Isis backs Armstrong Craven MBO
ISIS Equity Partners in Manchester has backed a £2.8m management buyout at recruitment firm Armstrong Craven.
The MBO team has agreed to pay AIM-listed Work Group £1.8m in cash with the balance made up of assets and a deferred cash payment of £300,000.
Armstrong Craven employs 51 staff at offices in Hale, London, New York and Hong Kong. It was founded by Cheshire-based Sue Craven in 1990 and sold to Work Group 15 years later for around £6.5m.
She led the deal along with chief executive Matthew Mellor and chief operating officer Rachel Davis after receiving backing of £3.5m from Isis.
Work said it had decided to sell after a loss-making year and due to the changing recruitment market. It said a review, “highlighted that the resources of the company (Work Group) are not sufficient to meet the investment needs of both the Armstrong Craven and Work Communications and Resourcing businesses”.
During the year to the end of December, Armstrong Craven generated an operating profit before exceptional items of £266,000 (2011: £934,000), and an operating loss after exceptional items, including an impairment of £2.9m, of £2.6m (2011: profit £934,000). It had net assets of £2.6m (2011: £5.3m).
Mr Mellor said: “This investment will support Armstrong Craven as it continues to expand its international footprint by targeting new geographies and opening international offices in North America and South East Asia. It will also support the development of the infrastructure, operations and people; enabling the business to build on strong relationships with existing clients and create new opportunities for growth.”
Nick Holder who, together with Pete Clarke led the deal on behalf of Isis, will join the board of Armstrong Craven.
Clearwater Corporate Finance advised the MBO team. Legal advice to Isis was provided by Gregg Davison and Andy Phillips of Pinsent Masons in Manchester.
Chris Heatlie and Sarah Cumming of BDO’s Manchester practice provided financial due diligence advice. Tom Raymond at Armstrong Transaction Services provided commercial diligence.
