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End of an era at MGI Midgley Snelling

MGI Midgley Snelling has just gone through one of the biggest changes in its 80-year history. After 35 years of operating offices in London and Weybridge, the firm took the bold step of selling its practice in the capital. Here partner Robin Sewell reflects on the experience…

The trigger for the sale was the unusual situation that the leases on both our offices ran out in the same year, which gave us the opportunity to go down several alternative roads. We were pretty settled in Weybridge, but London gave us more to think about.

One partner, who specialised in entertainment work, was close to retirement, which posed potential difficulties in replacing him, while two of the other three partners were in their late 50s. Coupled with the fact that we were looking at paying out hundreds of thousands of pounds for fitting out a new office, and a big hike in rent on the new lease, we started seriously reviewing our options.

Despite these issues, the easy option is always to carry on doing what you are doing so we almost reached the point of signing a new London lease. However, taking on a new, ten-year commitment of that size does tend to concentrate the mind, so after a serious talk with practice advisors we were already working with, we decided to seek a merger for the London office.

That was in late September 2007. Within weeks, the advisers had drawn up a (fairly!) short list of which firms might be interested, while also talking to the London partners about their aspirations – some wanted to carry on, some wanted to retire.

We wanted the merger practice to be one with a similar outlook and way of doing things to us, and which wasn’t going to get swallowed up itself by a larger firm, as it was important that our clients – some of whom have been with us for decades – and our 20 or so staff would be looked after as we have looked after them.

The agents found a dozen or so potential buyers, which surprised us. We know we’re a good firm, but we’re not huge, so were astonished at how well we were known. We did however narrow these down fairly quickly, because we could see that some simply wouldn’t suit our clients, our partners or our staff.

One criterion we asked the agents to look for was a firm that was not already a member of an international group so that we could try to bring them into MGI but unfortunately, that just wasn’t possible.

We eventually shortlisted three firms and held face-to-face meetings. One we discounted as too progressive and too corporate for our partners, who were used to being their own men. The other two were right geographically, in size – maybe four or five times larger than us – and with similar philosophies and ways of working.

It was a difficult decision but we chose MacIntyre Hudson. They were keen on doing a deal and there was a good fit between our business, our partners and our staff.

It all happened extraordinarily quickly. We were talking to potential buyers by the end of 2007 and the deal was essentially done by the end of January, although in hindsight, it was too quick. It’s impossible to appreciate the number of issues you have to deal with and it’s very difficult to do so in that kind of timescale.

What did we learn? Although we went paper-free about 18 months ago, there was the sheer volume of “stuff” to be moved. We’d centralised some of  our services a couple of years ago, basing audit, accounts and tax in London and our offshore work in Weybridge, so the work of the clients that were staying with us had to be moved back to Weybridge, where we had to start rebuilding our tax, audit and accounts capability.

The most traumatic issue was the computer files and software. We had one database, one practice management system and one document management system and all the information had to be divided correctly. Immediately the merger took effect, everyone wanted their systems to go live straight away and there was some frustration and questions about who was at fault when it didn’t! For a few days it was a bit fraught and again more time would have been useful.

We also learned that it was impossible to do this kind of deal cheaply. We were astonished at the amount of legal work and the fees were very costly, despite the fact that the financial side of it was as simple as we could possibly make it and there was nothing controversial about the deal – everyone involved wanted to make it work.

What we also found was that lawyers seem to find it very difficult to be neutral. Our instructions to our lawyers were simple: a fair agreement and don’t try to extract extra advantages out of the other side. But they were always trying to word things to our benefit – it must be embedded in the way they work – and we couldn’t just leave things up to them.

As accountants, we deal with this kind of transaction for clients all the time but it was interesting to see it from the other side of the fence. When it’s happening to a client, they ultimately make the decisions: when it’s your decision, you realise how difficult it can be. It’s made it very clear to us what the process involves.

Part of that was making sure that our staff were happy about the move. It was difficult to keep them as informed as we would have liked – you can’t say a lot early on but we told them as much as we could as soon as we could and went through all the formal processes of meetings and consultations.

And our final lesson? Experienced staff are as valuable to a prospective purchaser as your client base – a real gold dust asset – so value them!