her birthday was one day after my 26th wedding anniversary, which makes me feel really old, Jonathan. So let's talk about the podcast. It's the podcast that gets you inside the deal. In the first part of today's show, we're going to be interviewing our special guest and then we're going to have a little break. And in part two, Jonathan will be leaning on his 35 years of working in corporate finance to answer listener questions as well. And a few questions from me. Jonathan, who are we talking to today?
[00:01:30] Speaker B: Well, Chris, today I'm delighted that we're going to be chatting to Andrew Leatherland. So Andrew is the founder and CEO of Arch Law, a challenger law firm, which I'm really looking forward to finding out more about.
Andrew was previously the CEO of DWF, which during his time there he oversaw 21, maybe more acquisitions and frankly did an amazing job of steering that business through an enormous amount of growth. So. And I'm really interested in hearing about that as well. So. Hi, Andrew.
[00:02:06] Speaker C: Morning, Jonathan. Morning, Chris. Great to be here. Thanks for having me.
[00:02:09] Speaker A: No, thanks for joining us, Andrew. We will talk about Arch Law, but I want to take you back to your DWF days because that's what a number of our listeners will associate you with. I don't think necessarily people appreciate just how acquisitive DWF was. It went from 2 officers to 33 during your time, as Jonathan just said, 21 acquisitions. I think you became the managing partner in 2006. Just, just tell us about that.
[00:02:36] Speaker C: Oh, yeah, I was the grand old age of 35 then, so I think you can do your maths and work out just how old I am now.
[00:02:42] Speaker A: But you're younger than me. I've just worked that out.
[00:02:44] Speaker C: Yeah, so. So I, I went back to DWF when I was 29. I was enticed by the D of DWF, Jim Davis, who basically made me the worst financial offer of any firm that I was talking to at the time. But, but said to me, look, I'm going to back you, you've got my checkbook behind you and I think you can do something special with this business. And actually I think you're my successor. So as a 29 year old, very fresh partner, getting that level of commitment and support was unbelievable. So I became an equity partner and owner of the business at 31, sat on the board at 33, and then the partners decided it was time to have a first managing partner. So myself and a chap called Paul Berry, who's still a lifelong friend of mine, both stood for the managing partner role and it was an elected role of the 16 equity partners. And I got it by one vote.
[00:03:36] Speaker A: And it would be fair to say that your mandate was a mandate for growth, international expansion. Whereas Paul, no criticism, Paul at all, was probably a bit more conservative as well. I think it would be helpful just to talk about how big was DWF when you started that role as managing partner and how big was it when you left in 2020?
[00:03:54] Speaker C: Yeah, so 16 equity partners, about 45 partners in total, 29.4 million turnover in the year that I took over and built it to was about 336 million when I left and took it from being a regional firm to being a national firm to being an international firm. And the mandate I stood on was we've got some fantastic clients in the insurance sector and the financial services sector in particular, but they're not going to stay with us. With panels in just one regional location, we've got to be outside of the northwest. And that started the build from the northwest into other areas of the UK and eventually UK panels became global panels. So that started the globalisation of the firm as well.
[00:04:39] Speaker B: So I enjoyed watching the journey that DWF went on under your leadership. I mean, it was phenomenal. And in an industry that at the time was still relatively staid, I mean, it's different these days. Legal services are very active M and A market, full stop. But I am really interested in the strategy that you adopt at the beginning because there was, you know, bringing lawyers and partners in a law firm along to a journey that was so ambitious, if you like, must have been a challenge. And I'm just really interested in the strategy and how you brought people along and how you sold that strategy at the beginning. Really.
