GTC operates across seven segments of personal law, being family law, criminal law, contested estates, civil and commercial, administrative, agency and immigration, AFL noted in its announcement to the ASX.

“The business has 116 staff, seven offices in Australia and generated pro forma $20.3 million in revenue, $4.8 million in EBITDA and $3.6 million in EBITA for the financial year ended 30 June 2022,” the listed firm said.

AFL believes, it said, that the proposed merger will provide the listed national firm with a “material increase in both size, scale and diversity of its operations, will be materially earnings accretive, and is expected to deliver synergistic benefits for the merged group”.

Speaking about the proposed acquisition, AFL executive director Grant Dearlove said that the merger between AFL and GTC will be “a seminal moment for the personal legal services industry in Australia, with the combined group being uniquely positioned in a $20 billion market ripe for consolidation”.

“For shareholders, it delivers immediate scale, increased revenue and profitability and a more diversified earnings base from family law only to an additional six practice areas. We will have new exposure to the fast-growing revenue-sharing platform model which is challenging the traditional law firm model in regions such as the UK, and our geographic footprint will increase from 19 to 26 offices under seven quality and recognised brands,” he said.

“The integration of our complementary businesses will drive immediate and long-term increased revenue and expense synergies, with a significant reduction of duplicated costs already identified. The merged group will have a strengthened board and leadership team with proven track records in legal firm disruption and consolidation.”

GTC managing director James Stevens added that the merger marks the “true beginning of the consolidation of the personal legal services market in Australia”.

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This development, he said, is long overdue.

“The combined resources of the new group will provide it with all the tools it needs to grow and adapt to a rapidly changing world. Our enhanced national presence, top-tier administrative efficiencies and strong record of client acquisition will present a compelling business going forward,” he proclaimed.

Pursuant to a share sale deed dated 18 October 2022, AFL has agreed to acquire all of the shares in GTC from its existing shareholders in consideration for the issue of shares in AFL.

The total consideration to be paid to the vendors of GTC is estimated to be 49,709,716 AFL shares, assuming the balance of GTC’s net debt is $10 million at completion. At completion of the transaction, the total ownership of AFL held by GTC’s existing shareholders will be approximately 39 per cent.

Further two GTC directors will join the AFL board: Mr Stevens and also GTC chief executive Wayne Windell. Existing AFL non-executive independent directors Sarah Kelly and Kevin Lynch will step off the board on completion, and a new independent non-executive director will be appointed.

The acquisition is subject to satisfaction of customary conditions, including requisite approvals from AFL shareholders. The proposed merger has been unanimously endorsed and supported by the AFL board.

GTC was advised on the matter by BigLaw Maddocks, with partner Catherine Merity leading the Maddocks team involved.