Long-suffering shareholders of law firm Slater & Gordon may soon be out of their misery, with private equity vultures honing in for a buy-out. What’s the scam?
The scam is private equity ain’t there for the justice Your Honour; there is profit to be had exploiting Australia’s legal system by running about drumming up lawsuits for a buck. Private equity mob Allegro intends to restructure (euphemism for sackings and leverage) and sell again in a few years for a big profit.
Slater & Gordon went public with much fanfare back in 2007, one of the first law firms in the world to float on a stock exchange. It listed at $1 a share, peaked at $8.07 in early 2015, before the Learned Friends incurred massive losses in a greedy acquisition spree. Now 57c, their market value is just shy of $80m. According to an article (paywalled) in the AFR, Australian private equity firm Allegro Funds wants to pay $150m. That’s a PE ratio of almost 100x. Bring on those lawsuits!
Fellow ambulance-chasers, Shine Justice (ASX:SHJ), have been struggling too. They peaked around the same time as Slater at $3.30 a share before being sued, ironically in a class action, for dodgy accounting. Now 92c, their beleaguered investors will be chanting incarnations for a healthy profit result tomorrow. With a PE of just 5.17 – versus Slater’s 50+ there is some suspicion that all is not as it seems, or at least as it has been projected.
If you have the appearance of any money, be scared, be very scared, the lawyers are coming for it.
Red flags abound for Shine Justice but “no win no fee” law firm no respond, nor PwC
Kim Wingerei is a businessman turned writer and commentator. He is passionate about free speech, human rights, democracy and the politics of change. Originally from Norway, Kim has lived in Australia for 30 years. Author of ‘Why Democracy is Broken – A Blueprint for Change’.