Managing director Ian Carlson discusses introducing the firm's shared equity scheme
THINGS are moving relatively quickly at Top 50 firm Old Mill, but it is unlikely to breach the 763mph needed to break the land speed record.
Nevertheless, the West Country firm’s name may well cruise into the record books later this year when the Bloodhound Project it sponsors attempts to break the record.
“We’ve got our name on the tailfin, so when later this year it shoots off at 1,000mph in South Africa, the names of the men and women at Old Mill will go along with it”, explains managing director Ian Carlson.
The firm was formed following a spin-out of RSM Tenon in 2006, and with 130 staff across its three original offices recorded double-digit growth in successive years, eventually appearing in Accountancy Age’s Top 50+50 in 2013 at 46th.
And while things aren’t 1,000mph at the firm’s offices in Yeovil, Wells, Melksham and Exeter, Old Mill has grown rapidly in recent years, culminating in hitting 38th place in the most recent Top 50+50 with a fee income of £16.3m.
Today, that number has grown to £17.25m, and in January it extended equity stakes to almost a fifth of its 250 staff.
Some 23 staff members have joined the 21 existing partners – or shareholders as the firm describes them – in the business, taking the total to 44.
It forms part of an ongoing project which commenced in 2012 to broaden the base of staff members who have a share in the firm’s success.
The plan, Carlson tells Accountancy Age, is to issue a new round of equity every two or three years as part of its plans to bring talent on and ensure solid succession planning at the top of the firm.
“Part of it is the John Lewis model, whereby everybody within John Lewis is a partner and owns a bit of the business,” Carlson says. “If you own a part of the business, you feel more aligned with where it wants to go. As a business, you can motivate staff a bit better, it helps with staff retention and with recruitment.
“So there is a whole range of factors in looking after the staff. We always felt it was important to share the success of the business with everyone who works within it, and getting equity in the hands of more people is the ultimate way of doing that.”
Unlike John Lewis, Old Mill’s isn’t an equity-for-all model, but one that operates more on a reward basis and “takes a lot of the theory that comes from John Lewis”.
Old Mill provides an interesting case study as the shared enterprise model becomes more popular among firms – most notably Grant Thornton, which recently published its so-called shared enterprise approach in the firm’s first strategic review under the leadership of Sacha Romanovitch.
In the top six firm’s case, rewards will be funded from ‘superior profits’ and will be paid outside of pay rises, annual performance bonuses and partner profitability.
For Old Mill, initially establishing the system was a fairly onerous task, but once in place one that is relatively simple to replicate for further rounds of equity.
“It’s not easy thing to do. You spend hours and hours with lawyers and bankers to get it to work,” Carlson recalls. “We learned a lot from the first time round, which made this time better and a slicker process.”
The first time round, Carlson explains, started in “June or July in 2012″ and culminated in an almighty signing exercise” in December. This time, he says, was a “far more condensed” process and ran from September until New Year’s Eve.
“It’s a great way to sink hours and hours, but we learned a lot in 2012,” he says.
The streamlined process still “broadly” follows the same structure, he explains. Candidates are identified and consulted; banks and lawyers are lined up ready to provide funding and legal advice in a process that Carlson believes can “never have too much communication”.
“It took more than a thousand signatures to get the process completed this time around, so it’s a bit of a logistical nightmare,” he says. “It helped immensely that we decided to complete the deal on New Year’s Eve because everybody’s working to the same deadline, similarly, unlike some corporate finance deals, everyone’s on the same side.”
Despite the level of work involved, Carlson is expectant that further firms will look at the structure as firms seek to make themselves more attractive to talent.
“In the market place in general it’s becoming ever more competitive to find good people, and good employers are continually trying to innovate with new ways to recruit the best people and retain them once they’ve got them,” Carlson says. “Some may decide going down a wider equity route works for them, others may do other things.
“I think a lot of people will look at it, but whether they can actually get it to work will be dependent on what kind of valuation they’ve got, whether they’ve got goodwill and if it’s in the hands of just a few people, breaking it down will take longer to do.”
Satisfied Old Mill were among the first firms to pursue the equity offering, Carlson is aware that mid-tier firms – particularly outside London – have to compete on different points than their larger cousins in the major cities.
As such, he is keen to emphasise a personal aspect and an entrepreneurial spirit to working for the firm.
“It’s not rocket science, and it’s a simple business. We try to run it as a business rather than a traditional partnership with people with large portfolios. We try to take the best aspects from corporate life without becoming a big corporate, bureaucratic monster,” he explains.
“We’re not in London or New York, but we can offer a different kind of career and a different kind of life. At a firm like ours, you can get much, much closer to the clients and advise them in a far more rounded way than at one of the big firms. You get to know the clients properly and help them with life-changing decisions.”
Old Mill in numbers
Offices: Four, across Yeovil, Exeter, Melksham and Wells
Staff: 250, of which 44 hold equity
Fee income: £17.35m
Specialisms: Agriculture; financial planning; small businesses; audit; taxation; auto-enrolment; personal finance; charities
Bluffer’s guide: Both the firm’s name and those of its staff will be on the tail fin of the car in this year’s upcoming land speed record attempt