黑洞社区

When Chris Littlemore, chief executive of Archial, told 黑洞社区 in March he intended to grow the architect by merger or acquisition, being rescued from administration by a Canadian consultant was not what he had in mind. Nevertheless, the 14-year story of the practice concluded last week with its sale to 600-strong architect and engineer Ingenium, after six days in the hands of administrators.

With any other firm, this might have seemed an extraordinary chain of events. But for Archial, formerly SMC Group, this kind of drama is almost to be expected. The story of the practice鈥檚 rise is well-known, from its birth in 1997, through its quick-fire acquisition of a string of medium-sized practices, its flotation in 2005 and purchase of Will Alsop鈥檚 practice in 2006, to its rebranding and restructuring as Archial following founder Stuart McColl鈥檚 sensational departure. Despite Littlemore鈥檚 best efforts since then, the tale ends sadly, with an outstanding tax bill and administration.

With such a dizzying rise and sudden fall the story could be seen as an Icarus-like morality tale of the perils of overweening ambition. Except that, with its purchase by Ingenium, it might just have avoided plunging into the sea. As of today it is still one of the country鈥檚 10 biggest architects, and has received a big financial injection to put it back on a stable course. The question is: how did this fall from such a lofty position happen and where does Archial go from here?

I meet Littlemore, who picked up the pieces after McColl鈥檚 departure in 2007, with his new boss, Ingenium chief executive Victor Smith, the morning after the deal has been concluded. Smith studies Littlemore briefly. 鈥淵ou certainly seem a little more relaxed than you did yesterday,鈥� he smiles. 鈥淚鈥檓 just delighted that it was a very short period of time that the administrators were in control,鈥� responds an obviously relieved Littlemore.

He may be. But the first thing I want to know is how it came to this. Surely you have to take your eye some way off the ball to allow a 拢34m-turnover business to fail - and all due to an unpaid tax bill? Not so, says Littlemore. The collapse, he explains, was due to the drip-drip effect of lots of contracts being pulled or deferred. 鈥淎 number of schools, academy projects, a number of police and custodial projects were affected,鈥� he says. 鈥淓ach individual project doesn鈥檛 have a particularly material effect, but during the course of a few weeks you realise the effect this is having on your revenue. So you have to react to it, and that鈥檚 what we did.鈥�

While he won鈥檛 name individual projects, it鈥檚 clear that government spending cuts, and the BSF programme in particular, had a big impact. 鈥淚 fully understand the government鈥檚 reasoning behind it, and why they鈥檝e got to do that - everyone understands that,鈥� he says. 鈥淎ltogether they鈥檝e certainly had an impact.鈥�

Littlemore looks offended when I ask if the departure of Stirling Prize-winning architect Will Alsop, in August 2009, may have contributed to the firm鈥檚 woes. No, he says - the Alsop Sparch practice, part of the Archial Group, is going from strength to strength. Okay, so was it an error, in retrospect, to become publicly listed? It was a decision which has added to Archial鈥檚 nagging unpopularity with fellow architects, who have been suspicious of its corporate approach. Littlemore is evasive, but Smith says: 鈥淭here are obvious complications when one attempts to convert professional services businesses into corporate structures. There鈥檚 a layer of expense and governance required as a public company that restricts your agility and flexibility to operate as a professional practice.鈥�

Indeed, Smith reveals it was Archial鈥檚 status as a listed company that prevented a merger when they first started talking 18 months ago. Smith spent three days in June 2009 in the UK discussing a deal. 鈥淲e felt very good about the proposition but I think the debt structure at the time just didn鈥檛 make it feasible,鈥� he says. The collapse changed that. 鈥淐hris contacted me early last week and said: 鈥橶ould you be interested in putting in an offer?鈥� I said: 鈥橝bsolutely.鈥欌��

After that the deal was done 鈥渧ery very fast鈥�, says Smith, who travelled over from Toronto and stayed until the deal was done. He says Ingenium has long harboured a desire to set up a regional office serving Europe in the UK, and from their previous conversations he knew he liked Archial鈥檚 approach to design, its diversity of clients, and its international exposure.

鈥淲e鈥檙e culturally very similar, we鈥檝e got a similar design philosophy, certainly a dedication to serving our clients in a professional way. There was a lot of attraction there.鈥�

Most importantly for Archial鈥檚 staff, Ingenium has agreed to pay everyone up in full, and keep everyone on. The speed of the deal means it was, according to Littlemore, possible to keep all but a handful of staff (鈥淟ess than the fingers of one hand鈥�) from leaving, although defections do include some directors (鈥淚t would be completely inappropriate to say who.鈥�).

Meanwhile, Archial鈥檚 debt will be left with the administrators. Littlemore says its clients have been 鈥渆xtremely patient鈥� and 鈥渧ery loyal鈥� although he doesn鈥檛 directly answer whether any have walked away.

Possibly the best news is that it appears Littlemore will get a free hand to run the business, albeit with Toronto signing off strategy. While Smith talks about 鈥渄eveloping synergies鈥�, it鈥檚 clear Ingenium is not about to sweep in and turn the business upside down. 鈥淚鈥檝e got a lot of confidence in Chris and the current administration,鈥� Smith says. 鈥淲e certainly see them running the business autonomously, but according to plans and strategies and a reporting process so that we鈥檙e actively engaged in the business.鈥�

Perversely, then, Littlemore may have got what he said he wanted back in March - to be in a bigger practice, with more global reach - despite his firm鈥檚 collapse.