Upgrades after DRP acquisition

We have upgraded both our forecasts and valuation post the group’s latest acquisition. To recap, in its largest acquisition to date. BEG agreed to pay up to £25m (on a cash/debt free basis with normalised working capital) for insolvency practice David Rubin & Partners (DRP), a long-established operation with offices in London and Guernsey.

The acquisition, in combination with the addition of CVR in January, further builds the market share of the group’s insolvency business (from 10.5% to 12% by volume of insolvency appointments) and is expected to enhance its profile amongst important sources of referrals and opportunities for synergies between different components of the group.

We have increased our fair value calculation to 165p/share, which reflects the transformational nature of the latest acquisition. That share price is equivalent to a 18.7x FY22e PER and a 1.9% prospective yield (covered a healthy 2.7x by adjusted earnings). The multiple is broadly in line with the general market rating for UK listed professional services companies.