[00:05:22] Speaker C: And I think absolutely. I think for the first couple of years I was deliberately a managing partner rather than a CEO. And that move from managing partner to managing partner and CEO and then CEO was a deliberate, a deliberate direction of travel because it was a corporatization of the partnership model. It was, we, we used to sit there as a group of partners and everyone had their hand in the air and we'd all vote and say yeah or no. And it would take forever to get anything done. Box of paperclips. Yay. No, I don't think we need any paperclips. And eventually you get to a stage where when I was first appointed as the managing partner, I had this whole load of restrictions on me. You know, you can't do that and you can't do this and you've got to get consent for that and you've got to go this way or that way. And after a year when people realized that actually I kind of knew what I was doing and I wasn't going to be ridiculous in terms of the risks that I was going to take. Those, those restrictions fell away, which allowed me to form a proper corporate board within the business, which meant that a lot of the day to day decisions could be taken by the board as opposed to by the partners. And then there were four or five reserve matters which you go back to the part included M and A actually. And that was some of the more challenging conversations were particularly around the international M and A piece where you got a bunch of regional partners who become national partners. And then all of a sudden it was right, we're going to go into Germany or we're going to go into France or. And it's like, why do we need to do that? You know, we're quite comfortable where we are. So persuading people that the strategy, the strategic direction in terms of international expansion, global panels, sector focus was the right thing to do. And just constantly revisiting that and going back to why it is that we were on this expansion run was really important to get people bought in. But still those partnered meetings were a challenge, but obviously got changed to a PLC board over time as well.
[00:07:15] Speaker A: Yeah.
[00:07:16] Speaker B: So I'm involved in a few different deals in the legal services sector at the moment. And my observation is exactly that in order to get things done, you need to have decision making authority, so whoever is leading the business can make some crucial decisions.
The firms that are still effective having to vote on the photocopier, are probably not going to make strategic changes that they need to.
[00:07:42] Speaker C: That's absolutely right.
[00:07:43] Speaker B: Really interested.
So the first deal that you did was the Rixons deal and that took the business into an insurance focused direction. I suppose.
I'm interested in how you went, the strategy for developing. How did you find future acquisitions? Were they opportunistic or were they strategic?
And just how you thought about integration as well.
[00:08:11] Speaker C: If I talk about the Rixons deal, which I still think was one of the best deals that we did as a starting point, the firm DWIF at the time had got massive reliance on a single client. So about 40% of the turnover was with one client. And so that my biggest drive to start off with was diversification of that risk. You know, if that client had decided to pull the plug or had gone bust, then we'd have been in real trouble. And gradually, every period of time, we much reduced that as a percentage of turnover. But the Rixons deal was hugely important in terms of that because it brought on two. Well, it brought on several other insurers, but two really big composite insurers who are still, I gather, top three or top five relationships within dwf. What we were really good at through Paul Berry predominantly was properly account planning those relationships and properly growing them.
And what that deal with Rickson's gave us was the ability to get into some relationships that otherwise we'd have really struggled to get into and then growing those relationships out. And actually two or three of those core relationships became international and global relationships as well, which if we hadn't done the Rixon style, we'd have never been on the playing field effectively.
So that was the driver in terms of that deal was diversification of risk in terms of the client base, getting more insurers on board, supporting the insurance led strategy.
The next focus was then around geographical areas. So where did we need to be geographically to diversify risk we had and to capitalise on expansion opportunities as well. Rickson gave us a really small base in Leeds and we felt that at the time that that was a good market that we could expand in. So looked at other opportunities in terms leads, did a lot of lateral hires. You Know over my time, better part of 200 partner lateral hires in terms of bringing those in on top of the M. And a strategy with a view to then building out. So the initial building leads was on the back of that.
Birmingham we did a small acquisition in which was a public sector insurance focus, which gave us a footprint there. Again to build on from a lateral hire perspective and to integrate those clients through Scotland. We did a deal with a best friend relationship that Rickson's had with a firm called Bigot Bailey, which started to give us that UK coverage.
You eventually get to a stage where you're thinking, okay, we're ticking the boxes in terms of the regional centres we probably need to be in London. And London was one of those big investment plays of are we ready to do this? Is this the right time to do it? And we did that probably 14 years ago. And it was absolutely the right thing to do because we were dealing with major composite insurers and with banks on predominantly process driven transactional activity or process driven litigation activity. And getting into London allowed us to move up the food chain in terms of the quality of work that we could access. And having that presence there where a lot of the decision makers were based as well, was really important. And I think that that's what gave us a launch pad to build out really quickly.
