Advisory firm Shaw Tax, which has its main office in Edgbaston and lists Premier League footballers among its clients, has been acquired by Begbies Traynor Group, the quoted specialist professional services organisation, for an undisclosed sum.
The deal, announced yesterday on the same day that AIM-listed Begbies Traynor announced its interim results for the six months ended October 31, was described by its executive chairman Ric Traynor as considereably extending the group's penetration of the tax consultancy market and broadening its service offering.
With the acquisition of Shaw Tax, staff numbers at Begbies Traynor now total about 500.
Shaw Tax, the largest independent firm of dedicated chartered tax advisors in the UK with 48 employees, also has offices in London and Cyprus and it will be integrated with Begbies Traynor's existing tax consultancy in Manchester.
Mr Traynor said: "We look forward to growing the business as part of the group and to driving cross referral opportunities from our professional contact base."
An acquisition in May last year of Stellar Financial Services - since renamed BTG Financial Partners - and now the Shaw Tax deal will give the group fee income of £5 million annually from tax consultancy services.
Shaw Tax was founded in 1992 by Andrew Shaw and has developed significantly over recent years through a combination of organic growth and acquisition.
Its team specialises in the provision of corporate and personal taxation services including consultancy, compliance, wealth management and trustee services.
It has an extensive referral base of general practice accountants and lawyers who use the firm to help meet client needs.
Shareholders in Shaw Tax consist of its chief executive Mr Shaw together with a group of senior management and many of Shaw's staff. Mr Shaw qualified as an accountant with Price Waterhouse and after a spell with Ernst &Young started up Shaw's with some colleagues who remain with the firm today.
Shaw's has an extensive client base made up of high net worth individuals and their families, UK corporates and international companies. Clients include a number of prominent sports people.
Mr Shaw said: "This merger into Begbies Traynor will enable our business to benefit from being part of a bigger organisation. It will give us access to new clients, give our existing clients a wider service offering, as well as provide the operational support that can be obtained from a quoted company. In addition it will offer our staff more opportunities and a greater breadth of experience."
Shaws will become an integral part of developing the group's tax practice of which Mr Shaw will become national tax managing partner. Sacha Gregegoriou, national marketing manager for Begbies Traynor, said Shaw Tax would give support to the extensive network of general practice accountants.
Begbies Traynor's interim report said revenues were up to £21.9 million from £21.5 million in the same period last year in spite of a challenging market.
Profit before tax and amortisation slipped to £2.1 million (£3.7 million) reflecting a fall in the business insolvencies market and significant investment. Adjusted earnings per share fell to 1.7p (3.2p).
However, there has been a recent uplift in insolvency activity. The interim dividend is unchanged at 1p per share.
Mr Traynor said the group was trading in line with expectations.
"If the current increase in business insolvencies continues, we expect to significantly improve profitability over the medium term, justifying our decision not to cut back resources through the quiet period of last year. The group will also reap the benefits of our continued investment in acquisitions in this area," he said.
Birmingham firms including corporate finance boutique Jasper Corporate Finance and lawyers HBJ Gateley Wareing advised the shareholders of Shaw's on the deal.
Begbies Traynor shares were up 8.75p to 112.5p.