A surprisingly smooth ride - why the rise of the consolidators is unstoppable

The inside track on the great professional services shake out

Chris Bishop does a lot of thinking while he cycles.

Sometimes with colleagues like Daniel Wise, David Rowlands and Jay Lafinhan (pictured) as they cover impressive distances to support charities in the UK and abroad.

But also on a steady 50-mile group ride from the firm’s Sale office to its new partner campus, Sci-Tech Daresbury near Warrington.

But as he cycled to his work in Sale, from Levenshulme, on the 1st day of May - traditionally the worker’s day - he was satisfied that the deal he had encouraged and nurtured for his law firm, Slater Heelis, was the right one.

Across the other side of the North West, on her journey from the Wirral to Warrington. Lucy Williams was equally content, having gone through a similar process, but which had reached a wholly different conclusion.

Bishop was part of the senior leadership team at Slater Heelis that had accepted an offer to join the private equity backed sector consolidator, Lawfront, a network of similar sized firms across the UK.

From beginning to end the Slater Heelis deal took just six months from approach to completion, even factoring in regulatory approvals, tightened recently following the fraud discovered at law firm Axiom Ince. 

But for Bishop and his team, what started as a fast growing law firm growing quickly, investing in buildings, staff and tech, then found it needed to grow again, for even better tech and to start planning for the future generation to run the firm.

The firm had already made a transition from an LLP to a limited company and its financial results show a profitable firm with some decent growth. The challenge is succession, and the input of their key non-executive director Ann Mee was vital in focusing minds.

Not all partners were fully on board initially, it is understood, but meetings with private equity backer Blixt, notably their lead principal Rachel Reddy, and the driving force of Lawfront’s chief executive Neil Lloyd. 

“We needed to come up with a good working outcome for continued growth and keeping people happy here,” says Bishop.

“We completed on Tuesday night of the 30th of April, and the next morning I got up, I saw it was a lovely spring day. It was the 1st of May. And somebody sent me a really nice little mantra saying today is the day we cherish and celebrate our workers.”

Williams on the other hand had led a management buyout of accountancy firm JS, previously known by its traditional name, Jackson Stephen. 

I relay to her the reflections that Chris Bishop shared. “Well, as I made my way in to work on that first day as the head of the firm after the buyout I felt more relaxed than I thought I would,” she says. “I know the firm very well, I was excited about telling everyone and the reception has been great.”

But, she clarifies, “I wasn’t cycling in. Not from the Wirral to Warrington.”

But for both the issues of succession, and keeping the next generation on board, were in the forefront of their minds.

And right now, across the country, not just in the North, many professional service firms in accountancy and the law are facing up to profound succession issues.

Anyone running a practice gets messages on a daily basis from business brokers offering practices for sale, others will get approaches from intermediaries on behalf of sector consolidators with their feelers well and truly out.

In the accountancy sphere TC Group, backed by Inflexion, is on the acquisition trail, as is BK Plus, backed by Palatine.

Blixt, the private equity investor behind Lawfront, has also made its first step into the accountancy world with the acquisition of Duncan & Toplis, one of the largest independent accounting and business advisers in the East Midlands.

And in the North most recently the acquisition of Bolton-based Cowgills by Sumer, has handed Paul Stringer, senior partner of Cowgills, a war chest to start buying firms to add to his regional empire, under the Sumer ownership regime. Frankly, JS was one of the names I expected to be in his sights. 

But as the new buyer, rather than the seller, the decision wasn’t exactly in the gift of Lucy Williams. As she told me last week, the vendors preferred to sell to management rather than accept an offer from a sector consolidator, backed by private equity investors, and instead has an ambitious plan of her own.