[00:11:13] Speaker B: And from a deal point of view, these were generally mergers worthy. You weren't going raising money and buying and paying cash.
[00:11:20] Speaker C: No such thing as emergency, honestly. You know, there's always someone who's a dominant party.
[00:11:25] Speaker B: Yeah, but they were, they were bringing people into the partnership predominantly now asset.
[00:11:29] Speaker C: Value deals, just releasing the balance sheet. So.
And I'd say the vast majority of deals that I've done, I've done 24, 25 now, have been net asset value orientated, where you've got people who probably can't release the balance sheet any other way, they can't access their cash. So you give them an opportunity to realize that balance sheet through a pay down process, but you also give them a guaranteed earnings for a period of time as well.
[00:11:56] Speaker B: It's interesting because the market has moved on a little bit in that just at the moment there are now quite a few legal firms that are consolidators that have raised private equity and are now offering cash rather than a sort of partnership approach. So quite an interesting development in the sector.
[00:12:16] Speaker C: I think that's right.
I think David beach at nights did a pretty good job in terms of his initial raise and then his allocation of that for ma. He's still got a set formula where he pays a certain multiple which is balanced between his deferred consideration, his cash out and the earn out. So I think that works pretty well. The challenge is making sure that there are enough, good enough targets that warrant that type of approach. And one of the problems with the legal sector is that a lot of the consolidation has already happened. And those that are left, do they add a geographical dimension that you need? Do they have a sector focus that you need? Do they have a particular client that you need?
If they don't, then why are you doing it other than to just bolt on turnover?
[00:13:02] Speaker B: So one of the things that I was interested in, Alvarez and Marcel, we're growing. We've been growing by 20% CAGR for 20 years. But almost all that growth is through recruitment. There's virtually virtually no acquisition in there. And I'm interested in your. Because you mentioned that you bought businesses and then you'd gone into a sort of recruitment mode around. And I'm interested in your how you, how you view acquisition versus recruitment as growth drivers.
[00:13:32] Speaker C: And we did greenfield sites. You know, Dubai was a greenfield site, Singapore was a greenfield site. But it costs a lot of cash to build from greenfield. And if you can get a relatively cheap acquisition back to net asset value to provide you with that base, that footprint to build from, then I, in my experience, it was more cost effective to do it. That were more cash effective.
[00:13:53] Speaker A: When you talk about greenfield, you actually mean build from scratch.
[00:13:55] Speaker C: Literally. Literally get your license. You've got one person that you either send out or one person that you recruit on the ground, and then you start to build out from there. And quite often client led, you know, listening to your clients around who they rate in a particular region and then going after those people that would have you to bring them in.
[00:14:11] Speaker B: And so the business grew phenomenally. Like I say, it was a revolution, really. In the mid market legal services 2019, you oversaw an IPO.
I'm fascinated to hear how that, you know, your view of how that went. And it was a bold, bold thing.
[00:14:33] Speaker C: To do, wasn't it? It's just badly timed.
Why did we do the IPO in the first place?
You get to a stage where your balance sheet, you know, you put debt on the balance sheet with a view to doing the acquisitions.
Your profitability is okay, but do you want to turn around to the partners and ask for more cash to do more acquisitions and international expansion? Probably not. Do you want to turn to the bank and say, can we increase our facility? Probably not. So you've got to look at alternative sources of capital and, you know, private equity or. Or go for a flight. And at the time I. I was. Dismiss is probably the wrong term, but. But I didn't investigate private equity enough. I was, you know, I knew what I wanted to do with the firm. I knew the strategic direction. I just needed the funds to get it done. And I was very reticent about having someone sitting on my shoulder, as I perceived it would be, who would be telling me, no, you don't want to do it like that, or actually, you can't do it that way. I wanted the freedom to get on with it. So I should have, you know, hindsight. I should probably look to private equity a little bit longer than we did at the time. But IPOs seem to be the right way to go.
