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Begbies’ shares climb on personal insolvency deal
BEGBIES TRAYNOR (BEG:AIM) 107p
Gain to date: 21.6%
Original entry point: Buy at 88p, 19 Dec 2019
Shares in insolvency and business recovery firm Begbies Traynor (BEG:AIM) have closed in on new highs after it announced the acquisition of a portfolio of 500 Scottish personal insolvency cases from auditors Grant Thornton for an initial cost of £250,000.
The deal takes Begbies’ personal insolvency portfolio in Scotland to 1,500 cases and adds five fee earners to its existing team of 36 partners and staff.
Dependant on the outcome of the cases Grant Thornton could get another £250,000, but the Scottish business already generates annual fee income of £600,000 so the cost is more than outweighed by the long-term earnings potential of the portfolio.
Begbies has had a ‘good crisis’ with revenue for the year to the end of April seen up more than 15% at £70m and pre-tax profit seen up more than 30% to £9.2m despite a £600,000 hit for the impact of lockdown in the final six weeks.
The business recovery and advisory teams have continued winning and progressing cases as usual while most of the property service teams have continued to operate as normal except for valuation and sales activities.
SHARES SAYS: Begbies continues to do well and its services could be in higher demand in the coming year.