KPMG snaps up financial advisory firm Makinson Cowell

KPMG has snapped up Makinson Cowell, the financial advisory firm with clients including two-fifths of the FTSE-100, in a deal worth up to £15 million that sees the accountant add an equity arm to its debt advice practice.

KPMG would pay around £5 million upfront and potentially another £10 million via a deferred consideration for the business established in 1989 to give companies independent advice on how they were viewed by shareholders.

Makinson Cowell, a retained adviser to around 25 blue-chips, including Diageo, BP, Prudential and Burberry, works with around 15 other clients on specific projects.

The deal holds special significance for Simon Collins, KPMG's UK chairman, as it marks a successful conclusion to his endeavours aimed at adding an equity advisory business to the firm's debt advice practice he set up when he joined the firm in 1998.

According to Makinson Cowell, the deal would  enable KPMG to provide a full capital markets advice service across both debt and equity sides.

He added the deal had been structured with a deferred consideration so that key directors of the company  including founding partners Bob Cowell and Marian MacBryde and partner Howard Coates who were major shareholder in Makinson Cowell – had ''a real incentive to build the business''.

According to Cowell, the deal would allow the 70-strong firm to expand its geographical footprint and service offering.

Analysts say the so-called "shareholder spring" last year saw institutional investors take on company board members over executive pay, corporate governance and capital spending, with some investor revolts toppling CEOs.

Many companies are therefore looking at ways to get a better idea of how they were perceived by their stakeholders to help ease the tensions.

Makinson Cowell conducts interviews with debt and equity holders of companies and reports back their opinions to help company managements make decisions and improve performance.

The company with offices in London, New York and Paris is mainly focused on Europe-based companies with research and advice that is designed to be independent from creditors.

According to Simon Collins, UK chairman and senior partner at KPMG, there was such a big debate at the moment about the connectivity between institutional investors and boardrooms and auditors, so anything that gave them insight into what drove institutional investors was going to make it a better servant to the capital markets.

The business would carry a joint brand - KPMG Makinson Cowell with Makinson Cowell's Bob Cowell and Howard Coates and KPMG's Neill Thomas running the show.