[00:15:43] Speaker B: I think in some regards, what you did, and there's one or two other firms, as you alluded to, Knights and Gately, who sort of laid the ground for the private equity community getting interested in legal services. I think they'd. They'd made money in accounting. So a number of people had bought accounting firms and then run a buy and build program in that sector. And I said, I think what you did and the fact that that happened in accounting has laid the ground for now. There's probably about 10 consolidated, if not more.
[00:16:14] Speaker C: I think that's right.
Professional services generally, as you well know, are hugely cash generative. So as long as you can get the right structure in place from a management perspective and the right retention structure in place. And again, that was one of the drivers from the IPO was to get people being shareholders in the business, so they were literally bought into it then. I think it's a very investable type of business.
[00:16:35] Speaker A: You mentioned the timing wasn't right.
Presumably Brexit and then Covid, wasn't it? Yeah, yeah.
[00:16:41] Speaker C: I mean, couldn't have sounded worse.
[00:16:43] Speaker A: No, absolutely. I was just looking at the terms. The share price was £1 22. The market cap was 366 million. I read a report at the time. It said it came in below the expected range of 400 million to 600 million. Was the IPO everything you hoped it would be? Andrew?
[00:16:57] Speaker C: We were the only IPO to get away in that quarter. It was the quarter that Brexit happened and there was no other IPO in Europe. So in some ways, absolutely delighted that it got away and reflected the strength of the business and the strength of the proposition and 363 investor presentations.
In other ways, we didn't realize the value that we wanted day one, but it wasn't about a day one. Nobody cashed out day one. This was about providing the next funding round for the international expansion of the business.
[00:17:26] Speaker B: Just talk about that, the run up, the investor presentations, how did that feel and what sort of response did you get? Were you confident? Was it hard work?
[00:17:34] Speaker C: Exhausting. Yeah.
You get ferried around whichever city you're in. It tends to be London, Edinburgh or New York. So you get ferried around and you're literally backed up on bike taxis. Yeah, well, actually, to be fair, I didn't have that experience. I was, I was sat in the back of a nice Merc at the time. But I could, I could definitely see people doing that and I thought, I'm not up for that at all.
So you are. You start at 8:30, you finish at 6:30, you've got our segments all the way through, during which you've got to do your pitch and then you've got to get to the next one and do the pitch all over again. And it was, it was a brutal exercise, but actually really rewarding as well because it made you properly investigate and understand everything that you were talking about and really commit to what it was that you wanted to achieve. So I actually, despite being knackered, I really enjoyed it and I enjoyed talking about the business that we built and we were going to build moving forward.
[00:18:35] Speaker B: Yeah. And I'm interested. There's a leadership challenge to be doing progressive that was all a disruptive series of strategies that you followed through the acquisitions to the ipo. And from a leadership point of view, I'm just interested in how that feels, bringing people along and how much self doubt do you have? And it's just, I'd be interested in.
[00:18:59] Speaker C: How you viewed that challenge. I mean, it's just, you know, you tell them once, they don't hear you, tell them twice, they still don't hear you. Tell them three times and they'll hear about 20% of it. So it's just that constant communication piece of reminding people what the journey is, why we're on the journey and what we're trying to achieve. And we did that an awful lot. You know, it was town hall presentations every quarter, one on one meetings with a lot of the partners to get them on board with it. But you know, one of the benefits of DWF was that there was a cohesive group of partners who were bought into that strategic direction.
[00:19:30] Speaker A: Can I ask you about the ipo? I'm just mindful of the mindful of the time you. And actually I'll be interested in Jonathan's view as well. IPO seems to have gone out of fashion in a sense that like Matt Molden at thg, I think if he could turn back the clock, I think he would. I think you look at Steve Oliver, great guy, music magpie, you know, AO just announced they're going to acquire him for a modest fee as well.
