Business Achievers
Wealth creation is the ultimate business achievement. Nick Mulcahy, Darren O’Loughlin and Gerry Byrne detail some of the standout achievers from the past year
Wealth creation is the ultimate business achievement and in the past year there have been many good disposals for these founders
There are many ways to measure success in business. One metric that most entrepreneurs would concur with is managing to sell your venture. The vast majority of business owners never find a buyer, mostly because the enterprise is too small for buyers to be bothered with. Sometimes though, relatively new ventures can attract a massive price tag because their founders were smart enough to develop attractive intellectual property.
The ideal situation for the entrepreneur is to build a business that delivers handsome earnings for decades before they decide to check out. On that score, Anne Heraty, founder and CEO of Cpl Resources, can lay claim to being Ireland’s most successful female entrepreneur. She turned 60 last April, and after 31 years of growing her recruitment agency, Heraty recently decided to surrender control to a Japanese buyer.
Outsourcing has offered to pay €11.25 per share, which is a great result for Heraty and Cpl shareholders. Before the bid, the share was trading at the 750c level, and the 50% premium from Tokyo was designed as a knock-out deal. It also reflects the founder’s attachment to the business, which close observers say was allconsuming.
After a degree in Maths and Economics in UCD, Anne Heraty’s business career started out selling photocopiers. She found her metier with Grafton Recruitment, and after a couple of years she jumped out to establish Computer Placement Ltd (Cpl). At the age of 29, Heraty and her husband Paul Carroll bought out her partner in the nascent agency.
Cpl went public in 1999 when the couple sold 20% of their equity in the business. Further share sales followed, and when Outsourcing came calling, Heraty owned 29.1% of the equity and Carroll owned 5.8%. With the bid
valuing Cpl at €320m, the disposal reward for the couple is c.€91m for Heraty and €18m for Carroll (56). Since the company went public two decades ago, the couple also benefited from c.€50m in salaries, share buybacks and dividends.
Other shareholders will be pleased too. On the stock market Cpl Resources was subject to volatility, especially during Ireland’s economic crash in 2009. During the Covid market sell-off in March 2020, the Cpl stock was trading lower than it had six years previously. At year’s end, however, Heraty has delivered for investors who kept the faith.
Cpl reported earnings per share of 75c in the year to June 2020, so Outsourcing is paying x15 times earnings to acquire the company.
The cashflow multiple is x8 times, as
Cpl generated €40m cash from operations in 2019/20. Ninety five per cent of Cpl’s €570m revenue in FY 20 was sourced from ‘flexible talent’. These are the people who work on client engagements but are employed on a temporary basis by Cpl. The company bills out this cost to the client, and the net profit margin on this activity is 3.3%. Though permanent placements only account for 5% of turnover, they represent onethird of operating profit.
Outsourcing believes in the future of contract workers too. According to the Japanese buyer: “Outsourcing Group recognises the fundamental changes brought about by technological innovation in the workplace, including the increasing use of robots and AI, that has seen decreasing working hours per employee as well as increasing employment risk.
“Outsourcing forecasts that industry worldwide will be driven to undergo major shifts in the near future, as it scrambles to adapt to the changes caused by technological innovation.”