I think the main impact of Slater’s misfortune is likely to a...

I think the main impact of Slater’s misfortune is likely to a large net positive for Shine.

The positives:

- It is likely to provide a great lesson to Shine management of the risks of expanding too quickly (whether organically or by excessive acquisitions);

- Even if Shine management wanted to expand quickly they would realise that the banks or institutional equity participants would not finance this expansion;

- It is likely to mean less competition from Slater's in the Australian market in the short term. Slater's are likely to reduce advertising expenditure to help manage their large debt;

- Shine may pick up clients who are concerned about Slater's future;

- Shine may be able to recruit some good staff from Slater's who are worried about their future; and,

- Shine may possibly be able to buy a small part of Slater's Australian Operations. Slater's may be willing to sell part of their Australian operations to help manage their debt;

The negatives:

- Banks and credit financiers may be far more reluctant to lend to listed legal companies;

- Some clients and good potential employees may avoid all listed legal companies; and,

- The owners of unlisted legal firms, who Shine want to acquire, may be more reluctant to accept equity for all or part payment for their businesses.


What do you investors think are other consequences that I have not considered?