Did you, do you regret the IPO at all? Did you regret the public scrutiny that you got?
[00:19:59] Speaker C: No, not really. I think I'd have done things differently. So if with the benefit of hindsight, I'd have spent a year getting working capital management sorted, far more. So I went into the process without realizing just how income focused the UK stock market is. It's all about dividends. Of all the presentations that I did, there were a handful of growth focused funds. And all of these people were just basically saying to me, don't do M and A. Which was a bit of a problem because it was an M and A based strategy. Don't do M and A and just make sure you increase your dividend every quarter if you can. I thought, well, that's a really short term view from an investor perspective in terms of what we're trying to build. The US was the opposite. I walked into various presentations in the US and it was, so how many M and as can you do in a year? And can you speed that up a little bit? And don't bother paying as a dividend because actually we just want you to grow, grow, grow, grow, grow. So I think certainly back then there was a really different focus between the two markets. One on an income generation paying a dividend and one on a pure growth play. And I'm not sure that that's got any closer, to be honest.
[00:21:03] Speaker A: Do you think IPOs are dead in the water, Jonathan?
[00:21:07] Speaker B: No, not at all. I mean, there's situations when an IPO is a really valuable option and it's not always the best for realizing maximum cash from a business. But some businesses with some leadership teams, they want to raise money. They're comfortable with the public scrutiny. They can use the paper to fund acquisitions sometimes and it can be a great base. Others. Some people don't like the uncertainty and the lack of control over share prices. And sometimes the share price will react to an unusual, unexpected thing.
But no, they've definitely got a role to play.
[00:21:51] Speaker C: I remember one investor saying to me, you'll be checking your phone every hour just to see what the share price is. And he said, don't he said, don't look at the share price until a Sunday afternoon when you've had a beer or a glass of wine, he said, because it will move for reasons that are completely out of your control. And I remember when I within a month of doing the ipo, I did an acquisition in Poland, which is a fantastic acquisition, got it for an absolute steal. And I thought, that's gonna send the share price through. It'd be brilliant. And we went down by 2p because Donald Trump put some bizarre tweet out. And it, it was just that macro influence, that macro impact. It had nothing to do with us.
[00:22:27] Speaker A: It's that's Donald Trump here. Jonathan and I were sort of talking before, and Jonathan's a deal maker. I'm the journalist. I like to ask the journalistic questions, which Jonathan sticks to the deals, which is fine because that's the name of the podcast, the Dealmaker Uncut. But it would be remiss of me not to ask the question about your exit from DWF because it came out as a a bit of a bolt out of the blue, you know. And I was reading a story yesterday, City Am described in one report as an ousting. And this is how City Am reported it. Leatherland was no technocratic leader or managerial gun for hire. It was his vision and drive that took the firm from its humble Northwestern roots to make history as the first law firm to list on the main market of the London stock exchange just 18 months ago. And managing so one managing partner of a top 20 law firm said, I'm massively surprised. He has been the driving force behind the whole of the DWF story. He's done a brilliant job without a lot of assets. He is a great salesman and brand ambassador and he rescued the firm from a massive pile of debt by getting that float away. In the light of that quote, it seems surprise, surprising to me that you were exited, slash ousted, slash left, whatever words you want to use. What would your take be on that, Andrew?
[00:23:39] Speaker C: Firstly, I'd like to thank whoever it was that gave that quote, which is a very nice quote. Appreciate that.
Yeah, it's difficult, isn't it? We moved from a partnership structure where every partner has a vote on certain things, including the entrance and exit of partners, to a PLC structure where actually it's a PLC board that takes the decision and the PLC has got to work in the best interest of shareholders. The timing of my exit was Covid and lots of uncertainty at the time and the PLC board will have made a decision that they thought was in the best interest of the business.
[00:24:16] Speaker A: Were you surprised, Jonathan?
