Status
Analysis
Grafton.
PROJECT BARBARA · DEAL DOSSIER
Cover current as at 9 Jun 2026
Ref J298
Cover current as at 9 Jun 2026
Ref J298
Deal Memo · Acquisition Target
The Flatman Partnership (South)
188 High Street, Langley, Slough SL3 · sourced via Adam J Walker (Julie Drake) · share sale (single Ltd) · est. 2007
Verdict
🟢 Pursue
Priority
2
A small, clean, ~92%-recurring book in Glenn Flegg's town — the cleaner-on-durability deal; a high-synergy bolt-on, with the floor protecting capital with cushion.
Guide£675k (£661k ex-pipeline)·
StructureShare sale, cash-free/debt-free·
MotiveRetirement (both Barkers exit)·
SoftwareQuickBooks; lettings CRM TBC·
Sales pipeline£14k
KPIs at a glance
| Sales | Lettings | Total | |
| Revenue FY25 (MA) | £92,000 | £320,000 | £422,559 |
| Recurring fee | — | £294,000 | £294,000 |
| Recurring % | — | 92% | ~71% |
| Normalised EBITDA | Reported PBT (FY25) | ||
| Profit | ~£120,000 | £174,533 | |
| × Recurring fee | × Normalised EBITDA | × Base-run-rate EBITDA | |
| Asking price £661k ex-pipeline | ~2.3× | ~5.6× | ~4.1× |
| Managed | Rent-collect | Tenant-find | |
| Properties 180 let · 145 landlords | 163 | 15 | 2 |
| Avg rent (pcm) | Mgmt fee | RPE (norm.) | |
| Book economics | £1,400 | ~10% | ~£147k |
Downside · Professionalise
~£120k
Resale ≈ £720k–£1.05m. Capital protected with cushion (vs £661k).
Base · Enhance
~£165k
Entry ~4.1×.we underwrite to this
Upside · Transform
~£210k
+ AI-native run-rate & the GF roll-up. ~3.2×.
Chapter 2
Analysis — the financial model
Builds on Chapter 1 · the honest multiple, the durability stress test, and the three cases · backed by the Flatman acquisition model v1.
What this adds. Chapter 1 said the shape is right; this prices it. As at Glenn Flegg, the headline flatters — the Barkers are barely paid (~£12.6k salary, the rest as ~£110k dividends), so a buyer must charge a real operator. Normalised, the business earns about £120k, not the reported ~£174.5k PBT — and §3 then tests how durable that £120k is. The answer is the opposite of Glenn Flegg's, and in our favour.
1The normalisation bridge (FY24 basis — our full-detail year)
| Reported EBITDA (FY24 operating profit + depreciation) | £136,700 |
| + Owner-discretionary / one-off (penalties, owner motor, entertaining, charitable, sundry) | +~£25,000 |
| + Add back directors' remuneration | +£12,570 |
| − Market operator to replace the exiting owner (loaded) | (£52,000) |
| − Employer-NI / housekeeping correction | (~£2,000) |
| = Normalised EBITDA — today | ≈ £120,000 |
The business looks ~£15–55k more profitable than it sustainably is — 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.
2The recurring annuity (FY25 lettings £320k)
- Fully-managed recurring fee ~£270k · rent-collection recurring ~£24k → recurring fee income £294k — ~92% of lettings, ~71% of revenue. An unusually clean annuity.
- Non-recurring lettings (let-only / tenant-find / renewals / admin) ≈ £26k — small. Sales desk £92k sits alongside.
