The firm remaking Manchester

The search is on for Britain's fastest-growing private companies. Roger Trapp reports on one leading candidate
THE EARLY 1990s was not an ideal time to start out in the construction business. But after what chairman Ian Macpherson admits was a "fairly quiet" beginning, Mace has gone from strength to strength.

Indeed its expansion has been so impressive that it is among Britain's fastest-growing private companies, as identified by the Independent 100 listing compiled by the Independent on Sunday in association with accountants Price Waterhouse.

The company, which came 14th in the seventh annual league table, started in 1990 with just Mr Macpherson and eight colleagues. Eight years later, from its base in north London, it has become an important player in project management and consultancy, not just in Britain but in mainland Europe, the Middle East and the Far East.

Mr Macpherson says he is not too worried by recent developments in a part of the world that only a few months ago was seen as an ideal place to invest. "Luckily, we don't have a lot going on in the Far East at the moment," he says, adding that the company's work is largely for British rather than locally owned organisations.

Nearer to home the company is involved in several high-profile projects, including the new British Airways corporate headquarters near Heathrow airport, the reconstruction of Manchester city centre in the wake of the IRA bomb and the Millennium Point project in Birmingham. It has also just completed the new headquarters building for the pharmaceuticals company Glaxo Wellcome in Middlesex.

The first major commission was the BA project and things have just grown from there, says Mr Macpherson, pointing out that subsequent appointments have reinforced a "top-drawer" reputation. "We seemed to tap into client demand."

He attributes much of this success to the company's ability to develop some of the techniques he and others introduced in the late 1980s. Prior to starting up Mace, Mr Macpherson was a director of the building company Bovis and closely involved in the Broadgate development on the edge of the City of London.

As he says, he "learned a few tricks" from Stuart Lipton, then chief executive of Stanhope Properties, the group largely behind Broadgate. That scheme is acknowledged to have revolutionised the construction industry by showing that buildings could be completed as fast as those in the US and at lower cost.

He also acknowledges that the contacts he established during the Broadgate project have been useful in developing Mace.

However, Mr Macpherson attaches particular importance to the style of management. "It's a modern company with a very flat structure," he says. Moreover, although three directors now own all of Mace, they are about to sell 10 per cent of the stock to staff as the first stage in giving the employees a majority stake.

Mr Macpherson agrees that the construction industry is in much better shape now than when Mace started, but he insists that while it is "definitely picking up" it is not in a boom. Nevertheless, he has high hopes for a return to the Independent 100 listing after its debut appearance last year, when average annual sales growth over the previous five years had taken it to a turnover of just under pounds 16.5m. Since then sales have more than doubled to pounds 35m, while the number of people employed has risen from 193 to about 460 and profits have passed pounds 1m.

It is the sort of performance that has been identified many times over the past seven years of the listing. Among the companies that have appeared in it and since floated on the stock market are JD Wetherspoon, Stagecoach, Groupe Chez Gerard, Majestic Wine and European Telecom, the mobile phone distributor that topped the listing last year. Others - such as Value Added Medical Products, which topped the first table, and Merlin, the company behind the craze for football stickers and another business to have topped the listing - have been bought out. Still others - notably Loot, the classified advertisements newspaper publisher - have remained independent largely because their performance has been so strong that they do not need outside funds to finance expansion.

Significantly, an index of former Independent 100 companies that are now quoted on the Stock Exchange shows that these businesses have overall consistently outperformed the FT-SE 100 over the past five years.

The Independent 100 listing is based on annual compound sales growth over the five years to 30 June 1997. In addition, through the Middle Market 50 listing, there is recognition for the outstanding achievements of companies that continue to expand quickly even though they have reached a certain size. To qualify for this, companies must have sales of at least pounds 5m in the financial year to 30 June 1993 and more than 150 employees in the period to 30 June 1997.

To give some idea of the sort of performance that will qualify for inclusion, each of the top three companies in last year's Independent 100 achieved average annual sales growth over the five years of more than 100 per cent, while even for the 100th company the figure was 33.5 per cent. In the middle market, the top-placed company - another mobile phone business called Caudwell Subsidiary Holdings - achieved average annual sales growth of more than 75 per cent, while for the 50th company the figure was just over 25 per cent.

Pointing out that over the past seven years the listings had "become established as a premier forum of UK fast-growth emerging companies," Nigel Crockford, a PW corporate finance partner, said: "The Independent 100 and Middle Market 50 listings identify the star performers in the UK private company sector - an area so vital for the creation of wealth, employment and economic growth."

If you think your firm stands comparison with such businesses, contact Julie Harwood at PW for an application form. The address for forms and completed entries is Independent 100, Price Waterhouse, Southwark Towers, 32 London Bridge Street, London SE1 9SY. Entries must be returned by Friday 27 February.