When SMC Group shares dived from 196p to 16p in just eight months, chief executive Stewart McColl took the rap and left the company he’d founded. But as talks begin on a possible merger between SMC and Aukett, word is out that he could soon be making a comeback.

The career of Stewart McColl, the architect who founded SMC Group, looked all but finished in May when he left the listed practice after a series of profit warnings.

Then two weeks ago, when SMC announced it was in early-stage talks to merge with Aukett Fitzroy Robinson, the only other quoted architect in the UK, it seemed his dreams of taking SMC forward were dead and buried. But the Scottish architect, known for his unrelenting ambition as well as for his habit of teaming his ginger hair with loud ties, is waiting impatiently in the wings.

Sources close to McColl say he sees the Aukett talks as an opportunity to re-emerge from his seclusion. He is still a 17% shareholder in SMC and personally appointed the six-strong board. Crucially, he has contacts at Aukett, too. A couple of years ago, the roles were reversed and SMC was hunting Aukett. It pulled out in March 2005, and Aukett subsequently merged with Fitzroy Robinson, but McColl is well acquainted with Nicholas Thompson, now Aukett’s chief executive. That relationship, these sources suggest, could earn McColl a job driving acquisitions and new business in the merged company.

McColl, who was the face and name of SMC as well as its chief executive, was blamed almost solely for the financial problems that came to light in January. McColl had led SMC on the acquisition trail, but four of the nine architects it had bought ran into trouble. This led to expected profit being slashed, from about £10m to just over £2m. A month later, McColl was demoted to deputy chairman and non-executive chairman Sir Rodney Walker was named executive chairman. McColl left altogether in May after a further profit warning and Walker has remained in the post.

While SMC has fallen out of favour, the City’s confidence in Aukett has been growing. So the timing is good for the latter to swoop. But by announcing the talks at such an early stage, it may find that rival suitors emerge. Capita Symonds has been buying up architects, Atkins was in talks to buy Pascall + Watson but pulled out, and it is understood that it was also in discussions with Alsop Architects before SMC swooped last year. So there is a definite appetite for architects.

The merger would create the UK’s largest architect with 890 staff. It is worth pointing out that SMC is the larger of the two firms and generates higher profits. Aukett returned to profit last year, making just £780,000 in the year to September 2006. SMC’s pre-tax profit for the same period was more than three times that at £2.7m, but the City was expecting £7m.

This year Aukett is expected to make pre-tax profit of £2.3m and SMC £3m. But while Aukett’s shares have risen, SMC’s have fallen. To put it in perspective, Aukett’s share price is about 14p, up from 4p a year ago. SMC’s share price is 23p, compared with a high of almost 200p last December.

The SMC-Aukett deal would not be a cash buyout. Instead of selling their stock, shareholders would become part of a larger entity. It is clear both boardrooms want the deal to go ahead, but it will need the backing of SMC’s subsidiaries and shareholders. These are companies that were wooed by McColl and presumably remain loyal to the man, as well as the company.

What is unclear is how it would work, if at all, with McColl and Walker both on the board of the merged entity. Apparently the pair have not spoken since the day McColl left SMC. Some think McColl and Thompson could make the better team. Leslie Kent, analyst at JM Finn, which is also broker to Aukett, says: “The idea would be to combine Aukett’s financial brains with McColl’s flair.”

McColl and Nicholas Thompson would make a good team. The idea would be to combine Aukett’s financial brains with McColl’s flair

Leslie Kent, JM Finn

Others in the City think architects simply should not be listed on the stock exchange, whoever’s in charge. Few analysts cover the two companies, partly because they are both relatively small and listed on the alternative investment market, but also because of the nature of their job.

As one analyst who does not cover the stocks puts it: “Architecture is an ‘away with the fairies’ discipline … The workload can be unpredictable, drawn out and lumpy in terms of profit generation. It also depends on the fickleness of fashion. To date, no one has really made a success of it.”

DY Davis certainly didn’t when it listed in the 1980s. It foundered on the market before going private again. YRM also listed in the booming 1980s but suffered the same fate.

Aukett itself was a “very sorry listed company for a long time”, one analyst recalls. But Aukett Fitzroy Robinson, its directors would no doubt say, is different. Its boss Thompson is not an “airy-fairy” architect but comes from an accounting background. Formerly finance director and then managing director at Fitzroy Robinson, he became chief executive of the combined group when the company joined forces with Aukett two years ago.

As for McColl’s flair, that is appreciated in the City, where he has been able to punch above his weight. After all, McColl single-handedly raised the profile of his business. His very public ambition means that, like him or loathe him, he is an industry name, and that must surely be part of the reason why SMC managed to buy Will Alsop’s practice in March last year.

By contrast to the reserved accountant Thompson, McColl schmoozes contacts over breakfast or a drink. His preferred meeting place is Claridge’s hotel in London’s West End. It is understood that he has continued to hold meetings with potential SMC clients and acquisition targets in his capacity as a major shareholder, since his departure in May. This is a man whose ambition comes before his pride – he attended Building’s annual terrace reception at the House of Commons just days after his humiliating departure from SMC.

McColl, SMC and Aukett declined to comment this week, but the announcement issued by both companies said: “The boards of SMC and Aukett Fitzroy Robinson announce that they have entered into non-binding heads of agreement relating to a proposed merger of the two companies … There can therefore be no guarantee that agreement in the final terms of the merger will be reached or that the merger will proceed.”

Whether the deal goes ahead or not, one thing is for sure: this is not the last we’ve heard of Stewart McColl.