Social care firm, CareTech Holdings, has agreed to buy the entire share capital of Paisley-based Spark of Genius Limited in a deal worth up to £9.23million.
Spark provides residential care and education for challenging and vulnerable young people with complex needs and currently has 48 residential places in 9 residential homes across Scotland and 100 education places in 3 schools.
It was founded in Paisley by its chairman and sole shareholder, Tom McGhee, in 1999 and has grown profitably since. In the year to March 31, 2015, Spark reported revenues of £10.9million and profit before tax of £1.2million.
The acquisition by CareTech comprises an initial cash payment of £7.48million and an earn-out of up to £1.75million. Of this, £250,000 was settled on completion of the acquisition through the issuing of 100,000 ordinary shares at 250p per share. The remainder will be determined with reference to Spark’s EBITDA over the four financial years ending September 30, 2019.
Tom McGhee, Chairman of Spark, said: “Through our education-based approach we have become a market leader in our sector in Scotland. With CareTech’s support, and with our existing management team, we can continue to develop our business and the services we provide.
“CareTech has greatly impressed us as it shares our values, which are focused on the delivery of high quality services to children and young people with complex needs. Becoming part of CareTech is a very positive step for all our stakeholders. It will support our growth whilst we continue to offer excellent outcomes for the children and young people in our care.”
Farouq Sheikh, Executive Chairman of CareTech, added: “We are delighted to announce the acquisition of Spark, whose impressive growth in the past few years reflects the quality and innovation of its services and the strength of its local authority relationships. I would like to welcome the team at Spark to CareTech.
“This acquisition, which is expected to be earnings enhancing in its first full financial year, marks our first transaction following the £21 million placing in March this year. We continue to make good progress on a number of other potential bolt-on acquisitions and expect to have fully deployed the proceeds of the placing during the coming months.”