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With the aggressive acquisitions and chaotic M&A -have they performed sufficient Due Diligence on the target companies? Which blankets real value and is a discount for most legal practices - contingent liabilities 7 year book!!!!!! , especially with young inexperienced mix of staff and raced billing results . I got out after a retest. GLA
The blunt verdict expressed by a junior lawyer was that Knights "only care about share price", a judgment echoed by other staff.
"It’s all about the investors. I’d be better off in McDonalds", claimed a partner.
ouch !!
rollonfriday . com / news-content/ knights-plc-new-golden-turd-uk-law
(you get the idea of the link from that)
ref: JEngland
It's not just fees that they are struggling to get, it ranked last out of all law firms in employee working satisfaction and won the coveted Turd of the Year award for 2022. https://www.rollonfriday.com/news-content/knights-plc-new-golden-turd-uk-law. Bad reputation in the legal industry. I've decided it's not a blip, some very fundamental problems with this one.
plus...they gave guidance for " anticipated substantial growth" in H2 and then had to make an embarrassing admission that they didn't see the Omicron COVID or downturn there of ...ZERO credibility now , unfortunately ....along with facing more mouths to feed and lower incoming cash..not to forget the added Contingent Consideration they still have to pay out on...
They have to regain confidence with the City .... City has walked away ..for now
Very telling that none of the Dirs are stepping in to buy at 25% of their sale price. Easier than robbing a bank I suppose…
Not just those two. Other officers appear to have fortuitously decided to make big sells shortly before the big drop. Gosh, they were lucky!
29 Jan 2021: RNS:
"....announces that David Beech (Chief Executive Officer) and Bal Johal (Chairman) (together, the "Selling Shareholders") have sold, subject to completion, 15,700,000 and 300,000 shares in Knights respectively, at a price of 390 pence per share (the "Placing")"
LeCheval summarises the position very well. The CEO trousering £30m placing his shares at the very top last year is an all time pi_ss take. More fool the moronic institutions who bought it. He'll be laughing his way to Barbados soon.
I don't think the administrators are too far off tbh. In my very humble opinion, it's a fundamentally flawed business model full of very unhappy mediocre lawyers that look to exit at the first available opportunity (take the recent exodus of the former Shulmans partners). This is the next Slater & Gordon.
Quite unbelievable. Where the hell is the bottom here? With this action you’d think they were calling in the administrators.
Did go in and out @ £1.40's - waited until i thought was a good entry point - £1.03 am happy with after down 8% - speculative buy, IMO selling overdone, TU 19th I believe. GLA No doubt will fall further but made a start.
Didnt even get a dead cat bounce with this one...TBH (easy to say now I know) I thought the valuations of all the listed law firms were pretty nuts. I am expecting a wider correction across the sector. Corporate and Personal budgets always look to squeeze legal fees in tough times.
I totally agree, you'd think they were about to collapse looking at how far this has fallen, its still looking at 5% GROWTH YOY,
so hopefully its bottomed out now and starts to slowly rise into next trading update
Been watching this one dip for a while
£18m PBT and 5% organic growth FY23, for currently under £100m. that's a P/E of around 5/6x.... which is incredible
Should really be at 10-15x , so SP range should be between £2-£3.50
The SAYE scheme exercises are at £3
Covid related disruptions should be done, macro backdrop is across all sectors
Can only imagine there's been a few big sellers without much buying interest
Should get a full year update in May, let's see if dividend exists
All IMO
" Covenants tests are a lot more stringent than mere headroom"
sure...but they don't have to repay any debts just yet ..spread over a number of years.....they have to just service them.... and having headroom assists with that, should the need arises....
Lenders dont want their money back, ideally...they want to lend and profit from it... and re-lend again
My point being that at present I don't see any immediate concerns on any covenants and I think their lenders will be supportive at present ....in 6 months time if things have turned a lot worse then it may indeed be time to take another look ..but using dividend cash and profits will help keep interest payments up..and ..no doubt they will increase their fees alongside that
If you have particular concerns with any covenants then post the covenant details and lets take a look
Headroom is one thing. Covenants tests are a lot more stringent than mere headroom.
" I am concerned that bank covenants might be in danger of breach."
I think things would have to get an awful lot worse before there is any real danger of that.....they just sorted out a new RCF ....they have headroom for now ....just need economic sentiment to turn a bit better
Agreed Pokerships. My concern is the level of debt taken on to make all the acquisitions. Not just interest rates increasing, I am concerned that bank covenants might be in danger of breach.
drop..aligns with the sentiment that economic output is stalling ..so less client work....that is the thinking behind the drops.... they have bought other legal firms and still have to pay a lot of Contingent Consideration for them ....
...should see an upturn when the sentiment on the economy and client business turns better...
Nice vote of confidence.
They obviously see this as cheap at these levels
I'm here Teddy!
PS: Ashden. I bet you are fed up eating all that ****e from Greggs? Maybe your PlayStation needs an upgrade? If RTN opens up on Monday Red, worth a punt with the pocket money for a 10% rise by next Friday. IMO of course but dyor.
You listen to the old pro, it bounced off 12% rise on day 4. I was tempted to sell for a quick in and out but looking into this company, it is worth a lot more, so I am just going to hold until I get my 50%. Where is humpty the boiler room deramper?