City values S&W at £250m

The firm has said it is considering going public, and at the current
valuation would become the largest listed accounting firm in the UK.

Listed rivals Tenon are valued at a multiple of six times 2005 earnings,
while Vantis’s market capitalisation is 15 times its profits.

City figures indicated a multiple of 15 would be appropriate for S&W too.
The firm is thought to have made profits after tax of around £16m. A flotation
at that price would see some partners earn seven-figure windfalls.

Gareth Pearce, Smith & Williamson chairman and group chief executive,
played down the suggestions this week, arguing the company’s value would be
slightly less than £250m. ‘The main advantage is profile raising and being
better known. We see a listing as playing a part in that process,’ he said.

Vantis is valued at £110m, while Tenon is worth £39m.

‘High-quality professional services firms are attractive – as Smith &
Williamson is a bigger business, like Vantis, it would find it easier to find
bolt-on acquisitions,’ said Numis analyst Stuart Duncan.

‘Most of Tenon’s and Numerica’s problems came from the consolidator model;
it’s about the underlying models of firms,’ he added.

Ben Archer, an analyst at Charles Stanley, warned that the accounting sector
had not been great for investors, but Vantis had performed well because it was
an established firm that found it easier to integrate acquisitions compared to
Tenon and Numerica.

S&W revealed its figures for the year end 30 April 2006 last week. Income
leaped to £134.3m from £105.8m a year earlier. Profit before tax climbed to
£20.1m from £12.4m. Its two main service lines saw double digit growth.

Investment management and banking grew 21.6% to £68.9m, while tax and
business services grew £35.8% to £72.9m. Pearce’s remuneration climbed 24% to
£727,849, from £585,335.

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