Acquisition of Chamberlain & Co.

11 October 2022

K3 CAPITAL GROUP PLC

("K3", the "Company" and including its subsidiaries the "Group")

Acquisition of Chamberlain & Co.

K3 Capital Group plc, a multi-disciplinary and complementary group providing specialist advisory services to SMEs, announces today the acquisition of insolvency practitioner, Chamberlain & Co. ("the Acquisition") for an initial cash consideration of £3.3 million with an additional deferred consideration of up to £1.1 million.

Background and Rationale

Chamberlain & Co. is an award-winning turnaround, restructuring and insolvency practice headquartered in Leeds with offices in Sheffield, York and London. The business had turnover of c.£1.6 million and normalised EBITDA of c.£0.8 million in the 12 months to 30 April 2022. The Acquisition is expected to be immediately earnings enhancing.

The Acquisition strategically adds a new geographic presence for K3's Restructuring Division, strengthening its UK presence, supporting the ambition to grow national market share as well as adding new talent to the Group.

Terms of the Acquisition

The initial consideration of £3.3 million will be satisfied through a draw down from the Company's existing banking facilities. A deferred contingent consideration of £1.1 million will be payable over three years, satisfied through a combination of cash and shares at K3's discretion, subject to certain performance criteria being achieved.

FY22 Earn Out Consideration  

Management also confirms that in relation to the earn out consideration for previous acquisitions payable for the financial year ended 31 May 2022, the Company has elected to pay 100% of the earn out consideration in cash, rather than satisfying part of the earn out consideration through issuing new Ordinary Shares. A total of £4.4 million has been paid out in cash.  

This decision has been made to use its cash reserves in light of the strength of the Company's balance sheet and the Company's view that issuing equity at the current share price is not in the best interest of shareholders.

The earn out payments relate to the acquisitions of InTax Limited, Knight Corporate Finance Group Limited, Knight R&D Limited, RandD UK Limited and Quantuma Advisory Limited.

John Rigby, CEO of K3, commented:

"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."

Michael Chamberlain, founder and director at Chamberlain & Co., said:

"I'm delighted to be joining forces with K3. We pride ourselves on delivering a high quality service and we can add greater value to our clients through the provision of K3's broad range of advisory services. Businesses are facing unprecedented levels of financial hardship and we are now in an even stronger position to help businesses navigate the current economic storm."

-Ends-

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About K3 

K3 Capital Group plc (AIM:K3C) is a multi-disciplinary and complementary group providing specialist advisory services to SMEs, incorporating Business and Company Sales, Restructuring and Insolvency and Tax Advisory services. The Group floated on the London Stock Exchange's Alternative Investment Market (AIM) in April 2017.

Services provided by the Group fall into three key operating divisions:

Business Sales Division:

· Company sales and business brokerage

· Corporate finance services

· Transaction services

· Debt advisory 

Tax Division:

· Research and development tax credit advisory

· Tax investigations

· Tax planning

· Tax advisory 

Restructuring Division:

· Restructuring advisory

· Financial advisory

· Creditor services

· Forensic accounting and expert witness

· Pensions advisory

· Accelerated M&A