Learning from deals: Empresaria and Consol

The last couple of years have seen an increasing buzz around the IT & Digital sector reflected in the level of M & A activity in that space. The recently announced deal which saw Empresaria Group taking a 65% stake in ConSol Partners is very much representative of this trend. The deal values ConSol as a whole at around £14.5m. With net assets reported as being £2.7m, and post-tax profits of £1.2m for the most recent financial year, I’d reckon therefore that (in Enterprise Value terms) a post-tax profit multiple of around 10 was in play. This will be well up there in the upper quartile of exit multiples achieved, and given that Empresaria itself trades with a PE ratio of around 11 the strategic rationale for the deal would have to have been strong. The press release really sets that out:

• ConSol have become a business with an international footprint. The fact that they are not solely exposed to the UK market will be seen as both risk reducing and prospect enhancing.
• The management team are clearly viewed as being integral to the future growth of the business and the equity lock in is the method used to keep those people in the business. This would suit everybody of course but in order to obtain an exit multiple like this a flexible approach is going to be required.

These sorts of deals are highly instructive for recruitment business owners as to how to grow your business in a way that can maximise value on exit. If you would like to discuss your exit strategy then please contact James Price, or the Recruitment Accountants team.