The Scottish
Daily Record reports that
"Scotland's Murgitroyd Group have acquired rival European patent and trademark attorney practice Kennedys Patent Agency Limited in a £3.4million deal.
Under the terms of the agreement, £2.4million is being paid in cash, with the remainder being paid over three years.
Kennedys, who have additional offices in Aberdeen and Newcastle, were founded in 1997 by David Kennedy and Neil McKechnie.
With the exception of Kennedy and McKechnie, all of the firm's patent and trademark attorneys are remaining with the company.
Murgitroyd say the deal will boost their patent and trademark practices".
This raises interesting issues concerning putting a price on an IP practice -- an option that a sole practitioner may want to consider when either implementing an exit strategy or going in with another firm. Obviously it's not possible to know the details that drove the valuation in this instance, but it would be good to hear from readers who have had to put a value on their practices recently.
The Scottish Daily Record reports that 
Since Murgitroyd is a quoted company their press release for the LSE was quite informative. They said:
ReplyDelete"For the year to 31 August 2007, Kennedys' turnover amounted to £3.3 million, with EBITA totalling £208,000 and net assets amounting to £41,000. Net liabilities at completion, to be confirmed by Completion Accounts, are estimated at around £200,000, principally as a result of the Company's share of a heritable property being excluded from the acquisition. With the exception of
Mr Kennedy and Mr McKechnie, all of Kennedys' Patent and Trade Mark Attorneys are remaining with the Company following the acquisition. Mr Kennedy and Mr
McKechnie left the Company upon completion. In addition to the six qualified Attorneys remaining with the Company, eight part-qualified Attorneys and five experienced support staff will join the Group as part of the transaction. In
addition to Mr Kennedy's and Mr McKechnie's departures, twelve other former Kennedys support and administrative staff left at completion."
Assuming a patent practice with disbursements of around 50% we are looking at quite a moderate £100k fee income per fee earner on average, but they were clearly paying good salaries as the profit does not look impressive so the price is for the continuing workflow hence the earn out in case it disappears. Doesn't look as if the market was impressed.
Most IP solos will have far lower support staff ratios. I wonder what their records system is that it needs so many drivers.