Ellis: Platform for growth
A solicitor who left private practice to set up an employment law, HR and health & safety business 16 years ago sold it yesterday for £61m to a new big player in the employment law world.
Mark Ellis is retiring from Chester-based Ellis Whittam following its acquisition by Marlowe plc, a specialist health & safety and regulatory compliance group, on a cash free/debt free basis.
LDC, the mid-market private equity investor which took a minority stake in Ellis Whittam four years ago, is exiting too.
Ellis Whittam provides its services via a fixed-fee subscription model to over 3,300 organisations across the UK, supporting some 35,000 employers in all. With offices also in Glasgow and London, it employs approximately 180 staff, including 20 practising solicitors.
Clients include Pure Gym, Culina Logistics, Red Letter Days, the Chartered Management Institute, the Chartered Quality Institute, Toni & Guy, Royal Hospital Chelsea, The Works Stores Ltd, Rowan Foods, Air France, the Archdiocese of Liverpool and the National Hairdressers Federation.
The average client’s contract is for £4,100 per annum and an average contract term of nearly four years, meaning that around 90% of its revenues are recurring.
For the year ended August 2020, Ellis Whittam generated revenues of £16m and adjusted EBITDA of £4.4m. The deal is subject to Financial Conduct Authority approval.
Last December, Marlowe spent £6.3m – rising to a possible £10.3m over three years – to acquire Law At Work, a Glasgow-based national employment law business with 70 staff that originally spun out of what was then Scottish law firm Maclay Murray & Spens.
Alex Dacre, chief executive of Marlowe, said: “The acquisition of Ellis Whittam transforms our scale and capabilities in employment law, HR compliance and health & safety advisory and significantly advances our strategy to provide our clients with a comprehensive one-stop approach to their health & safety and regulatory compliance needs.”
He described Ellis Whittam as operating in “an attractive and underserved market where we see significant growth opportunities”.
The SME compliance market for employment law, HR, and health & safety services is valued at over £1bn and is growing at 9% per year, Marlowe told the stock exchange.
Ellis Whittam markets itself as “unique” because it combines “the service quality of a law firm with the certainty of fixed-fee services”.
It was realising that clients wanted this blend that he describes as his “eureka moment”; at the time he was an equity partner and head of employment at Cheshire firm Aaron & Partners.
He said: “EW will become Marlowe’s platform for growth in employment law, HR and safety compliance. Marlowe’s investment is a testament to the strength and success of the EW team and to EW’s outstanding reputation. Marlowe shares our values, integrity and ambition and it is a great new home for EW.”
Aside from Mr Ellis, Ellis Whittam’s management will stay in place, led by chief executive Gavin Snell.
The purchase amount was changed from £59m to £61m on the advice of Mr Ellis, who explained that the lower figure was that announced under the AIM rules, which calculate the consideration slightly differently.