The owners and directors of Northwood who sold the business to Belvoir have been paid almost £4m after a successful two-year earn-out.
It means that the total price paid is £12.6m – which is more than £9m down on the maximum price that could potentially have been paid.
Most of the final payment is in cash, with a quarter in shares, enabling former owners Andrew and Gemma Goodson to retain “a stake in the business that they had so successfully built up over the past 23 years”.
It also means that former Northwood boss Eric Walker, recently promoted to managing director of Belvoir, has firmly embedded his stake in the wider business.
Over 1m shares were sold by chairman and founder of Belvoir Mike Goddard to enable the distribution of shares.
Belvoir bought Northwood in June 2016 at a valuation then said to be up to £22m, with some paid upfront – reported at the time to be over £11.5m with the rest payable at the end of the earn-out.
Yesterday, Belvoir CEO Dorian Gonsalves told EYE: “In basic terms, the initial consideration was £8.6m and the final earn-out payment was £4m, giving a total consideration of £12.6m.
“We have always said to our investors that the maximum possible consideration of £22m was optimistic and exceeded our expectations and those of PwC in their financial due diligence.
“The earn-out period gave the sellers the opportunity to maximise the value and, all credit to the Goodsons and the Northwood management team, Northwood EBITDA increased by 51% over the two-year earn-out period.
“Belvoir’s management team helped the Goodsons to achieve this by centralising certain functions and by streamlining the business during the earn-out period.”
Belvoir Lettings yesterday issued this statement to the stock market:
“Belvoir Lettings plc (AIM: BLV), has been notified that on 4 December 2018, Mike Goddard, Chairman of the Company, sold 1,065,431 ordinary shares of 1p each in the Company (“Ordinary Shares”) to the vendors of Northwood at 92.9p each.
“The acquisition of Northwood in June 2016 was subject to a two-year earn-out. During the two years under review, EBITDA performance increased by 51% from £1,069,000 to £1,616,000 against which a final consideration payment of £3,959,000 was due. Settlement of the final payment in either cash or shares was at the discretion of the Board.
“Feedback from institutional investors clearly supported 100% cash settlement, if possible.
“Accordingly, Mike Goddard has made available 1,065,431 shares, enabling the Northwood vendors to take 25% of their collective final cash consideration in shares, thereby retaining a stake in the business that they had so successfully built over the past 23 years.
“As a result, the following transfer of shares from Mike Goddard took place:
|Transferee||No. of shares||Previous holding||Subsequent holding||Percentage
|Andrew David Goodson||733,869||555,339||1,289,208||3.69%|
|William Eric Walker||32,602||21,713||54,315||0.16%|
|Philip Allan Gee||21,735||16,447||38,182||0.11%|
|Nicholas Mark Harris||10,867||8,224||19,091||0.05%|
“Both William Eric Walker and Phillip Allan Gee continue to be employed by the Belvoir Group as Group Managing Director and Northwood Managing Director respectively and are regarded as PDMRs.
“Following this transaction Mike Goddard holds 4,506,490 Ordinary Shares, representing approximately 12.9% of total issued share capital and voting rights of the company.
“Furthermore, the option period for options held by Dorian Gonsalves under the Belvoir Lettings PLC Unapproved Share Option Plan over 163,399 shares due to expire on 31 December 2018 has been extended to 31 December 2020.”