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Legal Practice Board flays ILH float plan

The Legal Practice Board of Western Australia has taken the unprecedented step of publicly criticising the planned stockmarket float of Integrated Legal Holdings Ltd, which plans to acquire three Perth law firms.
The board's public criticism follows seven months of behind-the-scenes haggling, after ILH released a prospectus for a $14 million initial public offering last October.
It comes just a few days ahead of the expected release of a revised prospectus.
The main promoter of the float, Brett Davies Lawyers' partner Brett Davies, told WA Business News the Australian Securities and Investments Commission had no objections to its revised prospectus, which would be released this month.
The board, which is chaired by Freehills partner Steve Penglis and includes Mr Davies as an elected member, said it continued to have serious concerns with the proposed IPO.
It said that 59 per cent of ILH's total assets of $11.1 million were said to be goodwill.
However it does not accept the sum of $6.5 million reflects goodwill in accordance with the long established legal definition of that concept.
It also noted that goodwill represents only three per cent of the assets of Melbourne law firm Slater & Gordon Ltd, which issued its own prospectus last month for a $35 million public share offer.
The board also expressed concern about the total consideration to be paid to the foundation partners for the sale of their businesses.
It said ILH planned to pay $400,000 for Durack & Zilko, up from $343,000 quoted in the original prospectus and more than an independent valuation provided to the board by ILH's solicitors.
ILH plans to pay $804,000 for Brett Davies Lawyers, up from $604,000 in the original prospectus and, once again, above the independent valuation.
The board's statement did not refer to Talbot & Olivier, which was to be purchased for $2.2 million, according to the October prospectus.
While ILH planned to pay more for the law firms, the amount it planned to pay for information provider Law Central has been nearly halved to $3.3 million.
The board noted that the foundation partners will also receive salary payments, entitlements to a bonus pool and 'competitive shares' issued at a small fraction of the public offer price.

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ILH Group (IAW)

Share Price

Closing price for the last 90 trading days
Source: Morningstar

Share Transactions

06/12/13
$17k Bought
06/12/13
$32k Bought
06/12/13
$9k Bought
Total value as at the date of the transaction
Source: Morningstar

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