Ex-Knowles chiefs urge QSs to merge

Surveyors should take advantage of building boom and link together for AIM floats.

Quantity surveyors (QS) who want to release cash but fear that they are far too small to float on the Stock Exchange are being urged to consider a solution: merger.

Roger Knowles and Patrick Lineen are about to contact 12 medium-sized QS firms with a view to persuading a group of three or four of them to link-up and create a business with a turnover of £10m to £12m a year and a profit of around £1m. With that fire-power, the City would be interested.

Roger Knowles is the founder of legal services and dispute resolution group JR Knowles, which traded on the AIM (Alternative Investment Market) before its acquisition in July by Hill International for £7m. Lineen was the company’s finance director.

“I sold up in Knowles and then wondered what I should do next,” said Roger, who has a non-compete clause that reins in his activities for six months. “I just couldn’t sit watching the sun rise and fall and I saw that there is still a market for new companies coming into AIM.

“People know us. They remember that we did the same thing. That makes us ideally placed to act as the middle-men, well perhaps I should say mid-wives as we look to help in giving birth to something.

“QSs have never been in a better position. The boom is going to last until two years after the Olympics, which takes us to 2014.

“Fee rates are going up. A lot of QSs were made redundant in the 1990s and numbers have not recovered, but demand is higher than ever before. The time is ripe for an infusion of outside capital.

“If you are in a QS partnership you can’t get your money out. Even when you leave, through retirement, you are lucky if someone pays – and even luckier if they pay quickly. It can take years.”

By way of example, Lineen points to a QS practice with one million shares. The flotation would create 250,000 new shares, boosting the group’s working capital, while existing shareholders could choose to sell 400,000 of their shares, generating money to spend as they wished.

[Contract Journal, 15 November 2006, p 6]