Begbies Traynor grows 16% but may soon feel coronavirus effect
Professional services firm Begbies Traynor has reported another solid year of growth, with its traditional service line enjoying keen demand and being supplemented by a comprehensive diversification strategy in the last 12 months. However, as with the broader consulting industry, the firm does anticipate some disruption in the new financial year resulting from the Covid-19 lock-down.
Begbies Traynor is a leading business recovery, financial advisory and property services consultancy, providing services nationally from a comprehensive network of UK locations. The group has 740 staff and partners and the professional staff include licensed insolvency practitioners, accountants, chartered surveyors and lawyers.
The firm’s revenue boomed from £52.4 million to £60.1 million in 2019, buoyed largely by a diversification campaign that included organic investment, and the acquisition of Springboard Corporate Finance. While moving to strengthen its firm’s capacity in its advisory, corporate finance and property lines paid dividends then, however, it is the business’ bread-and-butter of insolvency work which has seen it enjoy an even sharper spike in demand for the latest financial year.
According to the most recent data from Begbies Traynor, the company enjoyed growth of 16% leading to the end of March 2020 – leading to an estimated revenue of £70 million. The news has boosted the firm’s performance in the year with profit growth of c.30%, reflecting an increasing number of insolvency appointments in the UK, particularly at the turn of the year.
Begbies Traynor reported that while it had enjoyed higher average fee levels and a strong performance from its advisory team – along with the continued contributions of current and prior year acquisitions – insolvency appointments notably increased through the year. This was even prior to any economic impact from the Covid-19 outbreak, which has significantly increased the level of distress in the UK economy.
As a result of the strength of its insolvency wing, Begbies Traynor therefore remains more upbeat about its future prospects than most in the consulting sector. While the timing of a return to ‘normal’ economic conditions remains unknown – impacting several of the company’s property service lines it has worked so hard to build up in recent years – the anticipated progressive increase in the number of insolvencies will likely see it enjoy greater demand in its traditional areas.
The annual financial statement from the company did note that the timing and volume of insolvencies may be influenced by the current short-term Government support measures. This is something Marie Wadeson of restructuring specialist firm Quantuma also recently noted has delayed the collapse of a large number of firms. However, with the Government overtly looking to scale back the extent of its support for businesses in the coming months, the situation may rapidly change before the end of the year.
The board of Begbies Traynor subsequently remains positive about the group’s prospects. While at this early stage of the new financial year, it is not possible to assess the potential impact of Covid-19 on Begbies Traynor’ 2021 growth, they stated that they expect that the company’s mix of service lines and counter-cyclical focus to place the group in a strong position.
Ric Traynor, Executive Chairman of Begbies Traynor, commented, “The group has delivered a strong financial performance with increased revenue and profitability, despite the disruption in the last few weeks of the financial year. This is credit to our partners and staff in these challenging and uncertain times, where they have adapted rapidly to remote working. Looking ahead we remain well placed, given our strong financial position, the likely impact of the Covid-19 pandemic on the UK economy.”
