Knowles to start new QS firm

Roger Knowles is planning to float another company on the stock exchange, only months after selling the company he formed 30 years ago to US group Hill International. Knowles has developed a plan with a former colleague to attract three to four medium-sized QS practices to merge together and then list on the Alternative Investment Market.

He is working with Patrick Lineen, who was finance director at Knowles from 1986 to 2002 and played an instrumental part in floating the firm in 1998. They have targeted 12 firms which are potentially suitable to merge into super practices. These companies could rival major QS firms, and would be £2-5m in turnover.

Lineen said that the pair’s business plan had already received interest from the City: “We have had preliminary contact with a stockbroker and he’s confident that he can raise the funds. He thinks QSs are attractive to the City; they have a stable source of income as opposed to riskier sectors such as high-tech companies. They are all busy and fee rates will be improving.”

Lineen said the option would be ideal for partnerships whose bosses were approaching retirement or firms with ambitious management. “It’s a managed exit route for those who want to release their stakes in their companies. In partnerships there is no recognition of goodwill in the business,” he said. “It could appeal to both the older boss coming up to retirement and the younger boss who aims to eventually become the head of a sizeable quoted QS firm.”

The model is similar to the one adopted in the accountancy sector by Tenon, which first floated as a medium-sized firm before it grew through the acquisition of smaller businesses, he explained. “In floating, it became a bigger player. We want to create a QS consolidator.”

Knowles commented that he was ideally looking for firms which operate in different regions so as to create a national player. “With framework deals, you now need a broader presence. These firms can cluster together to compete with the EC Harrises of the world.”

With firms winning longer-term work, floating was becoming increasingly viable. “We could be starting a trend here,” he said. Knowles said he would consider investing in the newly formed listed firm. “We might put money into it. We are flexible.” But, he added: “We are not going to wait around forever.”