The Flatman Partnership (South) (J298)
Independent lettings-led agency · Langley, Slough SL3 · Sourced: Adam J Walker (Julie Drake), 3 Jun 2026; pack received 5 Jun 2026 · Status: Under review · Structure: share sale (single Ltd company).
1Recommendation
🟢 PURSUE — priority 2 (behind Glenn Flegg J300). A small but clean, lettings-led, recurring-heavy book at a fair price, in the same town as Glenn Flegg. Why: ~92% of lettings income is recurring (£294k), no landlord concentration, single office, no HMOs; entry ~2.3× recurring fee / ~5.6× normalised EBITDA. The price read: the headline ~3.9× reported PBT flatters because the owners are barely paid — normalised it is ~5.6× EBITDA, mid-pack, and the Downside (professionalise & sell) returns capital. The three things that decide it: (1) can a market operator run it after both Barkers exit (the lettings person stays, the sales person goes); (2) does a share sale clean cleanly — HP / owner-Audi, loans, director loan, and the historic client-account control issues; (3) does the sale convey the Flatman name and a protected territory — it is a shared family brand, not a wholly-owned one (see §3).
2KPIs at a glance
All figures from the acquisition model; £, net of VAT. “Normalised” = after charging a market operator to replace the exiting owner-directors and stripping owner / one-off costs (see §4).
| Revenue (FY25 management accounts) | £422.6k (lettings £320k, sales £92k) |
| Recurring fee income | £294k (~92% of lettings, ~71% of revenue) |
| Lettings : sales mix | 78% : 22% |
| Reported net profit (PBT) — FY24 / FY23 / FY25 MA | £117.9k / £155.6k / £174.5k |
| Normalised EBITDA (today) | ≈ £120k (after a ~£52k market operator) |
| Asking price — ex-pipeline (guide) | £661,000 (£675k incl £14k pipeline) |
| Multiple — × reported PBT (FY25) | ~3.9× |
| Multiple — × normalised EBITDA (today) | ~5.6× (the honest one) |
| Multiple — × recurring fee income | ~2.3× (2.25× ex-pipeline) |
| Run-rate EBITDA — Downside / Base / Upside | £120k / £165k / £210k |
| Multiple — × Base run-rate (we underwrite) | ~4.1× |
| Capital protected in the Downside? | Yes — professionalise & sell ≈ £720k–£1.05m |
| Revenue per employee (normalised) | ~£147k (£412k / ~2.8 FTE; IB target £200k+) |
| Managed / avg rent / fee · thesis-fit | 163 · £1,400 pcm · ~10% · ~73/100 |
3The opportunity
| Business | The Flatman Partnership (South) Ltd (trading as Flatmans) · est. 2007 (formerly Barkers) |
| Location | 188 High Street, Langley, Slough SL3 — same town as Glenn Flegg (J300) |
| Structure | Share sale of the single Ltd company (accountant-advised), cash-free / debt-free |
| Guide | £675,000 incl. £14,000 sales pipeline (paid as received) → ~£661k ex-pipeline |
| Mix | 78% lettings / 22% sales · 95% of lettings is fully managed (broker) · Seller motive: both owner-directors exit |
Book: 180 let — 163 fully managed, 15 rent-collect, 2 tenant-find. 145 active landlords (none >10 properties — no concentration). Avg rent £1,400 pcm; management fee ~10%. No HMOs, no student lets, 90% local — a clean, simple AST book. Deposits with DPS (custodial); AML registered. Software not stated (DD; QuickBooks for the accounts). Sales desk £92k (15 sold, 8 instructions, £33k register) — optional, treat as commission-only.
A shared family brand — not a wholly-owned one. Companies House shows the Flatman name spans separate owners. The target, (South) Ltd (06308954), is owned by the Barkers — who are not the Flatman family. The Flatman Agency Ltd (11480975, Reading area) is owned by Michael & Tracy Flatman; the original Flatman Partnership LLP was dissolved in 2020. The brand markets two offices (Langley + Reading) and a wider patch (Slough / Reading / Wokingham) and states a goal to franchise; the accounts carry franchise-fee lines. So the business is independent (no franchisor skim) but trades a shared / licence-like brand — making the central question what the £675k actually conveys: the name, the domains and a protected territory, or only the Langley book (see §8, §10).
Premises: ground-floor office (450 sq ft) plus a flat above, on a 10-year lease from March 2021. The freehold is owned by a shareholder-connected company (related party) and the flat is sublet (~£10.6–14.4k income) — both DD items.
