Professional services group swoops in £4.5m deal for marketing agency

K3 Capital Group has announced the acquisition of Professional Insight Marketing for up to £4.57m, depending on company performance.

Professional Insight Marketing, based in Sutton Coldfield, trades as JE Consulting and is a professional services marketing agency.

Bolton-based professional services specialist K3 Capital Group said the deal will complement its 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.

It will also add 140 new members to the K3 Hub.

JE Consulting specialises in digital and creative services to SMEs operating in the accountancy, legal and healthcare markets.

Established in 1998, its 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 keynote speaker at major conferences throughout the UK.

For the 12 months to November 2021, JE Consulting generated unaudited revenues of £1.5m, and adjusted, unaudited EBITDA of £0.40m. It had net assets of £0.5m as at November 30, 2021, of which £0.59m was cash.

K3 Capital said 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 deal involves an initial consideration of £2.32m, which will be satisfied through £1.77m in cash from K3’s existing cash resources and a draw down from its existing banking facilities, and the issue of 177,430 ordinary shares.

Also, 120,000 growth shares will be made available and issued to the owners and key personnel of JE Consulting on completion.

The £2.25m earn out element of the acquisition is payable over four years, as 60% cash and 40% shares.

K3 Capital Group chief executive, John Rigby, said: “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.”

JE Consulting managing director, Jo Edwards, said: “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.”