Insolvency specialist Begbies Traynor (BEG:AIM) has announced the acquisition of Midlands-based finance broker MAF Property Limited, a deal expected to immediately enhance earnings which sent the shares up 0.1% to 119.1p.
The acquisition advances the group’s strategy to expand its range of advisory and transactional services with MAF binging expertise in construction, haulage, healthcare, agriculture, renewables, property finance, fleet management and vehicle leasing.
The business supports clients through arranging facilities for investment in equipment, vehicles and property, providing both refinancing and restructuring existing facilities.
EARNINGS ENHANCING
Research house Canaccord Genuity reckons the acquired business is on track to deliver a pre-tax profit contribution in the first year of around £0.6 million, which adds approximately 3% to Begbies Traynor’s 30 April 2022 earnings.
There are also opportunities for revenue synergies from MAF benefiting from Begbies’ referrals system comprised of accountants and other professionals.
Likewise, Begbies is expected to benefit from MAF referrals through its panel of lenders. The earn-out of up to £8.75 million is predicated on the business earning pre-tax profit of £1 million in the first two years and £2 million in years three and four.
The initial consideration is £3 million on a cash and debt free basis.
Analyst Rachel May at Shore Capital said she is leaving her forecasts unchanged for now, but added, ‘should MAF achieve the stretching profit targets required to trigger the earn-out, that would of course offer further upside to our FY2022F and FY2023 forecasts.’
