The world’s largest public float of a law firm has taken place with the listing of DWF on the London Stock Exchange.
Although there have been some changes in partner numbers since October 2018, at that time the firm was trending towards annual revenue (after recoverables) of £267m. The firm then comprised of 2,706 full time equivalent staff plus 312 full time equivalent equity and non-equity partners.
The 69 full time equivalent equity partners (using the number as at October 2018) have given up a large degree of income certainty in exchange for shares and expected dividends.
The equity partners will retain approximately 63.5% of the equity. With a float market capitalisation of £366m, each of the 69 (FTE) equity partners has an asset now worth £3.37m on average. In $A this is $6.3m. The proceeds from the float were relatively insignificant for equity partners compared to the ‘paper value’ of their shares. They received an estimated £283K (A$528K) on average each.
Equity partners will now be relying on dividends for their income as well as ‘wages’. They have received a pay cut of 60% so that this gap can made up with dividends.
Equity partners now have a huge incentive to make sure that the business generates adequate profits, not only for the sake of their income but also to sustain the value of their shares. These shares come with restrictions on when they can be sold.