Professional services group acquires insolvency practitioner at 5.5x EBITDA

Professional services firm K3 Capital Group has acquired restructuring and insolvency practitioner Chamberlain & Co. in a deal that could rise to £4.4 million. The deal, which is expected to be immediately earnings enhancing, will involve a £3.3 million initial consideration and a deferred contingent consideration of £1.1 million, payable over three years and subject to the achievement of certain performance criteria.

If the full deferred consideration is paid, the deal would reflect a 5.5x multiple of Chamberlain & Co.’s normalised EBITDA of £800,000 for the year ending April 30 2022. In that year, the business generated turnover of £1.6 million.

Chamberlain & Co. is based in Leeds and also has offices in London, Sheffield and York. Quantuma, which is owned by K3 Capital and will take on the Chamberlain & Co. business, says the acquisition will boost the group’s presence in Yorkshire, where it has seen increased demand for its services.

Chamberlain & Co. will provide a new geographic presence for K3 Capital’s Restructuring Division, which is aiming to strengthen its UK business and grow its national market share, while bringing new talent into the group.

K3 Chief Executive John Rigby said: "Chamberlain & Co. has built a strong reputation as a trusted adviser in the insolvency market and we welcome a new team of experts to our group. With demand for restructuring services growing as businesses face mounting economic headwinds, we will be in a stronger position to increase our response to customers' needs in the Yorkshire market.”

"This acquisition furthers our strategic objective of enhancing the group's strong organic growth with the addition of complementary SME focused advisory businesses. This is another example of bringing together businesses which can benefit from the group's unique distribution platforms, incorporating direct marketing, cross-selling opportunities and an ever-expanding professional introducers' network, to drive growth through economic cycles."

Quantuma CEO Carl Jackson added: "In what is an uncertain period for the UK economy, this acquisition will enable us to continue to respond to the growing demand for our services in the region. We look forward to further developing our practice in Yorkshire and working together with Michael."

Chamberlain & Co. founder and director Michael Chamberlain, meanwhile, said that UK businesses “are facing unprecedented levels of financial hardship” and that being acquired by K3 would put the firm “in an even stronger position to help businesses navigate the current economic storm."

The UK’s professional services sector is currently seeing a wave of dealmaking, spurred on by factors including an influx of private equity investment and the impact of COVID-19. As companies continue to struggle with the effects of the pandemic, rising costs and supply chain disruption, among other issues, demand for restructuring and insolvency services is set to increase significantly.


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