Begbies Traynor is to pay some £20m for independent firm CVR in its largest insolvency acquisition to date, which will see the group add its first overseas offices
The acquisition is for a maximum potential consideration of £20.8m on a cash free and debt free basis.
It consists of an initial cash consideration of £12m financed through the group's existing facilities. There is a contingent cash consideration of up to £4m subject to profit-enhancing financial performance conditions in the first three years post acquisition, plus earn out of up to £4.8m subject to successful fee realisations on three long-running contentious insolvency appointments.
CVR’s specialisms include restructuring, financial distress, fraud and asset recovery, business disputes, and pension covenant reviews.
The business operates from seven UK offices in London, Birmingham, Bristol, Southampton, Hove, Medway and Colchester; together with offshore offices in Gibraltar, Jersey, Cyprus and the British Virgin Islands.
The CVR team of 90 partners and employees will all join the Begbies Traynor group and will operate as Begbies Traynor and BTG Advisory moving forwards.
Begbies Traynor said there is a significant overlap of operating locations, which will enable the group to combine local operating teams in single offices and derive operating synergies, which are expected to be worth at least £750,000 per annum when fully realised.
Mark Fry, head of business recovery and advisory of Begbies Traynor Group, said: ‘The acquisition of CVR significantly increases the scale and specialisms of our business recovery and financial advisory business across London and the South of England, while enhancing our overseas capabilities.
‘The CVR team has a similar style and culture to our own and will be a highly complementary fit with our business’.
CVR’s specialisms include significant insolvency expertise with cases largely sourced from professional intermediaries and a strong contentious insolvency practice.
Begbies Traynor said the firm’s forensic accounting, expert witness and pensions advisory services will develop its BTG Advisory service line, while CVR’s established operations in offshore locations will enhance the offering provided by BTG Global Advisory.
In the financial year ended 31 March 2020, CVR reported annual revenue of £9.5m (audited) and normalised pre-tax profits of £1.2m when reported on the same basis as the group (unaudited). In the first six months of its current financial year, trading continued in line with this performance. Net assets were £4.1m (including net debt of £2.5m) at 31 March 2020.
Ric Traynor, executive chairman of Begbies Traynor Group, said: ‘The acquisition of CVR is our largest insolvency acquisition to date and is expected to be immediately earnings enhancing.
‘The increase in scale and capabilities leaves the group well-positioned to increase its market share and continue to grow its business recovery and financial advisory revenues.
‘The group continues to consider further acquisition opportunities and organic investments in both of its divisions, in line with our stated strategy.’