Cluttons bosses on its new chapter of growth

“This to me is about us turning the page into a new chapter,” says Cluttons chief executive James Gray from the LLP’s new uber-sustainable offices at Yarnwicke in London’s Square Mile. The new chapter of which he talks is the deal he has just completed with Cluttons’ management and investor Treun Capital to take control of the surveying firm. The deal, he says, draws a line under the period that saw the world’s oldest still-practising firm of chartered surveyors nearly lose that title and fail. Cluttons, which was founded in 1765, was bought out of a pre-pack administration in 2017. Turnaround specialist RCapital rescued the business as it faltered under a £42.9m pension deficit that had “become unsupportable in the long term”. That liability was transferred to the Pension Protection Fund and the business underwent a major restructuring that saw its Middle East business, which employed 190 people, sold to Savills and its total headcount reduced from 450 back then to 211 last year. Five years on, Gray (pictured second from left) is ready to stop talking about the pre-pack rescue and restructure. He wants to close the chapter on that part of Cluttons’ long history and start a different story. “This is going to be a very exciting chapter about how we want to invest in the business and how we want to grow it,” he says. Rewriting the rules Talks to end its relationship with RCapital and investigate the management buyout started about a year ago, Gray tells EG. “Over the past few years, we’ve been able to achieve quite a lot, and that’s buoyed us to think we can do more for ourselves and for our people,” he says. “That led us to a conversation about where we wanted to take the business. We wanted to continue to invest. There are things we feel we are good at, that we want to grow. We didn’t want to miss that opportunity so, very quickly, it got to a discussion about a management buyout.” Gray, obviously, won’t say a bad word about the five years of life with RCapital as the firm’s investor – it held around 50% of Cluttons UK LLP and always intended to exit its investment – but is clearly excited about the opportunities a fresh start can deliver. “We’ve had a good relationship with RCapital,” he says. “They’ve been good for us. But we do need to draw a line. This business needs to move on, and it needs to have a different perspective, and I think the MBO provides that different perspective, and a different type of investor provides the challenge we want.” This business needs to move on, and it needs to have a different perspective and I think the MBO provides that different perspective James Gray That different investor is Treun Capital, a London-based private equity firm set up to provide up to £10m plus follow-on capital for buyouts. The firm, led by Alex White and Paul Canning, says it invests to help “high-potential businesses grow value faster and with more certainty”. Gray calls Treun “very different” from RCapital, highlighting how committed it is to long-term growth and supporting senior management. “I think they particularly understand people businesses and professional services firms,” he says. “It’s quite a different dynamic in terms of that part of the industry.” So, with “up to £10m” of potential investment from Treun behind the business, what exactly is the new story Cluttons plans to write for itself? “We seriously want to invest further in the business,” says Gray. “We are so optimistic about the future.” That optimism comes from rebuilding the firm’s revenues – up by around 17% to just shy of £25m in the year ended 31 March 2022 (the most recent figures available at Companies House). It also comes from extending out into the regions – a foothold in Manchester was step one in 2021, followed by a presence in Newcastle more recently – and from seeing big opportunities in the digital connectivity and electrical utility parts of the industry, in which it holds a core specialism. [caption id="attachment_1211167" align="alignnone" width="2000"] Cluttons’ HQ at 119-121 Cannon Street, London EC4[/caption] “The past few years have been pivotal for Cluttons in building a leadership position in the management, sustainability and connectivity-driven activities of professionally managed estates, particularly within the dynamic and ever-growing national energy and digital infrastructure sectors,” says Gray. “As a business, we are definitely seeing an increased spike in work related to infrastructure improvement in the electrical infrastructure, preparing for a zero-carbon economy,” he adds. “It’s going to take a long time, but it gives us a different perspective and we know that if we invest further in those areas, we can only but grow substantially.” John Gravett (pictured far right), newly promoted to managing director as part of the MBO and who has been advising on digital connectivity for decades, reckons that bit of the business could easily double its turnover over the coming years to become a much larger part of the business. Growth too will come in the regions. Manchester and Newcastle currently represent around 10% of the business. Gray and Gravett believe this could get to 20-25% within a few years. And, while both are more than comfortable with Cluttons remaining a mid-sized player, neither see any reason turnover shouldn’t significantly increase. “I could quote numbers,” says Gray, “but we’re not chasing turnover. At the moment we’re a £25m business. We could be a £40m business in three years’ time. That would give you an idea of the gradient we’re looking at, but frankly £40m is a meaningless number. We want to grow profitably and we want to do it sustainably. We want to ensure we are constantly supporting the business through that growth phase.” New characters To help ensure that growth is done profitably and sustainably, Cluttons has taken on two new non-executive directors – former Bidwells managing director Catherine Spitzer (pictured centre) and Alan Froggatt (far left), former chief executive for Europe at CBRE. Froggatt will become non-executive chairman. Gravett says the appointment of two non-executives to the board is a “very significant change” for the business. “They are two very senior, well-recognised people in the industry, and it is quite something for us to have that round the table to support us,” he says. Froggatt, who Gray describes as a “management guru”, brings with him a wealth of experience across decades of practice in the real estate industry, while Spitzer’s tenure at Bidwells – she was managing director from 2017 to 2022 and helped grow revenues to £55m and boost profits by 70% – clearly signals the type of growth Gray and Gravett are eager to bring to Cluttons. “You can only admire the change that one sees with Bidwells,” says Gray. “Bidwells is bigger than us but was also in that medium-size space. They carved out a position for themselves, largely in the Oxford/Cambridge Arc, but during Catherine’s tenure, you could really see how that business changed. And it’s that change, it’s that outlook, that I think is the special piece.” And what about the special piece that Gray and Gravett want to see woven through the next chapter of growth for Cluttons? For both, it’s the Cluttons people, those employees – and clients too – that have supported the business through tough times. “This business has a great brand,” says Gray. “It’s got a great history, and taking it forward in a new chapter with a different outlook, with a refresh, is saying to the business that we are all confident about where we’re going and asking them to continue the journey with us. “But we have to prove that change,” he adds, “because if we’re going to talk about how this is the next chapter, and that we’re going to accelerate, then we actually have to deliver on that.” To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews Main image from Cluttons Office images © Riverside Capital; Portrait of James Gray © Tom Campbell