Can't see the wood for the trees? You need our free industry newswire
JHP Group in management buyout
JHP have been winning a fair amount of new work recently, so the extra funding will doubtless come in useful. Announcement below:
You may be aware from recent press reports that JHP Group has been attracting interest from a variety of organisations that were keen to acquire the business. Today I am very pleased to announce that following a lengthy and detailed process we have secured an exciting future for the company with a management buy-out in partnership with LDC (Lloyds TSB Development Capital), who will acquire a majority share of JHP Group. This is exceptionally positive news to start 2010.
The Executive Team, (Jim Chambers, Ralph Harris, Kristian Henderson-Morrow, Helen Richardson, John Deaville, Tracie Greenhalgh) are now working in partnership with our investment partner LDC, the leading UK regional mid-market private equity house, and part of the Lloyds Banking Group. LDC has a history stretching over 29 years of working with great management teams and has over 70 investments spread across all business sectors.
Our funders and delivery partners have all been advised that it will be very much business as usual. Our name remains the same as does the management team and we will continue to pursue the very best quality and outcomes for our clients and customers.
Anyone remember the Pelcombe BIMBO that turned them into Sencia? Rumours have been swirling that a few other companies are in pursuit of external funds to support new contract setup and delivery, so there may be a few more of these.
Comments
That's no way to speak about Larraine Daniel!
Hold on a minute, is this allowed? We own Lloyds TSB, it was bought by the government and bail them out to stop them going under.
Do "we" "own" the whole group though? LDC are a separate limited company.
Their website states that they've invested £30million for a significant majority stake.
Well done Helen Richardson, you didn't do it with Carter and Carter, but you have achieved your dream!
I think we'll see a lot of financing, refinancing, takeovers and, dare I say it, company's going into administration in the next year or so.
FND and Pathways funding is tough for Primes and totally untenable for Subbies if the Prime is taking a daft management fee. A company's ability to draw down funding is also currently being severely restricted by:
-Slow number of starts across the country making current staffing levels unsustainable.
-The impact of Young Person's Guarantee. Tens of thousands of potential FND starts having their benefit clocks stopped on YPG and holding them back from FND by up to 6 months. These customer are also competing with FND customers for jobs.
-Slow recovery in the labour market and a very, very slow recovery in the traditional industries (warehousing, construction, admin, retail, hospitality, etc) that have traditionally been the big employment destinations for many New Deal customers.
-The first year vacuum. Huge start up costs + back end funding is going to make for a finaincial nightmare in the forthcoming months.
-Unrealistic expecations. Some primes were seriously talking about, and financially modelling, a sustained Job Entry Rate of 45%. No one was achieving that under old New Deal where you got more money, more time with the customers and a Job counted straight away, not 13 or 26 weeks in.
The LSC/SFA have to cut their spend by £360 million next year so many companies that relied on other funding streams to complement FND are going to struggle as funding rates are being reduced from 3-10% across LSC contracts. The Ufi (learndirect) budget is also being slashed and I know some primes are currently relying on this for upskilling their customers.
Like other sectors, welfare to work is in a recession at the moment and it's only realistic to expect there to be some casualties or major refinancing deals. JHP have got a good reputation and some great people working for them so I assume that they're going it for the right reasons.
I was at a conference in the November where Lord David Freud was talking about and indeed promoting this exact type of buyout/takeover. This could be the future for some small/medium sized organisations in the welfare-to-work arena, especially if the Conservatives come to power.
Mergers and buyouts are where it's at for quite a few people in this market, unless Theresa May's assurances about protecting smaller providers cross into action to force small contracts and local experience. Bungle, the start up costs for FND aren't as big as you might think, depending on the approach the prime takes. The issue that appears more likely to sink the boat is meeting targets and the impact of that on profitability. Anecdotally, customers are having far more positive experiences on FND than New Deal so far, but providers are finding job outcomes even tougher to get than they thought. There's a fundamental mismatch between the expectations of the DWP and what providers can achieve, and I can't see it being resolved without either cutting FND delivery to the bone or large scale upgrading of payments across the industry. A movement is growing to provide guaranteed jobs schemes entirely separately to FND, but the movement's very left-focused, and the Conservative Work Programme model would shut down Young Person's Guarantee as soon as possible.
What a pity [Moderation - do not make this kind of allegation again]
A friend of mine works in Sheffield for DWP Provision Management Division. She's spent all Jan and Feb fielding complaints from companies waiting for payments from a Prime that are now up to 6 months late. This includes unpaid FND and ESF invoices. She says it's like the last days of Instant Muscle and there could be trouble ahead.
Anonymous: feel free to get in touch through the 'contact us' button if there's anything you'd like to discuss further on this. It won't be surprising if more providers fall over as part of industry consolidation - not every company will be able to continue operating or sell up.