4Net profit — reported, normalised, and the bridge between them
This is the analysis the model lets us do properly. The reported profit overstates the sustainable earnings, because the owners’ labour is not in the cost base — Nick and Kathryn Barker take ~£12.6k salary between them and the rest as ~£110k dividends. Both exit, so a buyer must pay a real operator.
| Period | Turnover | Operating profit | PBT |
|---|---|---|---|
| FY to 31 Dec 2022 | — | — | £138,512 |
| FY to 31 Dec 2023 | £419,874 | £157,773 | £155,587 |
| FY to 31 Dec 2024 | £442,296 | £118,948 | £117,949 |
| FY to 31 Dec 2025 (MA)* | £422,559 | ~£175,462 | £174,533 |
*FY25 = unaudited monthly management accounts, pre-depreciation, with employer-NI under-accrued. FY24 was a trough year (marketing £54.6k, consultancy £13.85k, sundry £9.75k).
The bridge — reported → normalised EBITDA today:
| Reported EBITDA (FY24 basis: operating profit + depreciation) | 136,700 |
| Add back: owner-discretionary & one-off (penalties, owner motor, entertaining, charitable, sundry) | +~25,000 |
| Add back: directors’ remuneration | +12,570 |
| Less: market operator to replace the exiting owner (loaded) | (52,000) |
| Less: employer-NI / housekeeping correction | (~2,000) |
| = Normalised EBITDA (today) | ≈ 120,000 |
The difference: the business looks ~£15–55k more profitable than it sustainably is, because part of reported profit is the owners’ unpaid labour — only partly offset by the discretionary costs a buyer strips. That moves the multiple from a flattering ~3.9× reported PBT to an honest ~5.6× normalised EBITDA. The value case then rests on the post-automation uplift, not the business as-is. This ~£120k is the Downside (professionalised) earnings; the Base and Upside build on it (§7).
Revenue per employee (normalised). Revenue ~£412k ÷ ~2.8 normalised FTE (1 lettings + 1 operator + 0.5 admin + 0.3 sales) ≈ £147k, vs ~£118k on raw headcount. Benchmark: traditional ~£50k; Intelligent-Business target £200k+.
Balance sheet: net assets only ~£23k (FY24) — value is goodwill / the recurring book. A share buyer inherits HP/finance-lease £64,102 (mostly a £36,916 owner Audi e-tron), bank loans £14,167 + £10k overdraft, and a £46,568 director loan — all to clear at completion (cash-free / debt-free); a £6,500 Audi VAT reclaim to repay.
5Ownership & key-person analysis
Two owner-directors: Nick Barker (hands-on operator) and Kathryn Barker (company secretary, spouse; holds the B shares). A share reorganisation is in train (A shares split N/K; 342 A + 173 B = 515 total). Both intend to exit; neither will carry on. Of the two employees, only the lettings person (£35k, 4 years) will stay; the sales person exits. A self-employed consultant / bookkeeper also attends regularly.
Read: this is the deal’s central risk — continuity rests on one retained employee plus whoever we install. The operator read: promote the lettings person and hire support, or recruit a branch manager (~£52k) — and tie Nick into a handover with restrictive covenants on both Barkers. The wage line (£90–92k) does not reconcile to the two-person list (~£63k); reconcile commissions / part-timers before relying on the cost base. Note too that the Barkers are not the Flatman family — they run Langley under a shared Flatman brand owned across separate parties (§3), so the brand and any territory / non-compete arrangement must be pinned down.
6Valuation vs thesis
| Criterion | Target | Flatman |
|---|---|---|
| Lettings-led | ≥80% | 🟠 78% (92% of lettings recurring) |
| Managed properties | 80–300 | ✅ 163 |
| Recurring fee income | £150–500k | ✅ £294k (sweet spot) |
| Entry multiple | ≤1.7× full / ≤2.5× partial recurring | 🟠 ~2.3× recurring / ~5.6× normalised EBITDA |
| Budget | ~£500k–£1.1m | ✅ £675k (smallest ticket) |
| Structure | clean | 🟠 single Ltd / single office / no HMO — but share sale (inherit liabilities) |
| Transparency | — | 🟠 unaudited FY25; control-history flags |
Mid-pack on both multiples — the same ~2.3× recurring as Glenn Flegg, at a smaller, cheaper ticket.
7Three-case underwriting — Downside · Base · Upside
We underwrite on three cumulative tiers (see the Investment Strategy). The rule: underwrite to the Base; require the Downside to return capital; treat the Upside as free optionality.
| Case | What it assumes | Run-rate EBITDA | Entry × |
|---|---|---|---|
| Downside — Professionalise | Normalised earnings, made clean & transferable; sold to a consolidator at an institutional × recurring fee. No automation. | ~£120k | resale ≈ £720k–£1.05m |
| Base — Enhance | + off-the-shelf tech, right-sized admin, sales desk to commission-only, fee optimisation — ~half the cost opportunity. The case we underwrite. | ~£165k | ~4.1× |
| Upside — Transform | + full AI-native run-rate (~2–3 FTE + outsourced inspections, fee/property uplift) and a Glenn Flegg roll-up (same town). | ~£210k | ~3.2× |
The floor holds. In the Downside, the cleaned, transferable book resells at ~2.5–3.0× recurring fee (or 6–7× EBITDA) ≈ £720k–£1.05m, above the £675k we’d pay — so capital is returned on the sale alone. Flatman clears the floor, so it is PURSUE. Price discipline still matters: the cushion depends on buying at or around ~2.3× recurring.