[00:24:20] Speaker B: Well, the professional services is a career where people are progressing through the ranks all the time. So there's always new high quality businesses, there's always new high quality people who can ready to step up and memories are sometimes short.
[00:24:39] Speaker A: The thing that surprised me was that when you left, the chairman, Sir Nigel Knowles, stepped up, I thought, as interim CEO. Four years later, he's still there. I mean that's, that's quite impressive, isn't it?
[00:24:53] Speaker C: I think it's quite unusual for a chairman to step in for a long period of time. But again it's, it's a, at that time it was a PLC board decision and they will have had their reasons to do that.
[00:25:05] Speaker B: I think it probably worth moving on to what you're doing now, Andrew. It sounds like you're having lots of fun.
I'm really interested. I was surprised to hear you've already got 140 people up and running and I think you said revenues are up to seven or eight million pounds. So obviously I've been involved in starting a new practice that's been growing really rapidly. And so I can see I've probably got some empathy with what you're doing. But I'm really interested to hear what you, what you've been doing over the last year or so.
[00:25:40] Speaker C: Thank you. So I came out of DWF and I was sat there middle of COVID middle of a global pandemic, getting lots of nice phone calls from big US firms, et cetera, to say, you know, will you do a European build for us? Will you do this? Will you do that? And I'm thinking, I'm not sure I want to go back into an environment where I'm in a. I've got a group of partners around me or I've got a board that I'm accountable to, or even external shareholders. I kind of want to have full control over my own destiny and a full ownership of something that I move forward with in terms of the build. And that's how the idea of arch came about. And it was literally within about three weeks of me going. I thought, right, that's the direction of travel. And when I was doing the investor presentation, a lot of the investors were saying, are you a Keystone Law? I'd never heard of Keystone Law at the time and obviously now it's a big name on aim.
I said, who's Keystone Law? And I looked and thought, okay, so it's a revenue sharing model where the lawyers only get paid when the clients pay. And one of the big problems most professional services, but particularly lawyers have is getting their bills paid, getting the cash in the bank. You don't have that problem with these models because they don't get paid if the client doesn't pay. So they are hugely incentivized to get that cash through the door. So I really like that as a model and I thought, okay, I can do something in that space.
But I felt that it was a little bit not just keystone. And at the time there were a.
[00:27:03] Speaker B: Few others as well.
[00:27:03] Speaker C: Yeah, 36 at the time. There's now over 120 who've gone down that route. I felt as though it was very focused on one person, plug and play, as opposed to being able to grow businesses within a business so focused on teams or groups of individuals. And that's what I really enjoy doing, is growing businesses. So if you kind of put me into something, I'd like to work with people to help them grow their business within my business. So it was a perfect template to do that. And that's what we've done is bringing people in who start with a small base but expand really, really quickly based upon having the confidence and the guidance sometimes in terms of my input and.
[00:27:44] Speaker B: The focus on the business, just generally, which key areas would you expect to expand in? What's the key areas that you're offering now? Target market.
[00:27:53] Speaker C: Yeah, I mean the four differentiators in terms of firms in this space for me was use of technology.
Making sure that whoever you bring in from a advisory perspective is technology orientated and is willing to buy into the use of AI, is willing to buy into the use of the best technology platform that we can provide. And if they're not, then the wrong person.
The international play. Having an international platform that you can build over a period of time and create those referral opportunities, really important team based, team based play. So having people who are focused on building a team rather than individual. And then finally management strength. Having a really good management team around you that provides you with that bandwidth to be able to support people in the business and scale it.
[00:28:38] Speaker A: Can I ask, can I ask one question, if I may. Just before we go to our first break, our final question. This section, it's. I look at you two and I think to myself, right, you're like kindred spirits in a sense that like Jonathan was at Big Four council firm for like 34 years of his life. And then after taking gardening leave and doing virtually nothing in his garden, as far as I can see, he's Then got this new lease of life at Avros. And Marcel, you at DWF for a number of years. You left in 2020, you come back, you've launched a, you know, Arch Law, and it looks like you're both unbridled or unburdened in a way. Would that be. Would that be fair?
