DWF partners will see their capital locked into the business for a five-year period after the firm’s landmark initial public offering, according to a filing setting out the details of the float.
The filing comes after the firm confirmed last June that it was considering a London listing, in what is set to become the largest U.K. law firm IPO to date.
On listing, the firm’s partners will become its majority “selling” shareholders. However, their capital in the firm will be subject to a phased lockup, which will mean that they can only take out 20 percent for each of the first five years after the IPO, half of which is linked to performance.
Partners leaving within the locked-in period risk forgoing the portion of their capital that has yet to vest. For example, if a partner were to leave three years after the IPO, she could take 60 percent of her equity, but the remaining 40 percent would remain with the firm, going into a newly established employee benefit trust.
DWF CEO and managing partner Andrew Leaitherland cited two principal reasons for the locked-in period: to encourage performance and to prevent the risk of partner departures.
“We’re a people business, and we depend on our ability to provide advice,” Leaitherland said. “From an investor perspective, they want to ensure continuity and growth and to prevent risks from occurring. So that’s why we created the lock-in.”
Leaitherland argued that the proposed locked-in period is “very similar to those at other listed firms.”
The planned listing on the main market of the London Stock Exchange, an official date for which has not yet been confirmed, is expected to take place before the end of March. The filing states that the intention is for a “free float of at least 25 percent.”
Around 25 percent of the firm’s stock will be placed into the hands of public investors, and around 10 percent will be held in trust for the firm’s employees, who will also be eligible to own shares.
In order to fund the public listing, the firm will restructure its partnership and remove the distinction between fixed salary and equity partners. Former equity partners will see a 60 percent reduction in their current fixed profit share, with salaried partners seeing a 10 percent reduction.
While partners will be paid on a fixed basis, they will also receive dividend income and performance-related bonuses paid out of an annual bonus pool.
Investment advisers Stifel and Jefferies International are assisting DWF in its listing, while Zeus Capital is acting as lead manager.
The intention to float document comes alongside half-year results for 2018-19, which detail the firm’s revenue growth between April 30 and Oct. 31, 2018.
In the six-month period, revenue grew by 18.3 percent to £133.4 million ($174.8 million), up from £112.7 million ($147.7 million) last year. The half-year performance comes after the firm saw revenues rise 18.6 percent to £236.5 million ($309.8 million) during the last financial year.
The firm will look to build on its new tie-up with Wood Smith in the U.S. and has formed a steering group that is focusing on how best to maximize referral opportunities and regional revenue. The firm is also looking to establish a managed services center in Australia to complement its existing “managed” and “connected” service offerings.
The filing also sets out the firm’s plans for a reorganization of its structure, governance and internal contractual arrangements, with the recently incorporated DWF Group becoming the parent company of the firm.