In September 2020, Smith & Williamson (S&W) completed a merger with Tilney, which had been acquired along with BestInvest by Permira in 2014, as the private equity fund sought to build a UK-wide wealth management and advisory firm. 

From announcement to completion, the merger had taken a year to close. The enlarged group had £47bn of assets under management and combined annual revenues of £530m. By Q3 of 2021, the merged firm’s assets had grown to £56bn and it employed more than 1,800 staff. Looking at the professional services side of the business, TS&W is now the UK’s sixth-largest firm by fee income.

The corporate finance offering still goes to market as S&W, but a year and a half on, how have corporate finance and transaction services developed? John Rugman took on the role of TS&W head of UK transactions in May 2019 and UK head of advisory in May 2020. “The merger has given us greater bandwidth and access to a broader client base,” says Rugman, who joined S&W as head of valuations in 2013. “It’s helped us in terms of scale, given us a shot in the arm and renewed our ambition for what we think we can achieve – it’s turbocharged our growth ambitions.”

The advisory service line includes corporate finance, transaction services and valuations, as well as restructuring, forensics and advisory consulting, which offers post-deal support and profit improvement advice to businesses that are mostly in some form of stress or distress. 

Rugman is keen to emphasise continuity: “We’ve always been very focused on private client businesses. While we are seeing that area increase, it’s important that how we service any new clients fits with the high attention to client service we have always applied.”

Power of technology

It’s fair to say that both Tilney and S&W’s approaches were built on long-term client relationships. That mindset has led to the increase in service lines being offered to clients at different stages of the business cycle. “The two organisations have a lot in common, with regard to culture – that’s helped a lot,” explains Rugman. The enlarged firm is now in “heavy recruitment mode”. At the end of last year, Neil Cook joined as transaction services partner, to lead the firm’s IPO and capital markets work. The firm has also been growing its performance advisory consulting offering under partner Claire Burden. As Rugman says: “Advisory is growing substantially, and the larger organisation we’re part of now has been very supportive in that.”

Brian Livingston, TS&W’s head of London M&A, says the merger has “doubled down” on the investment management and professional services offering: “We have always focused in corporate finance on understanding what clients are looking to achieve in the long term, both for themselves on a personal level and on a business level. Once we understand the journey of the client and become trusted advisers, we can then seek to assist them through services such as wealth management, private tax and financial planning, as well as corporate finance. 

“Having more services, particularly on the financial planning side, has increased the opportunity for assisting clients in that trusted adviser role and increased the opportunities for our business. It’s a very different concept of seeking a long-term relationship as a trusted adviser both prior to and after the sale. Otherwise you’re just another sell-side or fund-raising adviser.”

Pressing the right buttons

The use of technology has been ever-increasing for all professional services firms. Rugman says: “We’re very much getting into utilisation of all things digital.” TS&W has recruited in that area, too. “Since the merger, we’ve been able to bring in specific support. Last year, we recruited a chief digital officer, Robert Talson, to help increase our use of technology across the business to deliver enhanced digital experiences for our teams and clients. We never had the scale to do that previously. Digital transformation is very much on the agenda of a larger business that needs to be more integrated.”

TS&W has begun to use Introhive relationship mapping and discovery software, which interrogates calendars and contacts across the firm, to add to the business-wide network of contacts that will clearly be beneficial to deal leads. “We’re also looking at analytics and implementing robotic process automation on some of the more mundane tasks across the business,” Rugman adds. “But we’ll be increasingly bringing in new platforms to help us with the day-to-day running of the business.”

Global reach

TS&W’s team is part of the Oaklins International corporate finance network, which has been growing for more than two decades. Livingston describes it as a truly global network – it has more than 70 member firms in 45 countries, a presence in every continent and employs 850 professionals across the world, completing around 400 deals annually. 

Across the Oaklins network there are specialisms in different sectors and sub-sectors, run on a global basis: “Wherever we’re looking at doing a deal, we talk about local delivery but with global expertise. It’s a crucial part of our M&A offering,” says Livingston. By way of example, he says: “Our Dutch colleagues have a deep specialism in horticulture. Being able to call on sector expertise and local knowledge and wrap them around the full suite of services we offer, is how we win mandates and successfully complete deals.” 

A recent example of this sector expertise includes the sale of UK-based composites manufacturer Permali of Gloucester, where the sector expertise came from the Oaklins US member based in California, Oaklins Janes, which specialises in aerospace and defence. This was the second deal jointly completed with Oaklins Janes in 2021. A further example was the sale of plant breeder Floranova to Chinese company Chem China. The transaction was introduced by Oaklins Netherlands, which had identified both the buyer and seller through its research in the sector. Its sector expertise ensured the business was won and the client remains as a TS&W client. Several other deals have been completed with Oaklins Netherlands.

The team has also been busy in buy-outs. In November last year, it advised on Sonmarg Capital’s backing of Bath-based security, fire and safety systems business BWS Security. This year started with the completion of the £5m Puma Private Equity-backed MBO of digital mentoring platform Connectr, led by partner Iain Lownes of the Bristol team. In 2021, Oaklins in Germany introduced the team to JOST and as a result it advised on the carve-out and Endless-backed buy-out of Edbro from JOST, the commercial vehicle component manufacturer.

“What we saw two years ago was quite depressing, but now we’ve been seeing strong M&A, strong values and a strong pipeline, with several £50m-£100m transactions coming through in certain sectors, such as the software-as-a-service market, or in building products,” recounts Livingston. “Others, such as retail, are a bit more challenging, but if you’ve got a good business, in a good sector, there are so many people wanting to make acquisitions. A lot of deals are cross-border, which helps with valuations. In public markets, businesses are reallocating capital. In the private sector, owner-managers are asking themselves where their priorities are: ‘Where do I want to be going forward? I need to think about what I want to do.’” 

Another key driver Livingston points to is the US economy: “The US private equity market sees acquiring in the UK as a tremendous opportunity.” 

Rugman feels the uptick will continue, despite forthcoming headwinds: “If you look at the UK, we had a general election, then Brexit and COVID-19, which were real suppressors of UK activity. Now, we have a high level of activity globally in corporate finance. There are threats such as inflation and interest rates and what might then happen there, but my instinct is that this feels like a sustained level of activity.”