Controversial welfare-to-work training provider sold for £34.5m
SHEFFIELD welfare-to-work training provider A4e, which attracted major criticism in the early days of the coalition Government’s welfare reforms, has proven that work does pay after being bought for £34.5m.
Staffline will merge A4e into its Avanta division, adding A4e’s 2,000 employees and £140m annual revenues. A4e expects to record pre-tax profits of £10.2m for the financial year to March 2015.
Emma Harrison, who founded the company in 1991, found herself in hot water in 2012 after accepting a dividend payment of £8.6m on top of her £365,000 annual salary, and accepting payments of £1.7m for leasing private properties to her own firm. At the time she was advising the Government on some of its welfare reforms.
She stepped down as A4e chairperson in February 2012, but remained the largest shareholder.
Its troubles continued and following long investigations, six employees from Reading and Surrey were jailed for fraudulently claiming almost £300,000.They had forged documentation to say they had helped people find jobs, enabling them to hit targets and achieve government bonuses.
The firm said: “The company has been audited numerous times since 2011 [when the false claims were investigated] and has demonstrated that there has been no other instances of fraud.”
Staffline has agreed to acquire A4e’s share capital of £23.5m and will assume its debt of £11m. A4e will be integrated into Stafflines’ existing welfare-to-work business, Avanta, headed by managing director Rob Jackson.
The acquisition means that the two groups will become the largest Work Programme provider in the UK in terms of the number of jobseekers supported and contracted regions served, with the greatest geographical reach.
Staffline has already seen 28 on site branches, bringing its total to over 260.
Andy Hogarth, chief executive, Staffline said: “This is an exciting milestone in Staffline’s growth, considerably expanding the size and geographic reach of our Employability offering and will result in the combined business being one of the largest Work Programme providers in the UK.
“We look forward to creating a winning team and business, and delivering significant shareholder value.”
Andrew Dutton, group chief executive, A4e, who will be staying on in a consultative role before stepping down to pursue other interests, commented: “Staffline is exactly the right fit for us: its ambitions, robust financial position and its people and business values will all support the combined business as we grow together and build on our position as a leading Work Programme provider in the UK.
“A4e is now in the perfect ownership to both develop our customers and support our employer relationships and I wish the combined business every success in the future.”
A4e and its largest shareholder and founder Emma Harrison was advised by the Leeds corporate finance team at Deloitte. The team was led by Martin Jenkins and corporate finance director Dan Renton.
Mr Jenkins said: “This acquisition makes great strategic sense for both companies creating a clear market leader. The management team at A4e have done an excellent job in developing A4e and building an attractive platform which will create more opportunities for its people under Staffline’s ownership.”
