He's a happy bunny, is Gareth Quarry. And why not? He is, after all, the richest man in the law. Last week, he sold the QD recruitment businesses to global recruitment company TMP Worldwide. According to a copy of the offer document seen by The Lawyer, TMP paid some £45.4m for QD, having valued the 900,000-odd shares in the company at £50.47 each. Quarry himself controls 70 per cent of the equity, which has netted him a total of £31.8m.
It is a neat irony that the man who practised for a mere two years at Richards Butler before leaving to become a recruitment agent is now worth more – an awful lot more – than all those City partners he has placed over the past 10 years. And it is another neat irony that Quarry, whose company shaped a recruitment market that has created a growing number of millionaires, has become a multi-millionaire on the back of it. Not only that, but Quarry has capital assets – half of his wealth is in further TMP shares. Taken with his base salary of £212,000 – plus a £150,000 bonus – Quarry can pay off the mortgage on his seven-storey Clapham Common house, which includes a swimming pool and a ballroom, several times over.
So you can forgive him for grinning. “It's an incredibly potent cocktail,” he says, launching into a practised exposition of QD's future in what he terms the “human capital” business. (Human capital, for those readers unversed in current jargon, is what used to be lumped under the less sexy title of “personnel” and includes training, recruiting, outsourcing and mentoring programmes.) According to Quarry, TMP gives QD global reach and the all-important internet offering, monster.com, the largest recruitment website in the US. “They're the world leader in the 'clicks' [internet] business,” he says.
It is not the first time TMP – which also owns Yellow Pages in the US and myriad recruitment (sorry, human capital) businesses – has entered the UK legal market. Earlier this year, it bought HW Daniels Bates, HW In-House Legal and Reynell Legal – much smaller operations than QD, but which clearly gave TMP a taste for the legal market.
One might expect a certain amount of trepidation on the HW side, given QD's much greater size. One HW consultant says: “I was gobsmacked when I heard. I'm sure there'll be some fallout, but there's lots of excitement here.”
The TMP deal came like a bolt from the blue for everyone at QD, but there is no doubt about the unanimously positive reaction. QD Legal associate director Tim Marshall, currently leading the QD charge in Leeds, says: “When I joined QD I was told it would be a global human capital organisation and now it is. So Gareth has delivered.”
Another QD consultant says hopefully: “Maybe we'll get new offices now,” referring to the cramped and rather shabby surroundings in Bedford Row – Quarry acknowledges that new premises are a priority.
All this joy is a far cry from last summer, when QD Legal was hit by the departures of star recruiters Stephen Rodney and Adrian Fox to set up their own head-hunting outfit, Fox Rodney. “They must be spitting,” says a QD insider. Fox and Rodney declined to be interviewed but they both get something out of the deal. Both retain QD shares of 1 per cent, which means they will make over £400,000 each. “They helped build the business, it's only fair,” says Quarry.
Other major winners within QD are long-term employees such as Graham Manley in Leeds, who nets £1.5m, and head of the commerce and industry section June Mesrié, who is understood to net some £400,000.
Some of the enthusiasm within QD for the deal may have something to do with the money to be doled out to employees. No fewer than 200,000 shares – some 24 per cent of the full equity, approximately £10m – have been reserved for employees, though no one is yet sure of the exact distribution.
Equity distribution is a lesson Quarry has learned well. It was one of the reasons that Joe Macrae and Jonathan Brenner left Quarry and Alastair Dougall back in 1991 to set up ZMB, which soon became QD's only serious rival within the market.
Quarry says: “The best thing that could have happened to our business is Joe [Macrae] going on sabbatical for a few years. Actually, he was wonderfully nice and polite and called me to congratulate me as he was going off to the airport, which was typically good of him.”
It has been an open secret for years that Quarry was hoping to float the business and graduate to the big league. But in the past few years, the word “float” has been replaced internally by the vaguer phrase “crystallising event”. Still, most QD consultants always assumed that flotation was still the preferred option, particularly since the finance director, Jerry Harris, had been hired from recruiters PSD after he had taken that company to flotation.
“In the past four years, the market hasn't been interested in small cap floats,” says Quarry.
Harris adds: “We looked at all the recruitment businesses that existed 10 years ago and none of them exist now. They've all been taken over. If you look at the classic permanent recruitment sector they don't survive long in the market – because they can't get big enough.”
The TMP deal certainly delivers size – QD is now the undisputed number one in terms of numbers and global reach, but the real significance of the deal is the internet side.
QD associate director Chris Cayley, head of the Birmingham office, says: “The face of recruitment is changing dramatically, and the internet has got a key part to play in that.”
Other recruitment consultancies have ventured down this road already. ZMB launched Zureka last month, while a whole host of new sites such as totallylegal.com have also been established in the past six months. “Zureka's a start,” acknowledges Quarry. “But it's going to be difficult to [compete] against [us] – the $100m (£65.93m) marketing budget of monster is an enormously tall order.”
Yet there is a question as to whether a volume-driven internet side sits well with the more consultative approach adopted by QD. After all, QD has always sold itself as concentrating on partner and senior associate moves. Quarry and other consultants are strangely reticent about exactly how a commoditised, volume business will integrate practically with what Quarry calls the “high-touch” end, but there is no doubting their zeal.
QD managing director William Cock says: “We'll be more effective at sourcing people.” Cayley adds: “I think it can work together. It's about the process and adding value as much as [the internet being] a means of sourcing. At the end of the day, you'll still need people who know how to recruit. It's going to be about good assessment, good interviewing and good client relationships.”
Quarry's own client relationships are strong. There is no doubt that QD has a number of up-and-coming directors and associate directors such as William Cock, Greg Abrahams, Seamus Hoar, Chris Cayley, Sarah David and Tim Marshall, but key to the continued growth of QD is Quarry's own presence. One prominent partner who has been placed by Quarry and uses him for high-level hires says: “He's good at trying to get us to use his more junior people, but when it comes down to it, you just want him.” Another says: “He closes a deal like no one else.”
Despite having trousered so much cash, it is clear that Quarry's personal motivation is a touch more complex than just the bottom line (though there is no doubt that the bottom line is fantastically important to him). “If it was me I'd be lying on a beach by now,” jokes Cock on Quarry's windfall.
But Quarry himself shows no sign of leaving just yet. “TMP is a collection of entrepreneurs who reversed their businesses into TMP and stuck with it,” he says.
The only time Quarry falters is when he is asked what he is going to do with his cash pile of £15m. All of a sudden, the slick facade crumbles. “What am I going to do with it?” he repeats, in bemusement. “I really don't know. I really don't know at all.”