Capital structure is barrier to growth, say professional services firms at Knowledge Peers debate
30 May 2008
A panel of Knowledge Peers members from professional services firms has identified problems with capital structure as their key barrier to growth. At the round table debate at Grant Thornton's London offices, members agreed that the common use of working capital to fund long term needs could be problematic.
"Firms can pay the price of an inadequate capital base in their future growth," said Knowledge Peers' Bill Brown, who chaired the debate. "It restricts their ability to grow by acquisition or other corporate development. But the debate today shows that even assuming that firms were able to change their capital structure to access external funds, most are not ready to do so. For example, the benefit of partnership structures is they make it easier to retain key people - changing that could have important cultural implications."
Members also agreed that there was a general need to improve working capital management. The other business challenges they identified ranged from IT implementation (which was widely seen as a negative, costly exercise) to establishing best practice corporate governance, responding to new accounting standards, and worries over the potential commoditisation of legal services.
"This debate feeds directly into our research programme for professional services firms," said Brown. "Over the coming months we will be interviewing executives and advisors, to see what solutions they have found to these challenges. That way our members can tap into each others' experience more effectively."
The panel debate was hosted by Grant Thornton partner Peter Gamson, and attended by financial directors from Clarke Willmott, Wedlake Bell, Denton Wilde Sapte, Davis Langdon and Bishop & Sewell.
Knowledge Peers is a membership organisation for people who run growth businesses in the UK. We enable our members to tackle pressing business challenges by learning directly from the experiences of their peers. Our comprehensive research programme offers concise, practical guidance via video interviews and interactions with experienced executives and specialist advisors.
For more information, please contact the team at info@knowledgepeers.com or +44 (0)207 831 0076.
