LONDON, UK: K3 Capital Group, a multi-disciplinary professional services firm providing advisory services to SMEs, announced the acquisition of Professional Insight Marketing Ltd which trades as JE Consulting.
JE Consulting is a full service marketing agency specialising in digital and creative services to SMEs operating in the accountancy, legal and healthcare markets. Established in 1998 and based in Sutton Coldfield in the West Midlands, the business provides services to over 140 clients across the UK.
Founder, Jo Edwards, is a thought leader on the subject of digital marketing and social media for professional service firms as well as being a respected key-note speaker at major conferences throughout the UK.
The acquisition complements K3’s growth strategy by expanding and deepening the services of the K3 Hub, a centre for accountants in practice to access specialist advice, services and CPD training, available to K3 Hub members while also bringing 140 new members into the K3 Hub.
For the twelve months to November 2021, JE Consulting generated revenue of £1.5 million (unaudited), of which the majority is monthly recurring revenue, and adjusted EBITDA of £0.40 million (unaudited and normalised for Director’s salaries). JE Consulting had net assets of £0.5 million as at 30 November 2021, of which £0.59 million was cash.
The acquisition is expected to be earnings enhancing in the first full financial year of ownership and EBITDA is expected to grow as JE Consulting increases revenues and benefits from recent investments in service overheads.
The initial consideration of £2.32 million will be satisfied through £1.77 million in cash from the company’s existing cash resources and a draw down from the company’s existing banking facilities, and the issue of 177,430 ordinary shares (being £0.55 million at an issue price of 313 pence, calculated using the 30 day volume weighted average price to 21 February 2022) satisfied through the company’s existing authorities.
In addition, 120,000 Growth Shares will be made available and issued to the owners and key personnel of JE Consulting on completion.
The earn out is payable over 4 years with mechanisms to increase or decrease subject to certain performance criteria. The earn out is payable as to 60% cash and 40% shares across the next 4 financial years ending 31 May 2026.
The date for payment and/or issue of Ordinary Shares, as applicable, in respect of the Earn Out is set at 31 August in each relevant financial year. The cumulative Earn Out is capped at £2.25 million.
John Rigby, K3’s CEO, commented, “I am delighted to announce the acquisition of this highly trusted and established business that will accelerate our strategy of enhancing our solutions for accountancy firms and their clients.
The team at JE Consulting are highly complementary to our service portfolio and to the continued development of the K3 Hub, which, since its launch in February 2021, has recruited over 1,000 member firms in the UK.
This acquisition strengthens our presence when the professional services sector is expanding, especially in the accountancy space and increases our recurring revenue. I look forward to welcoming our new colleagues and continuing the successful execution of our strategy to generate long-term sustainable growth and attractive returns for our shareholders”.
Jo Edwards, Managing Director at JE Consulting, commented, “We are delighted to be part of the K3 Capital journey going forwards. The opportunities this acquisition provides to the business to continue to grow and invest in new services and marketing is now unrivalled in the professional services sector and we look forward to building relationships with the K3 Hub members”.
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