[00:29:13] Speaker B: From my point of view, yeah. I feel completely energized with what, what we're doing. The idea, the ability to build a business with a clear strategy and direction and be able to make. Make critical decisions is fantastic. I'm really loving it.
[00:29:31] Speaker C: And it looks a lot better, but it looks a lot better on it. Yeah.
[00:29:37] Speaker A: And you look, you know, you look. I mean, you're. You master your own destiny now, aren't you?
[00:29:40] Speaker C: Yeah. And that. That for me was always going to be really important, was having that full ownership, no accountability to anyone else. And if I wanted to do a certain thing or go down a certain direction, it was my call. And, you know, I was very lucky at DWF because I had a lot of freedom to do what I wanted to do, but I still had accountability to what was eventually 69 equity partners and then a PLC board. I don't have that anymore, which is great.
[00:30:02] Speaker A: Andrew, I look forward to your life being turned into a Netflix series. But for now, thanks very much for coming in. Time for a quick break. When we return, Jonathan will be answering some of your questions.
Welcome back to part two of the Dealmaker Uncut podcast. We just interviewed Andrew Leatherland, founder and CEO of Arch Law and the former CEO of dwf. Jonathan, fascinating chat. What did you think?
[00:30:33] Speaker B: Yeah, really, really interesting. I mean, like, like, like we discussed. I feel like that that journey that DWF went on was a really progressive. It was leading the legal services market in the way that they grew ambitiously and they showed the way for quite a lot of other firms to develop their own practice. And like I say, running a firm of lawyers like that and developing that strategy is no mean feat. So I can see that there must have been a lot of strong leadership required to set the vision and bring people along and then actually execute the series of growth and acquisitions. And then the ipo. I think it must have been a really strong leadership challenge.
[00:31:22] Speaker A: Yeah, yeah, I know. I've got a good friend of mine who's worked in a couple of law firms in a managing partner role, and trying to organize equity partners can be like herding sheep. It's really, really difficult. It's not like a normal business model. And that, you know, DWF were, were for a while, you know, they really were seen as a bit of an exemplar and a way to go, I don't think. I'm not sure Andrew would have left in the way that he left if it hadn't been for Covid because obviously everyone was working remotely. But I tell you what, I mean, he's come back much the same as you, really, with the wind in a sail and a real ambition to make Archlaw a big thing.
[00:32:01] Speaker C: Yeah.
[00:32:01] Speaker B: So I love what that business is now doing, and I think that we could easily see that one growing and it could easily be at the same sort of size as DWF was when it ipoed in a few years time.
[00:32:16] Speaker A: We'll watch it. That'd be nice.
[00:32:17] Speaker B: Synergy.
That business model in the legal services sector is really smart.
Allows lawyers to gain growth if they're self starting as part of. Part of an affiliation. But it's just a smart model.
[00:32:33] Speaker A: Okay, this next section, the final section is called Ask Jonathan. It's when listeners and I can ask Jonathan any question that we want. Now, not everyone wants to be named, needless to say. So first question, Jonathan. I'm looking to make my first acquisition. I'm a bit nervous. How much time should I spend on the due diligence process and what are the red flags I should look out for?
[00:32:53] Speaker B: So obviously the thing about acquisitions are that the. The most important thing to remember is when you bought the business, you do have to manage it and manage the people that you've taken into your organization.
So the financial due diligence is obviously really important and all the technical due diligence is vital. I think what people often underestimate is the fact that all businesses are made up of people. And so it's really important to make sure that in the deal process, when you've got a strategy for the acquisition, you remember that the people involved are going to become part of your business. Particularly if the people who are selling and who you're giving money to are going to retain key leadership roles in your business, then the relationships are vital.
And I just think the planning and the empathy about how people are going to fit together in the new organization is often underestimated.
It's obviously important to check that there's no hidden tax liabilities and to understand the financial trends. But I think there's a more holistic approach to acquisitions that people need to take.
