Consultaconsultant James R Knowles this week took the unusual step of briefing Building on the progress of its sale by auction, writes Angela Monaghan.

Quoted companies are not required to publicly discuss an auction if they are in talks with six or more parties, as is the case here, according to Knowles. However, Brian Quinn, the chief executive of the company, said he wanted to "control rumours" so that the market and Knowles' staff had an accurate picture of what stage the process was at.

Quinn was keen to explain that Knowles was not considering a bid from rival consultancy Systech. This was made before Christmas and offered 25p a share, which values the company at £5.25m.

Systech said last week that it was asked to reconsider the price over Christmas but had decided to stick with the initial indicative offer.

Quinn said that a deal with the firm was unlikely, but not impossible: "If Systech offers more money and amends its conditions we would listen," he said.

He added that the auction process was "a little bit of a distraction" but that most staff considered it to be an opportunity.

Andrew Kitchingman, director at Brewin Dolphin Securities and financial adviser to Knowles, said Quinn's decision to discuss the auction might attract more bidders, including internationally based companies.

He added that the company was in early-stage talks with about 12 parties, but said that the process would take "months rather than weeks".

Roger Knowles, who founded the company 30 years ago, had decided it was time to sell his 60% stake at the age of 68.

According to the rules of the takeover panel, any party that owns more than 30% of a company's shares is required to make an offer for the whole company on the same terms, although Knowles' remaining shareholders, which include Quinn as well as other staff members and institutions, would not be required to accept it.

Quinn said it was "inevitable" that Knowles would sell his stake at some point because he was already over 60 years old when the company floated on the alternative investment market six years ago. "Roger is passing the baton and he's very concerned about who he is passing it to," he said.

Knowles specialises in advising firms on how to avoid building disputes and advises them when there is one. It employs lawyers, quantity surveyors, architects and engineers.

Its share price was hit at the end of 2004 when it had problems in the USA and Far East.

In the year to July 2005, Knowles made a pre-tax profit of £41,000 compared with £483,000 the year before. Turnover was just over £30m.

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