Bolt-on. 188 High Street, Langley is the same town as Glenn Flegg (J300). Shared office and back-office, an overlapping patch and route density — if GF proceeds, Flatman is a high-synergy tuck-in and the roll-up case strengthens both.
8Risks & DD gaps
- 🔴 Shared brand — territory split & non-compete — the Flatman name is shared with a separate Flatman-family operation near Reading (§3). Establish how brand and territory have been split (written agreement, licence or informal carve-up), whether that operation can compete in our patch, the non-compete on the exiting Barkers, and whether the sale conveys the name + domains + a protected territory — or leaves a licence / forced-rebrand risk that impairs the goodwill.
- 🔴 Share-sale clean-up — inherit HP/finance-lease £64,102 (mostly a £36,916 owner Audi e-tron), bank loans £14,167 + £10k overdraft, director loan £46,568. Clear at completion (cash-free / debt-free); extract owner vehicles; £6,500 Audi VAT to repay.
- 🔴 Related-party freehold + the lease we do not want — the freehold sits in a shareholder-connected company and the company holds a long 10-year lease (from Mar-2021). We would take a lease on the office, but only on a shorter term with tenant break clauses at arm’s-length rent — no large / long-dated commitment; make a re-geared lease a condition so the related-party ownership cannot lock NewCo in. Test the flat sublet too.
- 🔴 Client-money / control history — the accountant’s rep letter flags historic QuickBooks issues (2021–23) and a 2025 client-account-vs-CRM discrepancy. Reconcile client + DPS balances; confirm CMP.
- 🔴 Owner exit + staff transfer — both Barkers leave; the lettings person (£35k, 4y) stays (confirm willingness, terms and her expanded operational-anchor role), the sales person (£28k) goes (confirm notice / redundancy cost and the sales-desk decision — commission-only vs close).
- 🟠 Topline drift — lettings £350k → £332k → £320k (FY23–25, ~4–5%/yr). Establish cause and churn.
- 🟠 Unaudited FY25 + reconciliations — signed FY25 statutory accounts outstanding; BQ income breakdown sums to £332k (FY24 basis) not £320k; £6,287 turnover-vs-VAT gap; wage reconciliation; marketing £44.8k (incl Rightmove £30.7k); a recurring £340/mo “Penalties” line.
- 🟡 Open facts — signed-terms %, compliance % (gas/EICR/EPC), redress scheme, and the lettings CRM all unconfirmed.
9Next steps
- Broker-only call with AJW (Julie Drake): process, timetable, seller expectations and flexibility; pipeline mechanics; whether the owner will do a handover; the floor before any HoT.
- Pull the missing pack: signed FY25 statutory accounts, standard landlord terms of business, the premises lease, CRM identity, the compliance schedule.
- Frame as a Glenn Flegg bolt-on in the pipeline; size the combined back-office once both packs are in.
10Qualifying preliminary DD requests
- Brand, territory & non-compete — who owns the Flatman / Flatmans name and the domains (flatmans.com / flatmanpartnership.co.uk); any territory or brand-licence agreement with the Flatman family / The Flatman Agency Ltd; non-compete on the exiting Barkers; confirmation the share sale conveys the name and a protected patch.
- Financials — signed statutory accounts to 31 Dec 2025 + a current-year management pack; reconciliation to the BQ and to the £6,287 turnover / VAT difference.
- Debt & structure — full debt & HP schedule; confirmation all debt + owner vehicles leave at completion (cash-free / debt-free); the £6,500 Audi VAT position; the share reorganisation / cap table at completion.
- Premises — the lease + the freeholder (shareholder-company) relationship + the flat-sublet tenancy; and openness to re-gear to a shorter term with tenant break clauses (we will not inherit the long commitment).
- Contracts — standard landlord terms of business + % of book on current signed terms.
- Client money — client-account & DPS reconciliation at a cut date; CMP / scheme; the 2025 client-money correction.
- Compliance — schedule (gas/EICR/EPC/RTR/inventory %); redress-scheme membership.
- People & systems — staff schedule with roles, salaries, commissions, tenure (ages at offer stage); wage reconciliation; confirm the lettings person stays (terms / role) and the sales person leaves (notice / redundancy cost); the lettings CRM + a test data export.
- Book quality — landlord-retention / churn history on the managed book; cause of the topline decline.