LSL and Connells buy two-thirds of LMS

LSL Property Services  and Connells have each bought a one-third stake in LMS, the national conveyancing company and former HIP supplier.

Each of the estate agency groups has paid £672,000 for a 33.33% share. The agreement allows for them to up their stake to 50% each.

The deal marks the start of a new chapter for LMS after some turbulent years which saw its fortunes rise and then nosedive.

It comes just months after LMS quietly went into receivership on January 18 with an astonishing £30m worth of debts. The 20-year-old firm had long been rumoured to have been in trouble.

Its management team then bought LMS out of administration, the financial restructuring allowing it to shed huge debts.

At the height of the market, LMS enabled mortgages of more than £26bn a year and employed over 500 people. But it was badly stung by the housing market collapse and by HIPs, into which it had ploughed around £12m, and its equity backers wanted out.

In January, Legal Marketing Services Ltd and LMS Direct Conveyancing were sold out of receivership to a firm called Brabco 1019, a company led by LMS managing director Andy Knee. The deal saved 100 jobs and allowed the backers to walk away from their investment.
 
Just weeks later, on March 31, the gross assets of the LMS Group amounted to £4,069,000. For the year ended March 31, 2011, it had made a profit after tax of £591,000.

This week’s deal was done by LSL and Connells investing in a company called Cybele Solutions Holdings, the parent company of LMS.

 Both LSL and Connells representatives will be joining the LMS board.
 
Andy Knee said: “Whilst LMS has adapted well to the challenges of the market and remained profitable despite the significant downturn in housing and remortgage transactions over the last few years, we came to appreciate that our customers generally, and lenders in particular, are seeking not just good service levels but also the reassurance of longer-term financial security and stability.
 
“This new joint venture will allow us to offer this and also open up mutually beneficial business opportunities.”

David Livesey, group chief executive of Connells, said: “Now is an ideal time to invest in a best-of-class panel management provider. LMS will enhance Connells’ proposition to our lender partners, providing an effective and profitable addition to the Connells Group.”  
 
Simon Embley, CEO of LSL, said: “This investment is in line with our desire to ensure that we have a market-leading conveyancing proposition for our lender clients.”