Harrington Brooks buys Debtmatters brand ahead of potental sale
HARRINGTON Brooks has picked up the trading name and other assets of Bolton-based Debtmatters after it was placed into administration.
Sale-based Harrington Brooks already owned Debtmatters’ back book of Individual Voluntary Arrangements (IVAs), which were sold by the company’s founder Ges Ratcliffe in a £1.7m deal in September 2009.
However, following the appointment of insolvency firm BDO as administrators of Debtmatters Ltd earlier this month, it has also picked up the trading style, website, television commercials and other intellectual property assets of the business for an undisclosed sum.
Meanwhile, Ratcliffe has bought back the call centre and lead generating assets through a new vehicle known as Moneyselecta in a deal that saved 38 jobs.
Matthew Cheetham, chief executive of Harrington Brooks, said: “We are very pleased to have acquired the intellectual property of Debtmatters.
“This will allow us to further expand our business and promote the brand name. We can also confirm that all the clients acquired from Debtmatters in 2009 and since will remain completely unaffected by the sale.”
The deal is one of several acquisitions to have been completed by Harrington Brooks over the past 18 months as it has sought to increase its market share ahead of a potential sale, which could take place by the end of the year.
TheBusinessDesk.com understands that the firm’s current majority shareholder, Inflexion Private Equity, is looking to sell its 72% stake and and that a process could begin within the next few weeks.
Mr Cheetham did not to comment on the likely timetable for any deal, but he did say that he expected a change of private equity partners “at some stage” in the future.
Harrington Brooks is one of only two remaining investments that Inflexion made via its 2003 fund so will want to exit in order to achieve a close, but Cheetham said that both he and finance director Terry Sweeney are also shareholders in the business and intended to remain as such.
Newly-filed accounts for Harrington Brooks show that in the year to March 30, 2010, it made a pre-tax profit of £1.3m on (2009: £1.3m loss) on sales which increased by 30% to £11.7m.
The accounts also show that it paid £1.4m in September last year for Stockport-based debt management firm Fresh Start Financial Management.
Acquisitions from three competitors helped to double the number of debt management plans under its control and its net liabilities were reduced to £4.2m.
Finance director Terry Sweeney said the business had achieved “continued good results” in the following year to March 31, 2011, with both sales and profits ahead of the prior year. The business was also refinanced at the end of May, with a new £10.5m five-year loan being provided by PNC Financial Services.
Cheetham added that the firm, which now employs 340 people – 240 at its Sale headquarters and 100 at Fresh Start in Stockport – has achieved greater efficiencies as a result of integrating debt plans acquired from competitors.
“As you get more of them, you end up doing them better,” he said.
He added that although the overall market for IVAs remains stable, Harrington Brooks had managed to increase its market share at a time when other local competitors were exiting the business.
Cheetham said that a sensibly-regulated debt management and advisory business was an asset to the North West and an important source of jobs.
“All of the larger players are in Greater Manchester or just outside in Blackburn or Chorley.
“I think there’s full employment within the sector at the moment – if not, it’s pretty close. Anyone who works in the industry can find jobs and there always seem to be recruitment drives.”
