Year zero for PEP at merged firm

Expanded equity at HowardKennedyFsi gives false reading on PEP-meter 

On first sight of its post-merger figures, Howard Kennedy’s tie-up with Finers Stephens Innocent (FSI) looks to have had a disastrous impact on average PEP. The reality, however, is that the firm has broadened its equity in a bold move it hopes will guarantee its future.

The merged firm launched on 1 February and has only released combined figures for the 2012/13 year-end. Turnover for the combi-firm was £40.6m, compared with £27.8m at Howard Kennedy and £17.6m at FSI a year ago.

PEP, however, has fallen by 52.4 per cent, from £269,000 at legacy Howard Kennedy to £128,000. FSI did not publish its PEP figure a year ago. The bottom of equity is now just £60,000 compared with £194,000 at Howard Kennedy a year ago, while the top end has moved up by 10 per cent, to £375,000 from £341,00

Before the firms merged, both kept their equity tight, which caused Howard Kennedy some problems. When family head Ursula Danagher quit to join Memery Crystal in 2010 she did so shouting about lack of partner involvement.

The arrival of chief executive Mark Dembovsky has been transformative. As well as leading the merger talks Dembovsky persuaded longstanding partners to open up the equity. Combined, the pair had just 22 equity partners, but after a concerted effort to persuade salaried partners to join up this has increased to 70.4.

Of course, it has not been easy. Insiders suggest not all those offered equity signed up.

Many may shy away from declaring PEP after such a drop, but for HowardKennedyFsi it’s just a base from which to grow.