Neal Allen: aiming for number one (pic: Terry Murden)
Neal Allen tells TERRY MURDEN how his firm is keeping the deals flowing in a more challenging market
The climb up three flights of Georgian stairs to Neal Allen’s office is a stamina-testing reminder that historical and architectural grandeur is ever present in a city increasingly recognised as being at the cutting edge of technology. This is Charlotte Square, arguably the most famous of Edinburgh’s New Town addresses, and one that Allen and his partners in the independent deals advisory firm HNH cherish for the extra touch of kudos it provides.
HNH has been expanding its headcount and is likely to add one or two more. “We could use some extra space,” says Allen, “but this has been a good location for us and we have no immediate plans to move.”
The business, which he runs with fellow partners Harry Linklater and Bruce Walker, was part of an expansion plan for a Belfast-based company that was looking to move into Scotland just as they were seeking a partner to help them set up a boutique operation.
A recommendation by Paddy Graham, head of BGF Scotland and Ireland, brought them together in 2019 and this year it is likely that the Scottish operation, for the first time, will be the largest part of the business in terms of fee income.
Growth has been hard-earned in a market that everyone knows is challenging and will remain so, even as inflation and the cost of borrowing come down as expected.
“The environment, particularly the cost of borrowing, has undoubtedly made things harder and we were flat out until October and then had a relatively quiet November and December,” says Allen. “it’s about rolling our sleeves up and getting on with it.”
By the year-end the seven-strong Edinburgh team will have enjoyed a record year, completing 10 deals, ranging from £2 million to £60m in a range of sectors from food and drink to business services. They have included deals with logistics firm Bullet Express, IFA company Carbon Financial and Sidey Solutions, a manufacturer and supplier of windows and doors.
The main focus, though, is tech and tech-enabled services, and the big growth areas now are in cybersecurity., software as a service, and AI.
“The market is not straightforward,” says Allen. “Clearly there are still many deals out there, but there is a not unreasonable caution among investors about putting their capital to work.
“Everyone is looking for certainty and in the current climate that means deals are taking a little longer with buyers and sellers seeking to settle on value.”
Allen is a Yorkshireman who had no designs on a career in finance when he chose to study English at Leeds University. He went to work for PwC in the Midlands and then returned to Leeds with Bank of Scotland. While there he was enticed north to Edinburgh to join its integrated finance team.
After the financial crash that saw the bank, which had become HBOS, fold into Lloyds, he joined KPMG as an adviser. His desire to do his own thing saw him team up with Linklater and Walker. The latter has developed a strong whisky focused role and a high profile addition to the team is in the pipeline.
Allen is unequivocal in his ambitions for the firm. “We want to be the number one deal house in Scotland,” he declares.
There are already about a dozen potential deals at various stages which should mean that even if the economy continues to be sluggish it should be a productive year for HNH.
He says Scotland is producing a lot of good companies, though they tend to be at the smaller end of the range that investors typically consider. However, he insists that small can indeed be beautiful and that it enables a close and mutually beneficial working relationship between adviser and client.
The philosophy is built around understanding the client’s needs and, rather than being driven by targets, seeking out what is the best way forward.
“It is critical to know everything about the client, be prepared for any questions from buyers and investors, to know the direction of travel and if there are any negative factors that need to be addressed,” he says.
“It is in our interests, as well as those of the client, that the advice is appropriate and we get the right deal.
“If it means advising them not to go ahead, then so be it. We won’t push clients into a deal if we don’t think it is right.”
Birthplace: Middlesbrough, moved to Scarborough, aged 9
Education: Leeds University (English), qualified accountant [at PwC].
Career highlights: PwC (East Midlands), Bank of Scotland (Leeds and Edinburgh), Caird Capital (Edinburgh, London, north of England), KPMG (Edinburgh), HNH (Edinburgh).
What are your main interests out of work?
Hill walking, golf, occasional visit to Tynecastle and Murrayfield.
What makes you frustrated?
People not maximising their potential or opportunities.
What did you intend to be when you were younger?
I had no particular career in mind, but I knew an English degree didn’t qualify me do anything specific and that I needed to get a profession.
I worked for a few months in a marketing firm, but it went bust. Finance seemed to be at the centre of everything so it was a natural choice.
Did any individual inspire you in your career?
My boss at Bank of Scotland integrated finance, the late David Cowie, encouraged me and suggested I move to Edinburgh.
Name three people, living, dead or fictional, that you would invite to a fantasy dinner party
Paul McCartney – I am fascinated by the process of composition and I would just love to know where all of the tunes come from!
Oprah Winfrey – someone who has become fantastically successful in what has been a hostile environment (and she was really good in The Color Purple).
Leonardo da Vinci – it is amazing how someone could be so skilled in so many different fields