TIDMBEG
RNS Number : 9340L
Begbies Traynor Group PLC
18 January 2021
18 January 2021
Begbies Traynor Group plc
Acquisition
"A significant expansion of the group's scale and
specialisms
in business recovery and financial advisory"
Begbies Traynor Group plc (the "group"), the business recovery,
financial advisory and property services consultancy, today
announces that it has completed the acquisition of CVR Global LLP
("CVR").
Highlights of the acquisition
-- Maximum potential consideration of GBP20.8m on a cash free
and debt free basis, financed from the group's existing bank
facilities
-- Represents the largest insolvency acquisition the group has undertaken to date
-- Delivers a significant expansion of the group's scale in London and the South of England
-- Enhances the group's existing specialisms in business recovery and financial advisory
-- Adds first overseas offices, enhancing the offering provided by BTG Global Advisory
-- In line with strategy to target value-accretive acquisitions
and is expected to be immediately earnings enhancing
About CVR
CVR is a leading independent firm of insolvency practitioners,
forensic accountants and experts in other related complementary
disciplines. The firm's specialisms include restructuring,
financial distress, fraud and asset recovery, business disputes,
and pension covenant reviews.
The business operates from seven UK offices in London,
Birmingham, Bristol, Southampton, Hove, Medway and Colchester;
together with offshore offices in Gibraltar, Jersey, Cyprus and the
British Virgin Islands.
The team of 90 partners and employees will all join the group
and enhance our existing strong network of offices and teams across
London and the South of England. In common with our previous
insolvency acquisitions, the CVR team will operate as Begbies
Traynor and BTG Advisory moving forwards.
There is a significant overlap of operating locations, which
will enable the group to combine local operating teams in single
offices and derive operating synergies, which are expected to be
worth at least GBP0.75m per annum when fully realised.
The CVR specialisms are expected to enhance the group's offering
and include:
-- Significant insolvency expertise with cases largely sourced
from professional intermediaries.
-- A strong contentious insolvency practice which will
complement the group's existing practice.
-- Forensic accounting, expert witness and pensions advisory
services which will develop our BTG Advisory service line.
-- Established operations in offshore locations which will
enhance the offering provided by BTG Global Advisory.
The business has a strong record of financial performance based
on the development of the specialisms noted above and an increasing
and profitable caseload. In the financial year ended 31 March 2020,
CVR reported annual revenue of GBP9.5m (audited) and normalised
pre-tax profits of GBP1.2m when reported on the same basis as the
group (unaudited). In the first six months of its current financial
year, trading continued in line with this performance. Net assets
were GBP4.1m (including net debt of GBP2.5m) at 31 March 2020.
Reasons for and benefits of the acquisition
The group's strategy is to increase the scale and quality of its
businesses both organically and through value-accretive
acquisitions, enabling increased shareholder value through the
delivery of strong, sustainable financial performance.
Our strategy in business recovery and financial advisory has
been to increase market share and add complementary service
offerings, whilst increasing the average case size and complexity
of the caseload. The group has a long-standing track record of
making successful acquisitions that have met these criteria.
This strategy has delivered a steady increase in the group's
market share of new insolvency appointments, reaching a record high
at the half year ended 31 October 2020 of 10.4%, up from 8% at the
same point in 2018. The increase in our market share, together with
an increase in average case size, has mitigated the weakness in the
wider insolvency market during 2020. The development of the
division, including the contribution from acquisitions, enabled
growth in revenue and profits in the half year ended 31 October
2020.
The acquisition is in line with our strategy, as CVR adds both
scale and specialisms to enhance the group's business recovery and
financial advisory practice, both regionally and overseas. It is
expected to be immediately earnings enhancing.
Principal terms of the acquisition
The acquisition is for a maximum potential consideration of
GBP20.8m on a cash free and debt free basis. The consideration is
structured as follows:
-- Initial cash consideration of GBP12.0m (subject to cash
free/debt free adjustments), which will be financed through the
group's existing facilities.
-- Contingent cash consideration of up to GBP4.0m subject to
profit-enhancing financial performance conditions in the first
three years post acquisition; and
-- Earn out of up to GBP4.8m subject to successful fee
realisations on three long-running contentious insolvency
appointments.
At 31 October 2020, the group reported net cash of GBP0.7m.
Following this transaction, the group retains significant financial
headroom in its committed bank facilities of GBP25m. On a pro-forma
basis, following the acquisition, net debt is expected to be
GBP11m.
Mark Fry, Head of business recovery and advisory of Begbies
Traynor Group plc, commented:
"The acquisition of CVR significantly increases the scale and
specialisms of our business recovery and financial advisory
business across London and the South of England, whilst enhancing
our overseas capabilities. The CVR team has a similar style and
culture to our own and will be a highly complementary fit with our
business.
"We welcome the team into the group and look forward to working
with them."
Ric Traynor, Executive Chairman of Begbies Traynor Group plc,
commented:
"The acquisition of CVR is our largest insolvency acquisition to
date and is expected to be immediately earnings enhancing. The
increase in scale and capabilities leaves the group
well-positioned to increase its market share and continue to
grow its business recovery and financial advisory revenues.
"The group continues to consider further acquisition
opportunities and organic investments in both of its divisions, in
line with our stated strategy."
Enquiries please contact:
Begbies Traynor Group plc 0161 837 1700
Ric Traynor - Executive Chairman
Nick Taylor - Group Finance Director
Canaccord Genuity Limited 020 7523 8350
(Nominated Adviser and Joint Broker)
Emma Gabriel / Angelos Vlatakis
Shore Capital 020 7408 4090
(Joint Broker)
Mark Percy / Anita Ghanekar
MHP Communications 020 3128 8168
Reg Hoare / Katie Hunt / Florence Mayo begbies@mhpc.com
Information on Begbies Traynor Group can be accessed via the
Group's website at
www.begbies-traynorgroup.com/investor-relations
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END
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