DSW moves into new service area as deals slippage hits numbers

Dow Schofield Watts (DSW) the mid-market, challenger professional services network, has set up DSW Principal Partners (DSWPP) to offer businesses access to top professionals to join their business on a fractional – or part-time – basis.

The urgency for DSW of a move into revenue streams other than fees from deals was apparent this morning (15 February 2024) when the AIM listed advisory business issued a profit warning to the stock market because of “slippage to some previously anticipated deal revenue and…deal aborts.” 

DSW’s share price took an immediate hit on early trading, with shares trading at 35.60p, over half what they were worth a year ago and 25 down on last night’s close.

Profits are expected to be between £600k to £700k, but chief executive James Dow warned the lull will continue into 2025.

The group was also rocked earlier this year by the shock resignation of deputy chief executive Nicole Burstow, who was intended to be Dow’s successor as chief executive. She is taking up a new opportunity in private industry and is currently working her notice.

Dow said: “Whilst it is very disappointing that the improving trend we saw in the M&A market has stalled, our confidence in the medium-term outlook for the Group is unwavering, and we remain well positioned for when the M&A market returns.

“In the meantime, we continue to invest in recruitment and to grow the network. Diversification into new service lines not reliant on M&A remains a focus. The business recovery and tax advisory licensees, which were acquired during the year, have performed well, and we are seeing record numbers of enquiries from potential new partners and licensees.”

DSWPP is being led by founding partner, Steve Lord, who has spent the last six years as an investor and executive chairman acquiring and developing a portfolio of industrial SMEs in the UK, North America and the Middle East.

The new venture is part of a drive by DSW to find high margin, complementary, niche service lines with a strong synergistic fit, rather than be dependent on revenues from deals, especially in a depressed mergers and acquisitions market.

Companies will take on experienced skilled people on specific projects, without the need for a full-time Lord is joined by Claire Cushnahan, Nina Mcloughlin, Mike Ellis and Richard Jones who will be founders and principals in the business, based at DSW’s Daresbury office.

Lord says the model isn’t to hire out consultants but skilled professionals who he says will be experienced in working with growing businesses, reshaping industries and impacting the economy.

There is huge demand for high performers at different stages of their careers, he says. “There are no losers in the fractional market – it is a game changer for clients and our Principals who will range from Gen Z to Gen X.”

Lord added: “We provide high-level executive thinkers that you might not need on a daily basis. As a growing small to medium-sized business or a business with fluctuating workloads, you need access to visionary, strategic, technical or financial skillsets and sector expertise. We also provide end to end solutions for private equity houses, financial institutions and banks who need strategic support with their portfolios to deliver enhanced returns on their investments, particularly in turnaround or distress situations. With DSW Principal Partners clients can tap into specialised skills on an as-needed basis with our total solution.”

DSW Principal Partners is aiming to provide national coverage with multiple Principals across different functions and specialist areas, with international ambitions on the horizon. This will include AI, robotics, supply chain management, environmental, healthcare, education and e-learning, finance and banking, legal and compliance and creative and digital marketing.

James Dow, DSW Capital’s founder and chief executive, said of the new division: “DSW Principal Partners provides a key point of difference and will enable us to further facilitate our national and international footprint. Having the calibre of Steve, Claire, Nina, Mike and Richard join as DSW Principal Partners is a testament to the DSW model and the quality of our client base.”

DSW Capital plc, the owner of the Dow Schofield Watts brand was admitted to AIM in 2022. 

Dow Schofield Watts now has over 100 professionals in Aberdeen, Cardiff, the North West, Leeds, Leicester, London, Nottingham and Reading.