Maximising the Value of a Recruitment Business when Selling Optima - - PowerPoint PPT Presentation

Maximising the Value of a Recruitment Business when Selling

Optima Corporate Finance

Our Services

Acquisitions

Have acted for a range of public and private companies in identifying acquisition targets negotiating & structuring terms and project managing deals to completion

Disposals / MBOs

Have acted for large corporate in selling non-core business to the management team and numerous business owners selling to larger recruitment businesses

Fundraising

Have raised and restructured finance for a range of recruitment and recruitment related businesses. Strong contacts with debt and equity funders Supporting management teams generally when they are starting to consider preparing to sell. We help to develop strategic plans and financial projections to plan and measure performance

Commercial Advice

Track Record

We have completed deals in the following recruitment sectors over the past 15 years:

Healthcare IT Education Energy Domiciliary Care Rail Construction Secretarial Call Centre Management Industrial Finance Driving Engineering Social Care

Insider’s Guide to Selling a Recruitment Business

Brand Strong market presence and reputation Cultural fit Continuing Investment in the Business Motivated team Robust client relationships Spread of clients Healthy & sustainable margins High quality management Profitable business model beyond the vendors Visibility of Profits International presence Compliance

What Issues will a Purchaser Consider? It’s all about RISK

Indicators Length of service Staff turnover Basic pay, commission plan, bonuses, other benefits compared to market averages Woking conditions and environment

Motivated Team

Other Factors Share ownership Internal Promotion Share options Staff Surveys CSR Policies Awards Training

Sale Process

D E C I D E T O S E L L R E C E I V E A N A P P R O A C H

Appoint Advisor Prepare Information Memorandum Draw Up Distribution List of Strategic Purchasers Supply Information Receive Approach Receive an Offer Evaluate Offer Negotiate Heads Of Agreement Due Diligence (Commercial, Financial & Legal) and Contracts

COMPLETION

Go to market and approach Strategic Purchasers

Issues To Consider when Selling

Confidentiality Valuation Asset or Share Sale Surplus Assets Earnout Warranties and Indemnities Don’t take your Eye off the Ball

Issues to Consider when Selling a Recruitment Business - Valuation

Multiple of Earnings Use of EBITDA Adjustment of Profit Average/Weighted Average of Profits No Absolute Right or Wrong Example EBITDA Yr1 Yr2 Yr3 £100k £400k £250k

A. Don’t touch it with a barge pole B. Most recent profit = £250k, then apply multiple C. Weighted average profit = (1x£100k) + (2x£400k) + (3x£250k) = £275k, then apply multiple 6 D. Don’t Know

£’000 600 500 400 300 200 100 Year 1 Year 2 Year 3

• A. Don’t touch it with a barge pole
• B. Most recent profit
• C. Weighted Profit Average
• D. Don’t Know

Issues to Consider when Selling a Recruitment Business - Valuation

What Multiple is Appropriate

This will be Determined by: Comparative plc Multiples Strategic Fit Size of Business Risk Factors Niche Specialisms Market Sentiment Recent Deals What the Purchaser is Willing to Pay

Concluding Thoughts

It’s all about RISK for the Purchaser Ensure the business isn’t heavily reliant upon you Make the business as robust and sustainable as possible to withstand any nasty surprises Specialists are more valuable than generalists – differentiate You never know when you might receive an approach from someone like us might write to you Use experienced professional advisors who understand the sector