Empresaria is a specialist recruitment company that's positioned for bottom-line growth, after many painful years of restructuring, and this opportunity is yet to be recognised by the market.
Introduction
Empresaria was founded in 1996, by Miles Hunt and David Telling (who also set up MITIE), with a brief to develop a specialist recruitment business operating within diversified, growing market sectors. In the first decade all of the growth occurred in the UK but in 2004 Empresaria transferred to AIM and set out on a path of international expansion. So far so normal but what sets the company apart from its peers is its philosophy of management equity and oversight. In this there are two main elements; firstly key employees retain, or acquire, a meaningful minority stake in the business that they manage; secondly the board allows them full operational freedom while providing financial security and rigour. In other words they have skin in the game and are allowed to remain entrepreneurial.
Now the company operates in 18 countries (grouped into UK, Europe and Rest of the World) across six key sectors (up from 5 at flotation). However this apparent simplicity hides the fact that Empresaria is an umbrella organisation that operates through a multitude of individual companies. The reason for this is that recruitment expertise is very location and sector specific; thus each business performs best if local managers run their team as the local market demands and brand themselves with a locale-specific identity. In a sense the board are investment managers and shareholders are relying on them to select successful private firms worth bringing into the fold.
Unfortunately this unique focus hasn't proved particularly profitable for shareholders; the initial offering on AIM took place at 65p and the price now, drum roll please, is a heady 64.5p! Hardly an earth-shattering performance. There are a couple of good reasons for this dismal outcome though; the first is, reasonably enough, the global financial crisis and the huge staff cutbacks that this led to; the second is that just as Empresaria recovered then Germany moved to certain new collective labour agreements and this unleashed years of struggle and liability for retrospective pay and social security costs. An initial provision of £3M was made for this liability, later reduced to £1.7M, and this has only just been…
