DSW raises £5m in IPO to grow license fee modelby
Model aims to attract senior professionals who want to launch their own businesses.
DSW Capital, the owner of mid-market accountancy brand Dow Schofield Watts, is to float on the stock market, raising £5m and giving it a market capitalisation of around £21m.
The Warrington-headquartered company will be admitted to the Alternative Investment Market (AIM) on 16 December and the flotation gives it a market capitalisation of £21.4m, based on a share price of 100p.
Its license fee model aims to attract experienced, senior professionals, predominantly with a Big Four accounting firm background, who want to launch their own businesses.
IPO net proceeds of around £3.8m will be used to help to scale the business through organic growth, geographical expansion, additional service lines and to target ‘break outs’ – existing teams in larger firms, with £800,000 being used to pay down the group's outstanding bank debt.
DSW Capital currently has 19 licensee businesses, with 82 fee earners across offices in Warrington, Manchester, Leeds, London, Reading and Aberdeen.
It received an average licence fee of 14.7% of licensee revenues and generated operating profit of £1.7m and operating cash flow of £800,000, for the year ended 31 March 2021.
Dow Schofield Watts was set up as a corporate finance boutique in 2002 by James Dow, Jonathan Schofield and Mark Watts, who had previously worked at KPMG's corporate finance practice in the North West.
As the Dow Schofield Watts name established, the management team identified that the Big Four accounting firms have many individuals who are either frustrated at the limited openings to make partner or, having developed a network of contacts within a specialist niche, want to run their own businesses.
James Dow, chief executive and co-founder of the group, will own 14.5%, with all directors holding a combined 24.5%.
He said: “The successful fundraise will support our strategy to capitalise on the substantial growth opportunities presented in the changing UK accounting market and our vision to become the most sought-after destination for ambitious, entrepreneurial professionals to start and develop their own businesses.
"We believe our new quoted company status will help raise the profile of DSW further, enabling us to accelerate the growth of our network.”