LONDON: Begbies Traynor Group plc (LON: BEG) announced the acquisition of MAF Property Limited, which trades as MAF Finance Group, a Midlands-based finance broker.
The acquisition is for a maximum potential consideration of £11.75m on a cash free and debt free basis with normal levels of working capital (i.e. adjusted for cash, debt and working capital levels at completion).
The consideration is structured as follows:
· Initial consideration of £3.0m (subject to cash free/debt free and working capital adjustments), to be satisfied as £2m in cash financed through the group’s existing facilities and through the issue of 847,458 new ordinary shares of 5 pence each in the group (“New Ordinary Shares”)
· Earn out of up to £8.75m (at least 67% is payable in cash with the balance in New Ordinary Shares) subject to delivering material growth in profits as detailed below:
o £2.0m subject to average PBT of £1.0m in years 1 and 2
o £6.75m subject to average PBT of £2.0m in years 3 and 4
MAF is a firm of finance brokers, operating nationally from a strategically placed head office in the Midlands with a highly experienced team of 46 employees, including two directors, who will all join the group.
The business supports its clients in providing access to finance through arranging facilities for investment in new asset purchases (including equipment, vehicles and property) together with both refinancing and restructuring existing facilities.
MAF has sector expertise in construction, engineering and manufacturing, haulage, healthcare, agriculture, renewables, property finance, fleet management and vehicle leasing.
The team works with a large panel of banks and specialist funders to arrange finance products including asset finance (hire purchase and finance lease), property finance, invoice finance and unsecured loans to provide support for its clients and assist their growth plans. During the last financial year, MAF raised finance in excess of £150m for its clients.
In its financial year ended 31 December 2020, MAF reported revenue of £3.1m and normalised pre-tax profits of £0.3m (when reported on the same basis as the group), after charging organic investment costs of £0.3m in the year. It had net assets of £0.5m as at 31 December 2020. MAF has continued to make good progress in its current financial year.
Begbies Traynor Group (LON: BEG) strategy is to increase the scale and quality of its businesses both organically and through value-accretive acquisitions to both complement and diversify its range of service offerings.
Finance broking complements the group’s existing advisory and transactional services, particularly debt advisory and restructuring, as well as the valuation and sale of assets (including property, plant and machinery through the group’s Eddisons property division).
The acquisition will also deepen the group’s existing relationships with banks and other lenders. The acquisition is expected to be immediately earnings enhancing.
MAF has grown rapidly in recent years, having invested in organic growth through the recruitment of experienced employees and broadening its product and sector expertise. The team will accelerate this development activity to include marketing its services through the group’s existing, extensive referral network of accountants and other professionals to their clients, and directly on the group’s client assignments.
Ric Traynor, Executive Chairman of Begbies Traynor Group plc, commented: “The acquisition of MAF is in line with our growth strategy and complements our existing, and expands the range of, our service lines.
MAF specialises in providing growth capital for investment and has developed excellent relationships with both clients and financial institutions over many years. As companies seek to bounce back from the pandemic, access to finance will be critical and going forward the MAF team will prove invaluable in increasing the support and advice we can provide to UK businesses.”
Begbies Traynor Group plc LON: BEG share price
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7 May, 4:35 pm GMT+1 · Disclaimer
