Blood, sweat and recruitment 

Spencer Manuel, founder of recruitment company NetworkersMSB, talks about his approach to structuring a big deal.

After 15 months of trading, Spencer Manuel, founder of the AIM-listed recruitment consultancy NetworkersMSB, came across a major obstacle.

On a routine business trip to Mexico in 2001, Manuel found himself held at gunpoint: ‘I went to Mexico to chase debts and do some customer development work, and I happened to get mugged and shot in the leg.’

After losing a near-fatal amount of blood, Manuel was in a critical state: ‘It was touch-and-go whether I would live, but I wasn’t going to let it beat me.’ Not one to make a fuss, Manuel adds: ‘At least my customers in Mexico paid me back quickly; that’s one positive to come from the experience.’

Crucially Manuel didn’t let the incident colour his attitude towards international markets. Indeed, NetworkersMSB has offices in the US, Mexico, Germany, Malaysia, China, India and South Africa.

In fact the international breadth of the business is holding them in good stead: ‘A lot of our competitors are UK-centric organisations and it’s a tough environment. It’s our international business that has grown nicely.’

MSB and beyond

NetworkersMSB reported a turnover of £163 million in 2008, its eighth successive year of growth. One of the biggest steps for the company was the acquisition of IT recruitment company MSB in 2006.

‘MSB was the first IT recruitment company in the UK, so it had good customer relationships,’ claims Manuel. ‘It was a great opportunity to buy an organisation that had been poorly managed for a long time. We hoped to use the company’s infrastructure and use it to propel us into a larger organisation.’

However there were complications: ‘In terms of revenue, MSB was three times our size. It was also a difficult acquisition because there were two parties that were after it, one of whom was a major shareholder of the company. One of the rivals dropped its bid early on, but the other one, a private investor, held on. Every time we raised the bid, the other guy would equal it.’

Both parties were evenly matched: ‘As a public company, we were fortunate because we could raise money. However we also had to follow more regulations and satisfy various requirements. This made us slower to act  and we were going head-to-head with an individual who could just pick up a phone and make a deal. We decided to give it one last try, so we raised the bid and managed to secure it.’

The transaction was financed by bank debt which the company ‘has been paying back aggressively ever since’. Inevitably, the recession has meant the company has needed to scale back its ambition: ‘Our original plan was to carry on consolidating the market, but the credit market won’t allow that, and the stock market is so low we don’t want to use our paper. M&A has been put on hold.’

Although times are hard, Manuel has seen it all before: ‘We went through the dot com crash and I remember thinking at the time: “This is awful, no one is recruiting,” but we were a lean company then, so we survived. Now we are well-placed because we work in technical areas, where there are skill shortages, and we can move people around the world.

‘Although it is too early in the cycle to get involved in M&A, credit markets have eased and we’ve seen more activity in the last six weeks, which is a good sign.’

Patrizia Rossi

Patrizia Rossi

Patrizia was Editor of M&A magazine, a sister title to GrowthBusiness, from 2006 to 2009.

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