LONDON: Marlowe plc has entered into a conditional agreement to acquire Ellis Whittam (Holdings) Limited for consideration of £59 million on a cash-free, debt-free basis, a news release said.
Founded in 2004, Ellis Whittam is one of the UK’s leading providers of outsourced Employment Law, HR and Health & Safety services. The company provides its services via a fixed-fee subscription model to over 3,300 organisations across the UK.
It is headquartered in Chester, with offices in Glasgow and London, and employs approximately 180 staff, more than half of whom are health & safety consultants, employment lawyers and HR compliance advisors. Ellis Whittam’s subscription-based advisory services help employers across the UK remain compliant with evolving employment law and health and safety legislation.
The acquisition adds significant scale to Marlowe’s current offering of employment law, HR and health and safety services and offers synergies with Marlowe’s wider Health and Safety and Compliance division, particularly the Law At Work brand.
It strengthens Marlowe’s position in this market, which has a range of attractive characteristics, including a scalable model, non-discretionary spend, high barriers to entry, and increased demand due to Covid-19. Key management will remain with the business going forward. For the year ended August 2020, Ellis Whittam generated revenues of £16.1 million and adjusted EBITDA of £4.4 million. The Acquisition is subject to FCA consent and is expected to complete in November 2020.
The Group also announces a proposed placing to raise gross proceeds of up to £30 million through the issue of up to 5,441,376 new ordinary shares of 50 pence each at 547 pence per share to new and existing investors.
The Placing will be conducted by way of an accelerated bookbuild process which will be launched immediately following this Announcement, in accordance with the terms and conditions set out in the Appendix to this Announcement. Cenkos and Berenberg are acting as lead bookrunners and corporate brokers in connection with the Placing, and Stifel is acting as bookrunner.
Alex Dacre, Chief Executive of Marlowe plc, said: “The acquisition of Ellis Whittam transforms our scale and capabilities in Employment Law, HR Compliance and Health & Safety advisory and significantly advances our strategy to provide our clients with a comprehensive one-stop approach to their health & safety and regulatory compliance needs.
“The business, which delivers subscription-based consultancy services, supported by software, operates in an attractive and underserved market where we see significant growth opportunities. Ellis Whittam is a major step in strengthening our position as the UK leader in regulated safety and compliance services to organisations of all sizes. We are confident that this acquisition will generate attractive returns for Marlowe’s shareholders.”
Marlowe is a UK leader in specialist services, which assure safety and regulatory compliance, whilst managing risk for businesses across the country.
Founded in 2004 and headquartered in Cheshire, Ellis Whittam is one of the leading providers of outsourced Employment Law, HR and Health & Safety services. Ellis Whittam helps organisations to manage business risk and remain compliant with stringent employment law and health & safety regulations. Employers subscribe to Ellis Whittam’s fixed fee service to protect themselves against the often costly consequences of employee and health & safety related risks.
Ellis Whittam serves customers of all sizes but has a particular focus on SME organisations who typically do not have in-house expertise in Health & Safety and HR and therefore seek to outsource it to a retained provider. As at the end of August, Ellis Whittam supported over 3,300 customers and had an average contract value of £4,100 per annum and an average contract term of 3.9 years and no significant customer concentration. Circa 90% of its revenues are recurring and cash conversion was in excess of 100% in the year ending August 2020. Organic revenue CAGR from 2017 to 2020 was over 10%.
The Acquisition deepens Marlowe’s compliance offering in the SME market, which has attractive growth prospects. The SME compliance market for Employment law, HR, Health and Safety services is valued at over £1bn and is growing at 9% per year. There are customers who require these services but do not currently take them. The Acquisition offers significant synergies with Marlowe’s existing operations in the space. Key management from Ellis Whittam will remain with the business.
The Group is in advanced discussions with its lenders in connection with a new £70 million debt facility, which is conditional on the Placing raising minimum proceeds of £15.5 million and which is anticipated to be put in place shortly.
It is expected that, on or around 30 October 2020, the Group will enter into an agreement in connection with a further acquisition for total consideration of up to approximately £1.5 million, which shall be funded from the Group’s existing cash resources.
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