QS will seek backing for surprise listing at extraordinary general meeting later this month

Cyril Sweett is set to become the only listed standalone QS as it prepares to use a flotation on the alternative investment market (AIM) to fund an acquisition strategy across the UK, Europe and Asia.

The consultant will hold an extraordinary general meeting this month to allow employee shareholders to vote on a proposal by senior management to join the junior exchange.

If the vote, which is set to take place on 25 June, is carried, the firm can expect to join the AIM later this year. Some listed engineering groups, such as Atkins, offer QS services, but Cyril Sweett would be the only dedicated QS on the stock market.

Dean Webster, Cyril Sweett’s chief executive, told Building this week that the decision to go ahead with a listing was made after a strategic review of the company by Close Brothers, which concluded last month.

Cyril Sweett’s management commissioned the review to find ways of doubling its size in the next three to four years.

The report suggested the possibility of raising capital through investment by a private equity house, but this proposal was rejected by the board in favour of the AIM listing.

Webster said: “The firepower that investors will give us will enhance our capacity to make acquisitions. We have a wide regional base in the UK but want to extend this into south Wales with an acquisition.

“We also want to make an acquisition in France and Spain. We’re also targeting Asia Pacific.”

The move has been greeted with optimism by analysts, who point to consultancy as a growing field. However, other companies have questioned the move, especially after the experiences of AIM-listed architects SMC and Aukett Fitzroy Robinson.

Richard Steer, the senior partner at Gleeds, said: “I wish them luck but it’s not something I would consider doing. Our market is too volatile and I don’t see this sort of thing becoming a trend.”

Steer’s caution was echoed by Jonathan Goring, the managing director of Capita Symonds. Goring said: “I don’t think it’s a good short-term plan – it’s a dangerous move. The market is not stable enough and it doesn’t understand the pressures of our industry.”

Cyril Sweett reported a pre-tax profit of £4.3m for the year to 31 March 2006, on a turnover of £44.8m. Senior managers control 21% of the firm between them.

Two architects that floated on AIM …

  • SMC Group. Floated in June 2005. Despite a successful first year, a flurry of takeovers and a rise in profits, by 2007 shares had plummeted by a third. In February, Stewart McColl stepped down as chief executive and in April the group reported a profit slump.

  • Aukett Fitzroy Robinson. Floated in April 2006 when it moved from the support service index on the stock exchange to the AIM. Three months of losses followed along with three office closures and 19 redundancies.