42 digital consultancy jobs saved in Chelsea Apps Factory sale
In an uncommon turn of events amid a booming digital consulting industry, Chelsea Apps Factory fell into administration earlier in the summer. The firm is believed to have succumbed to heightened sectorial competition, however it was quickly sold by Quantuma administrators, preserving the firm’s value and some 42 remaining jobs.
The global digital transformation market has almost doubled in size over the past 18 months. According to the most recent figures available, revenues of the consulting service line have increased by more than $20 billion since 2016. While the service offered by consultants to assist clients with their digital transformation is still a relatively new aspect of the industry, efforts to integrate new, innovative technology with business operations have become so essential to the survival of modern businesses that it is one of the most talked-about aspects of consultancy today.
However, while digital transformation consulting services currently represent a $44 billion global industry, this seemingly unending gravy train of exponential growth does not mean that digitally orientated consultancies are unconditionally bullet-proof. Illustrating this point, London-based digital consultancy Chelsea Apps Factory has overcome a recent near brush with administration thanks to a restructuring project marshaled by professional services firm Quantuma.
Established in 2010 – by former boss of UK tabloids The Sun and the now defunct News of the World, Mike Anderson – Chelsea Apps Factory provides end-to-end services to a host of big-ticket clients. These have included Transport for London, who the firm worked with to enhance customer service on the London Underground by building an app to provide an overview of real-time incidents, retailer Waitrose and betting chain Ladbrokes, among others. Having launched with just three employees, by 2015 the firm reportedly hosted a 70-strong team by 2015 (though the recent announcement suggests this figure may be inaccurate).
Things looked to be on the upward incline, something echoed by founder and CEO Anderson on his permanent LinkedIn profile. The profile, which presumably was written this year, as it still speaks of the firm as being in its eighth year, reads “Our consultant and development business is well on track to achieve our run rate of £10 million+ per annum and last year we came in the 16th fastest growing tech company in the UK."
Despite its promising trajectory, however, the finances of Chelsea Apps Factory were poorly balanced. In its most recently available financial accounts, Chelsea Apps Factory generated revenues of £6.6 million in the 12 months to 28 February 2017, but still managed to post a pre-tax loss of £1.42 million. The firm unexpectedly filed for administration, in mid-July, appointing Quantuma Partners Andrew Hosking and Simon Bonney as joint administrators. The duo oversaw a quick pre-pack administration deal in order to safeguard the firm’s staff and assets. A pre-pack follows the same rules as a traditional administration, so the new owner buys just the business and its assets - without any of its liabilities or unsecured debt, as Mike Ashley did with House of Fraser earlier in August.
The purchase, for an undisclosed sum, saw Chelsea Apps Factory snapped up by CA Factory, a newly established business which counts Anderson as a director, according to Companies House records. While this seems unusual, “Phoenixing” a company in this manner remains legal, due to its capacity to allegedly save jobs. Along with Anderson, Chelsea Apps Factory's senior management team also includes Chief Financial Officer Robert Rinaldo, Chief Information Officer Peter Myers and Chief Operating Officer Edel McGrath, who previously worked at KPMG for 28 years. The leadership subsequently look set to retain their jobs, along with 42 remaining employees, while the deal also preserves the value of the business and its in-house intellectual property.
Commenting on the sale, Hosking, one of Quantuma’s joint administrators, said, “Tech is a highly competitive industry, and businesses rich in intellectual property can be subject to complex financial headwinds. This deal allows Chelsea Apps Factory to continue its operations, crucially safeguarding 42 roles, and minimising disruption to ongoing clients.”
Fellow joint administrator Bonney added, “Our involvement from an early stage allowed us to enter negotiations quickly, and we are very pleased to help save more than 40 jobs in this hi-tech industry – a significant result and a positive outcome for the business.”
Quantuma is a business advisory firm with offices in London, Southampton, Marlow, Watford, Brighton, Birmingham, Bristol, Manchester, Ringwood and Weymouth. In July 2018, the firm opened two international offices in Cyprus. Earlier in the year, the firm was tapped to oversee the administration of British-based mobile phone maker WileyFox. The beleaguered technology firm entered restructuring procedures following a catastrophic 2017, which saw numerous projects either delayed or jettisoned.
