8 October 2012 | By Joshua Freedman
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Tim Ross, GC at trendy and fast-growing IT supplier Kelway, says legal life is getting interesting as the company expands abroad
IT supplier Kelway has the feel of a super-hi-tech, anti-establishment operation, which is no surprise for a company founded by a 22-year-old. When you walk into the offices at Fleet Place, a line of what look like massive servers are there to greet you as an example to prospective clients of the services the company offers.
Show and tell
“It’s almost a showroom,” says Tim Ross, Kelway’s general counsel.
Kelway, a relative minnow, is slowly making its mark on the technology world. In 2011 The Sunday Times ranked it the country’s 76th fastest-growing private technology company by sales growth, while Kelway describes itself as the UK’s fastest-growing IT supplier. It claims to be making up ground on the industry’s biggest players and that more than 30 per cent of FTSE100 companies are its clients.
Ross too, has the aura of being somewhat divorced from the Establishment. The open-shirted lawyer admits to being on the young side for a general counsel. He qualified in 2005 at David Wineman Solicitors (now DWFM Beckman), moved to DMH Stallard and then landed up at IT services company Morse.
Ross joined Kelway as general counsel in 2010, with the legal team since swelling to two (excluding contract management staff and legal executive-equivalents) following the hire of a newly qualified Davenport Lyons lawyer.
“I was the first legal hire – we were getting to a size whereby it wasn’t just okay to sign things and expect that everything would be alright,” Ross points out.
Kelway, founded in 1990 by a 22-year-old Phil Doye, had around 450 staff at the time of Ross’s hire, turning over £178m a year. Annual revenues have since grown to just over £350m. Lower mid-market private equity house Core Capital invested £5.2m in the company in 2006, taking a 25 per cent stake.
It has opened an office in Dubai and has a presence in Cape Town, Dublin and Singapore, alongside its 11 UK addresses, targeting the corporate mid-market. Its clients also include 10 to 15 of the top 50 UK law firms.
The expansion led it to rethink its choice of legal adviser last year as the company began to get too large for its legacy lawyers. It called Olswang, Osborne Clarke and Reed Smith – a Kelway client – in for a beauty parade for the main corporate advisory role.
“We went through quite a rigorous selection process when we were looking for new lawyers. We used to use a firm in Swindon called Clark Holt,” Ross notes, referring to the company’s first set of acquisitions. “They did a lot of work for Kelway, but we almost outgrew them. We invited Osborne Clarke and Olswang as real technology specialists, and Reed Smith who have international breadth and quite a good record in technology.” Ross continues to maintain a warm relationship with Clark Holt on legacy matters.
Reed Smith came out winners, thanks to the global spread and its technology capability (Ross highlights digital media partner Gregor Pryor). The client win has led to a string of mandates for the US firm, including most recently on the acquisition earlier this year of Irish company Business & Scientific Services (BSS), a Microsoft large account reseller, which concluded in March. Relationship partner Sam Roberts led on the deal.
There is no doubt more work in store for Reed Smith, with Ross describing Kelway as “acquisitive and aggressive”. Roughly 50 per cent of its growth since he joined has been through M&A. As well as the current task of splitting legacy BSS into two arms – a Northern Ireland and a Republic part – Kelway envisages further expansion. It has just launched its cloud proposition and could, one day, open up further afield. It is all part of the company’s spirit, one emanating from the founder.
“It’s hugely entrepreneurial,” says Ross. “Kelway is a growing company - it encourages an entrepreneurial spirit. I realise that for a GC role I’m relatively young. Phil [Doye] – he’s still very much a presence here on the floor every day. Kelway’s almost like a cult – people buy into ‘the Kelway way’.”
Ross highlights South Africa as a developing hub and notes that the company has not yet instructed outside lawyers in Singapore.
Reed Smith acts for the company in Dubai, where it too has an office, although the firm does not yet have a Singaporean base. But the US firm’s most handy tool could be its capability back home, with Kelway mulling an entrance into America.
“It’s a debate that we have,” Ross reveals, on the question of a Stateside launch. “I’m quite a big proponent of the US, while understanding that it’s a difficult market to break into. It’s the missing piece in our jigsaw.
“Our whole international strategy is based around letting our clients into an office. Dubai was the first international office we opened, purely and simply so we could give the same service to our clients in their offices in the Middle East.”
And the good news for the external lawyers is that a US opening will probably be through another M&A move.
“I don’t think we could break the US without having local knowledge,” Ross confirms. “It’s spoken about, but no decisions have been taken.”
But perhaps the biggest deal of all will come when Doye, who owns approximately 55 per cent of the shares, finally takes his leave
“Who knows how an exit will be done?” Ross. “We are 25 per cent owned by a private equity house. One of the exit options is listing, but it’s probably not the preferred option,” he admits, highlighting a sale to another private equity player or trading to an industry rival as likely possibilities.
When it happens, it will be the end of a remarkable journey for the founder of one of the UK’s most ambitious technology companies.
Title: General counsel
Reporting to: CEO Phil Doye, COO Steve Lamey
Company turnover: £360m
Legal capability: Two
Legal spend: £50,000
Main external law firms: Reed Smith (corporate). Shakespeares (employment), Gardner Leader (litigation), Mason Hayes & Curran (Ireland), Nauta Dutilh (Netherlands)