Connecting Excellence CEO on first acquisition, growth pipeline and Bitcoin strategy

The acquisition pipeline looks extremely lively and extremely healthy. Um, and not only that it did coming into a deal, post announcement,

Hello, you're watching Proactive. I'm joined by Scott Allen, the CEO of Connecting Excellence.

Scott, good to speak with you again. You've now completed your first acquisition. What does James Gray recruitment bring to XEE beyond the 1.79 million pounds of revenue?

Yeah, I mean, last 12 months, 1.79 million revenue, they're up 21.5%, 1.27 million gross profit.

So 70.9% margin and they've done 431,000 Ebitda over the last 12 months. So,

aside of the commercial aspects of the deal, it brings on board a team of motivated, experienced recruitment consultants who are operating in the UK and the USA, who want to grow their business, grow their brand, grow their team and deliver results into the future. And the

way we've structured the deal, make sure that the owners of the business are aligned in their incentives and that the team within the business are aligned in their incentives. And what it brings to us is the first copy and paste, if you like, um acquisition within the group that that proves the model and allows us to build on that and and and showcase to other businesses in the industry that this is how we will deliver.

And your team can come on board on day one, carry on as they were on day one, and we can align the incentives to make sure that the years ahead are structured to perform higher and give you the access to the wider benefits of a listed group.

And just looking at that structure, Scott, the deal's largely deferred, linked to EBITDA performance. How does that structure protect XEE while giving James Gray room to grow?

Yeah, well there's thousands of privately owned, owner- managed executive and specialist recruitment companies around the UK. There's 10,000 of them globally. The way we're structuring the deal is because these businesses have very little in terms of exit strategy and want to drive value into a business and build value into a business.

We've set the terms of the of the deal so that the EBITDA delivered directly correlates with the earnout for the owners over the say two, three, four, five year period and we've we've shown that as an example in this one where XE retains 75 to 85% of Ebitda in those first three years.

The the acquisition also takes your Bitcoin treasury to just over 81 BTC. How important is that balance sheet strategy alongside the recruitment business, Scott?

The balance sheet strategy and the operational business both benefit each other. So we've want to disrupt executive recruitment by acquiring good profitable businesses and hiring revenue generating recruiters. The balance sheet makes us more attractive to the next acquisition and the next recruiter hire by driving significant value into the balance sheet to be held over the long term.

So I think currently we are holding around 5.25 million at the time of that purchase Bitcoin on the balance sheet. So just under $7 million of Bitcoin on the balance sheet. and that just provides us increasing optionality when it comes to executing deals and making sure that we can make acquisitions.

We obviously want to scale that as well, Stephen, so we've got benchmarks in place for 100 Bitcoin, 200 Bitcoin, 500 and 1000. And for the operational business, we want to see it hitting those 10 million revenue marks and the 25 million revenue marks and 50 million revenue marks over the uh coming periods of time.

you mentioned copy and paste um Scott, what does the acquisition pipeline look like and how quickly can XEE build a larger more profitable recruiting group?

The acquisition pipeline looks extremely lively and extremely healthy. um and not only that it did coming into a deal, post announcement, we've obviously generated quite a lot of interest from the industry and the communication that is yet to completely go through executive recruitment, I'm sure.

But those who've heard about the deal, who are in that position as owner managers who want to stay and want to build the businesses, it's a very attractive proposition to them. So our first deal, pro former, if you look at the businesses is is circa doubling the business

and adding revenue per share, Bitcoin per share, increases to shareholders. The acquisition pipeline, I'm confident we can continue delivering on that, and we want to make sure that it's the right business at the right time that we bring on board every time.

Scott, I hope you'll continue to keep us updated with your progress. Thanks for your time today.

Thanks, Stephen.

Scott Allen, the CEO of Connecting Excellence.