[00:34:17] Speaker A: I know it can vary depending on the size of the acquisition and the monies involved, but due diligence typically Would take what, months, weeks, years?
[00:34:26] Speaker B: So it depends. There's a fundamental difference if you're buying a business that is being marketed by a high quality advisor or if you've got an off market deal.
If there's an advisor being appointed to market a business, they will normally performed a suite of due diligence.
And during the process, normally in the second round of a bidding, you tend to be provided with a whole load of information that's well prepared. And the name of the game is to get your own due diligence people to understand what's within that information that might not have been as clearly pointed out. If you're buying a business that hasn't been prepared for sale and it's not being marketed, then obviously there's a greater need to, to get right underneath all the numbers.
And that process can take a bit longer and it's a different process because you need to develop it with the person you're trying to buy a business from.
You normally will be able to agree a better deal if you're negotiating off market with somebody that you've identified, persuaded to come and talk to you and that you've, you've managed to spend quite a lot of time with before you actually agree a deal. In sale processes, often the amount of time is restricted because you're competing with other bidders. So it can vary though. I've seen deals that have been done literally in a matter of days, never mind weeks, but most deals from start to finish take six months.
[00:36:00] Speaker A: Okay, it's your final question and I suppose a lot of this will depend on the budget. Always mindful when we're recording and when the podcast goes out, but the budget's on October 30th, so a question. What are entrepreneurs saying to you about the performance of the new Labour government? Because I've got an interesting take, but I'd be interested in yours.
[00:36:20] Speaker B: So I think that when, when the election happened, the economy was starting to feel more positive, interest rates were coming down and I think people felt that it was time for, a lot of people felt it was time for a change.
The old Conservative government had been struggling with a whole series of different things that had been affecting them. And I think everyone was hoping that the new certainty of a new government that appeared to be focused on business growth and economic growth would be refreshing.
I think that it will take a bit more time really to work out whether they can deliver, that their strategy on tax and growth will evolve over time.
And so I think the jury is out and there's been some distractions in the early days around the gifts and stuff like that. But I think there's, it will, it will take longer to assess really what the new, how the new government's going to perform with. In the, in, in, in the area of supporting business.
[00:37:36] Speaker A: I've got an interest in politics and I think the Labour Party in Kirstam has got more credit in the bank than the right wing media think. I think the stuff about, you know, free tickets to watch Taylor Swift and stuff it, it's a peripheral thing. It's poor judgment in my opinion. But, but I don't think it's, it's, I don't think it's enough to sink, you know, to sink Keir Starmer, but he's got to be. You've got to think of the optics of it. Just because something is legal doesn't mean to say it passes a sniff test. But I did a roundtable recently and about 15 entrepreneurs around the table and I said, who thinks Labour are doing a good job? Not one hand went up. Now, that's not to say that they thought the Conservatives had done a fantastic job. But I think there's a lot of cynicism and a lot of concern among entrepreneurs, many of whom are trying to get deals over the line, you know, before there could be a big increase in the capital gains tax. We will watch and see.
I'd like to finish on that note. Massive thanks as always to you, Jonathan. It's always Joe will get always great to get your thoughts. If you want to ask any questions Jonathan, you can do via the show Notes. That's all for this episode of the Dealmaker Uncut podcast. Powered by Alvarez and Marcel. Final shout out to what media and the star of the show, Jonathan.
[00:38:47] Speaker B: Thanks, Chris.
[00:38:48] Speaker A: You're always modest when I say that. I give you the big builder when you just say under your breath. Thanks, Chris. Don't forget to subscribe to the podcast. If you like it, tell your friends. If you don't like it, tell your family. And make sure you follow us on social media. Thanks very much. Thank you for tuning in to the Dealmaker Uncut podcast. We hope you enjoyed today's conversation and found it insightful. If you like what you heard, be sure to subscribe and tell your friends. We'll catch you in the next episode of the Dealmaker Uncut Podcast.
