The genuine regret with which numerous market commentators and former partners talk of Ince’s downfall arguably bears testament to the firm’s historic repute. Many remember the controversial rescue deal which saw listed firm Gordon Dadds snap up Ince & Co in 2019 as part of a pre-pack administration. As one rival shipping partner recalls: ‘When the news broke, there were quite a few people on my floor in the shipping market and they were upset about what they saw as the collapse of an institution.’
Neither Ince nor the market were under any illusions. This was very much a rescue deal, not the culmination of a longstanding strategy. A few months after the deal, a scathing March 2019 administrator report from Quantuma found that the Ince business would have collapsed just weeks later had the deal not gone through. It noted that the equity partners had ‘no appetite’ to step in and raise £8.5m in additional capital to save the firm. Responding to the report at the time, Ince’s then managing partner in Germany, Jan Hungar, conceded: ‘This demonstrates what we said at the time of the acquisition, that the deal with Gordon Dadds was essential to ensure that Ince continued to operate and enable us to grow.’
Notwithstanding the inherent high-risk nature of the buyout (Gordon Dadds’ business model rests on acquiring distressed businesses), the outcome has been far from ideal. This year alone, Ince Gordon Dadds has been a near permanent fixture in the headlines – and often for the wrong reasons. As one City managing partner grimly notes: ‘Unfortunately, you get remembered for your last headline. You don’t want people to think you have a culture problem.’
The year started slowly for Ince after the £10m buyout of mid-cap investment banking company (and its own corporate adviser) Arden Partners was stalled by regulatory constraints, with the process dragged out for months from January to April.
Then came a downbeat set of financial results in May 2022, albeit arguably due to circumstances outside the firm’s control. A significant cyber attack in March, which was later estimated to have cost the business £5m, was cited as a major factor in its revenue slipping 3% from £100.2m to £97m.
Ince also partly attributed the downturn to Russia’s invasion of Ukraine, which it claimed affected global shipping, ‘a key market for us’. Further, Covid was highlighted as a major factor, ‘impacting the UK market from the end of November 2021’, as well as the firm’s offices in China.
The year has also featured an unedifying series of gaffes. In May, Ince attracted unwanted attention after a group of its lawyers was accused of acting inappropriately in a Cardiff eatery. Cora restaurant owner Lee Skeet alleged in an email that the group had ‘talked down to, disrespected, and touched unwantedly’ a 22-year-old waitress named Lily.
Then over the summer, the firm owned up to a pensions payment blunder which saw Ince pay pension contributions into the wrong account, for which the cyber attack was allegedly to blame.
Such was the damage that, in July, Ince stated it needed to raise £8m to avoid ‘financial difficulties’. The firm also parted ways with chief executive Adrian Biles, previously the managing partner of Gordon Dadds, who guided the firm through its float before acquiring Ince. Biles was replaced by Donald Brown, formerly chief executive of acquired business, Arden.
In August the firm managed to raise £9.5m through the sale of shares, and in September Ince announced it was removing a £2.9m payment from its balance sheet via the sale of one of its businesses, tax consultancy CW Energy.
While these prudent financial measures may have steadied the ship, they were overshadowed by the news in September that Biles was being ousted altogether. An ominously-worded RNS statement read that Biles had ‘been removed as a director of the company with immediate effect, as a result of circumstances which may give rise to a conflict of interest between Adrian Biles and the company’.
The firm has not expanded on the opaque statement, but market commentators have their theories. One ex-partner describes Biles as a ‘difficult figure’ guilty of ‘leadership and strategic failures’, ultimately undermining what was a popular decision to float. The former partner elaborates: ‘When a problem arises you can either take a constructive approach or you can be difficult, and he went for the latter.’ A rival shipping partner simply states: ‘I don’t think Biles was the best thing for them.’
In September, Ince announced it had settled claims with both Adrian Biles and former finance head John Biles. As per the settlement, all parties waived their claims against one another, and the duo paid £670,000 to the firm, while Ince paid £690,000 to both ‘relating to claims for loss of office, rent and other expenses’. It was announced that a further £15,000 would be paid to both ‘for loss of office and their interests in shares in the company’.
‘The strategy was a good one but there were problems of execution. Once that happens, I’m afraid in any corporate it will get to a position where you have to have a change of management.’
John Llewellyn-Lloyd, Arden Partners
Hardly surprising then that the firm has endured cultural reversals during this challenging year. One rival partner paints a picture of fiefdoms: ‘Ince has some big personalities who bring in a lot of profit. As such, I hear the firm is pretty lax in terms of oversight. In any case it’s not a happy ship.’
Perhaps inevitably, these tensions have amounted to departures – nine partners have left the firm since March. Now, market commentators question the calibre of those remaining. One partner at a rival shipping firm notes: ‘Some people were tied down after the listing for a period of time but I don’t think the good ones stayed long after. There’s not much quality left. They probably promised a lot in terms of associate pay, but let’s just say we see a lot of CVs.’
Despite the gloom, there is optimism to be found. Some have praised the firm for what can be viewed as a necessary and brave leap into the public markets, a desperate attempt to save jobs and preserve the Ince brand. One managing partner is keen to remind detractors that listing is not just a flight of fancy: ‘I can understand why people would describe it as “the death of an institution” but you have to give the firm credit for breaking the norm. They clearly thought [the Gordon Dadds deal] would give them a way of breaking that perception. You have to have a good strategy to sell to investors, going through the process almost validates itself.’
And many agree that, on paper at least, there was a convincing pitch to investors. John Llewellyn-Lloyd, joint head of corporate finance at float adviser Arden Partners, recalls the Ince pitch as ‘a cross-selling strategy’. He adds: ‘They were very much in the middle of the market seeking to grow and develop, and they were going to use the capital to do that.’
But ultimately, Llewellyn-Lloyd concurs with the prevailing sentiment that good strategy combined with poor leadership only gets you so far: ‘’The key point was with the benefit of hindsight, the strategy was a good one, but there were problems of execution. And then, once that happens, I’m afraid in any corporate it will get to a position where you have to have a change of management.’
As one former Ince partner concludes: ‘The deal could have worked, but Covid came along and then there were the leadership issues. It’s difficult to point to one specific factor, but if you asked me what I would have done differently, it would require an entire book to explain.’
Ince did not respond to requests for comment. LB
tom.baker@legalease.co.uk
Return to Legal Business 100 contents
