The Boards of Pertemps Limited (“Pertemps”) and AIM-listed Network Group Holdings plc (“Network”) have announced today the planned management buy-out of both businesses by a joint management team.
The management buy-out brings together Pertemps and Network into the UK's largest independent provider of specialist outsourced recruitment services and temporary employment solutions. The combined business, which will be rebranded Pertemps Network Group (“PNG”) with immediate effect, will have a combined turnover in excess of £425 million.
The transaction will consolidate Pertemps and Network into a unified business, allowing for more effective marketing and delivery of its combined capability and facilitating the Group’s planned growth and acquisition strategy.
The MBO forms part of an agreed succession plan by which the founders of Pertemps and Network will progressively step back from the day to day running of the business with the existing and long-established senior management team, all of whom have more than 20 years of experience in the business, assuming greater responsibility.
The transaction is also a continuation of the transfer of ownership of the business from Tim Watts to PNG’s employees who will hold around 40 per cent of the Group’s equity going forward. Tim Watts and the founders of both Pertemps and Network will continue to hold a substantial equity investment in PNG.
As part of the transaction, leading mid-market private equity provider LDC will also complete a significant investment alongside management and employees to support the PNG’s growth strategy in the UK and overseas as well as providing funding for a planned acquisition programme.
Operating from its head office in Meriden, near Birmingham, Pertemps was established by the Watts family in the 1960s, with Tim Watts appointed as Chief Executive in the early 1970s. The business provides outsourced labour, human resource and training solutions to a number of key clients in the UK with a supporting network of around 140 locations in the UK. The business operates across a wide range of sectors with particular expertise in the industrial, engineering, logistics and commercial markets.
Network comprises a group of specialist recruitment businesses working within the IT, legal, financial and healthcare sectors together with its back-office process outsourcing subsidiary company, ESoS.
Whilst PNG’s trading environment remains challenging, the Group has benefitted from the increased outsourcing of recruitment and other human resources process activity along with a general consolidation by customers in favour of larger providers with the necessary geographical reach and IT systems to drive cost out of their own internal processes.
LDC’s investment was led by Investment Directors Steve Aston, Alistair Pendleton and Chris Hurley. Steve Aston and UK Portfolio Managing Director Chris Hurley will join the board with immediate effect.
Martin Draper, LDC UK New Business Managing Director said:
“We are delighted to be investing in PNG alongside Tim and a high-quality management team and to support an excellent business which has such a strong growth platform.”
“The business has a market leading reputation in the provision of recruitment solutions and we are looking forward to working closely with the team to identify acquisition opportunities to deliver further growth. Pertemps is an iconic Birmingham brand and the Midlands team at LDC is pleased to support the management team’s plans.”
Commenting on the transaction, Tim Watts added:
“It gives us great pleasure to announce the formal rejoining of Pertemps and Network Group Holdings as one private company, Pertemps Network Group Limited. Together with our partner, LDC, we are confident that the new enlarged business will be able to take advantage of the many opportunities that will present themselves in the recruitment industry in the coming years. The new enhanced group will be able to offer recruitment services to most areas and specialisms in today’s recruitment industry. We firmly intend to grow the business over a relatively short period of time.
“This will be a new exciting period in the history of Pertemps, where we will be taking opportunities to grow by acquisition and organically, to make our company the foremost recruitment business in the UK.”
The transaction was completed with support from a number of Midlands-based advisers including Eversheds who acted as legal adviser to LDC and Gateley who advised PNG’s management team and Network. Mazars provided financial due diligence. The Board was advised by Pinsents.
Issued on behalf of LDC by Citypress
Press information: Katie Dale, Citypress. Telephone: 0121 230 1783.