Begbies Traynor Group - Complementary acquisitions add to growth thesis
Begbies has announced two acquisitions this week for a maximum consideration of £9.25m, adding to its property advisory and transactional services division, Eddisons. In keeping with Begbies’ strategy for value-accretive acquisitions that add services or geographies, Begbies is paying c.1.0x EV/Sales for an additional c.4% of sales.The £8.25m acquisition of Kirkby Diamond LLP and Kirkby Diamond Property Management, (together adds five, complementary, office locations along the M1 corridor and all 62 staff will join Begbies Traynor. In keeping with prior acquisitions, Begbies is paying £5m initial consideration (£3.5m cash and 1.3m shares) and a 3 year earn out of £1.5m for maintaining current financial performance and a further £1.75m subject to profit-enhancing financial performance.
In addition, Begbies Traynor has announced the acquisition of an online national property auctions business with five staff, Network Auctions, to complement its existing auctions business. The group is paying £0.5m cash (0.8x EV / Sales) and a further £0.5m subject to revenue growth targets.
Acquisitions are a key part of Begbies’ strategy. Since we forecast that it will generate over £16m FCF pre-acquisitions per annum, it clearly has capacity for these deals, and potentially more. Trading on under 10x cal 2026 PER, we believe its shares are materially undervalued and retain our 150p fair value.
Begbies Traynor Group is a business recovery, financial advisory and property services consultancy. Co. provides these services through two operating segments: business recovery and financial advisory services, which provides transactional support, valuations and advisory services through its subsidiary, BTG Financial Consulting LLP; and property services, which delivering advisory, such as commercial property valuations, property receiverships, property management and accounting, and as well as transactional services that include property auctioneers, machinery and business asset auctioneers to owners and occupiers of commercial property, investors and financial institution.
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