(By Anthony Miller – Thursday,5th March 2009 10:40pm). What most piqued my interest during my meeting with the InterQuest top team today (executive chairman, Gary Ashford, CEO, Ross Eades, and CFO, Michael Joyce) was hearing about IQ Equity, Ashford’s newly founded private equity arm, which he aims to use as a growth vehicle for the group.
Simply put, Ashford is looking for disgruntled high-performing recruiter teams from established competitors who fancy setting up their own specialist IT recruitment businesses but don’t have the wherewithal to do so. Target specialisms include GRC (governance, risk & compliance), data warehousing, business intelligence and ‘Cloud’. IQ Equity will of course take a majority stake in the incubating businesses. Ashford is hoping to seed up to half a dozen new ventures over the next couple of years – the first should be announced in the next few weeks. IQ Equity will also be used to finance straight acquisitions, an integral part of Ashford’s ‘buy and build’ strategy.
Ashford hopes that a combination of organic, inorganic and ‘incubator’ growth will take InterQuest from its current £4.3m of EBIT to some £10m and thence to a more respectable valuation than the £9m the group is worth today (4x '08 P/E) – that’s over 60% down over the past 12 months, compared to 25-35% down for peers. Well, Ashford, Eades and Joyce are seasoned hands in the recruitment sector so they know what they’re up against. I guess the key question is, if they succeed in doubling the size of their mini-conglomerate ITSA group, will it be worth materially more, given that SThree, with £55m of EBIT and double InterQuest's margins, trades on a 6x '08 P/E?
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