Latest deal enhances revenues and relationships
The latest acquisition, Midlands based finance broker MAF should add new dimensions to BEG’s business portfolio. It builds potential to grow more cyclical, financial advisory and property services operations, as well as enhance trusted working relationships and higher profiles with banks and other secured lenders. The latter groups being a potential source of referrals for BEG’s insolvency arm.The transaction should immediately enhance earnings, even though the payment terms are more back-end loaded than recent BEG acquisitions. Maximum potential consideration is £11.75m: £3m up front (£2m cash and 0.848m new shares), £8.75m deferred, subject to delivery of material profit growth over the next four years. Those terms reflect MAF management’s ambitious growth plans, which BEG fully supports.
Our figures incorporate a £0.5m contribution to BEG operating profit this year (to end April 2022), with ongoing potential for loan book growth to offset short-term investment related earnings drag as the business builds up. We still believe that supports a fair value of 165p / share, equivalent to a 18x FY22e PER and a 1.9% prospective yield (2.8x covered by adjusted earnings).
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.
Mattioli Woods provides pension consulting and administration, wealth management, asset management and employee benefits consultancy. Co.'s operating segments comprise:Pension consultancy and administration, which include setting up and administering pension schemes, as well as providing consultancy services for one-off activities; Investment and asset management, which manages and placing of investments on behalf of clients; Property management, which manages collective property investment vehicles, facilitates direct commercial property investments on behalf of clients; and Employee benefits, which assists its corporate clients with employee engagement.
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