DSW’s profits to slip again but looks at ‘improving’ M&A activity

James Dow

The slowdown in the deals market has resulted in DSW Capital warning it expects a second-successive drop in profits.

However it believes “we may have passed the low point in the cycle” and has seen “more normalised levels of M&A activity” in the past three months.

The company is now forecasting adjusted pre-tax profit in the year to March will be £1.1m-£1.4m, compared with £1.4m and £2.0m in the previous two years.

The mid-market financial services provider operates as Dow Schofield Watts, Camlee, and Bridgewood. It has more than 100 fee earners across 25 licensee businesses.

M&A activity accounts for around 70% of DSW’s revenue. Although activity levels are “improving”, the higher end of its forecast “is subject to certain M&A deals currently scheduled to complete before the year end”.

DSW’s chief executive James Dow said: “We were cautious at the start of the year and remain vigilant to macro uncertainties but believe the medium-term outlook for the group remains positive.

“We continue to execute on our recruitment strategy with significant investment in our capabilities, which, coupled with favourable recruitment market conditions, have delivered new offices in Cardiff and Leicester.”

Revenue across its network was down 25% to £7.3m in the six months to September, resulting in adjusted pre-tax profits of £0.2m. Its results are typically weighted towards the second half of the financial year due to the recognition of profit share income.