Begbies in swoop for Eddisons

MANCHESTER accountancy group Begbies Traynor is buying the Leeds surveyor Eddisons in an £8.8m deal.

Begbies has agreed to pay an initial £5.3m in shares and a further £3.5m in cash or shares based on future performance.

It said the deal was in line with its goal of enhancing its insolvency business with complementary services such as valuations. Begbies is paying for the initial consideration by placing more than 13 million new ordinary shares.

Meanwhile, Begbies said the lowest number of insolvencies since 2007, down 16% during the half year, had created “difficult” conditions, with pre-tax profits down 32% to £1.5m on revenues of £20.8m, down 3%, in the six months to October.

Eddisons, founded in 1844, has around 200 staff and offices in Leeds, London, Manchester, Birmingham, Bristol, Glasgow and Nottingham. It is led by a management team who have owned the business since completing a buyout in 2008.

Key shareholder directors will stay with the business for at least five years and it will retain its existing brand, operating as a separate division within the group. In the year to March Eddisons made earnings before interest, tax, depreciation and amortisation of £1.3m on revenues of £13.4m. The business is being acquired on a cash and debt free basis.

Chairman Ric Traynor said: “Despite a challenging trading period for our profession, with reductions in national insolvency volumes to the lowest level since 2007, we have continued to trade profitably, with results in line with market expectations. We have mitigated the full impact of market conditions through acquisitions completed in the current and prior year and continued cost discipline, and we have retained our market-leading position in terms of number of insolvency appointments.

“We anticipate some improvement in trading levels in the second half of the financial year, over the traditionally busier winter months as we experienced in the previous financial year.  The last four months of the financial year will also benefit from the post-acquisition trading profits from the Eddisons acquisition announced today, which is expected to be earnings enhancing in the current financial year.

“Overall, the group remains well placed to take advantage of opportunities to develop and enhance the business, both organically and through selective acquisitions.”

A team at Deloitte in Manchester led by partner Jodi Birkett provided vendor due diligence on the deal.