3RRA + owner-exit stress test — the durable earnings base
The same test we ran on Glenn Flegg — strip RRA-banned/erodable income and owner-dependent sales — lands very differently here, in Flatman's favour.
| Fully-managed recurring fee | ~£270,000 |
| Rent-collection recurring fee | ~£24,000 |
| = Recurring fee income — DURABLE (92% of lettings) | £294,000 |
| Non-recurring lettings (let-only / tenant-find / renewals / admin) — partly RRA-eroded, but SMALL | ~£26,000 |
| Sales desk (separate) — owner/person-dependent; the sales person exits | £92,000 |
The read — and the contrast with Glenn Flegg. Flatman is 92% recurring, so the RRA-banned/erodable slice is tiny (a fraction of the ~£26k non-recurring lettings). The owner-dependent piece is the £92k sales desk — and since the sales person leaves, we'd treat it as closed / commission-only and un-underwritten anyway. So:
- The durable, post-RRA, owner-independent earnings are close to the £120k normalised EBITDA — that figure is already struck on a recurring-heavy book after a market operator. Where Glenn Flegg's durable earnings fell (from £143k toward ~£90–110k, leaving GF a book-value play), Flatman's normalised EBITDA largely survives the test.
- The real erosion risk here is not the RRA — it's the documented topline decline (~4–5%/yr, §4): the book is shrinking, and that needs diagnosing.
- The Downside floor (resale of the £294k recurring book at ~2.4–2.5× ≈ £720k–£1.05m) sits comfortably above the £661k ex-pipeline price — more cushion than Glenn Flegg.
Underwriting consequence: Flatman is the cleaner deal on durability — a genuinely recurring book, capital-protected with room. Underwrite the recurring book; treat the sales desk as un-underwritten; price against the floor (which has cushion) and watch the declining trend.
4The recurring book over time & churn
Lettings turnover has declined: £350k → £332k → £320k (FY23→FY25, ~4–5%/yr) — the key watch-item. Establish the cause (lost instructions? fee pressure? churn outrunning new business?) and gross churn from the CRM export. (Total turnover FY23 £419.9k → FY24 £442.3k → FY25 £422.6k — sales lumpiness sits on top of the lettings drift.)
5Sales business unit (separate; people-led)
~£92k revenue / 15 sales — small, lumpy, tied to the people who run it. The sales person exits, so the realistic treatment is close it or run it commission-only; it is not part of the underwritten value. Anchor on the recurring lettings annuity.
6Valuation vs thesis
At £661k ex-pipeline: ~2.3× recurring fee (the same as Glenn Flegg, at a smaller, cheaper ticket — slightly above our 1.7–2.0× rule, so negotiation room), ~5.6× normalised EBITDA (mid-pack). RPE normalises to ~£147k — already high for a traditional agency, reflecting how lean it runs. Thesis-fit ~73/100.
7Three-case underwriting (floor-protected)
| Downside | Base | Upside | |
|---|---|---|---|
| Run-rate EBITDA | ~£120k | ~£165k | ~£210k |
| × on £675k | resale £720k–£1.05m | ~4.1× | ~3.2× |
The floor holds with cushion — professionalise & sell the clean, transferable book at an institutional × recurring fee recovers at least the entry price. We underwrite to the Base (~£165k); the Upside adds the AI-native run-rate and the Glenn Flegg roll-up — same town, shared back office (combination thesis).
8Structure — a share sale (the read)
A share sale of the single Ltd company. The structural upside vs Glenn Flegg's asset deal: the company's contracts, registrations and the book transfer with the shares — no per-landlord novation. The trade-off: a share buyer inherits everything, so it must be cash-free/debt-free with a tightly-warranted SPA and the clean-up done at completion (the HP/Audi, loans, director loan). For onboarding the company + its systems come across intact, simplifying ingestion vs a per-property asset assignment.
9The deal-specific wildcards
- Shared brand & territory: pin down what the £675k conveys — the Flatman name + domains + a protected territory, or only the Langley book — and whether the Flatman-family Reading operation could compete in our patch. A licence / forced-rebrand risk would impair the goodwill.
- Related-party freehold + the long lease: re-gear to a shorter, break-able term at arm's length as a condition; don't inherit the 10-year commitment.
- Client-money control history: the 2021–23 QuickBooks issues + the 2025 client-account-vs-CRM discrepancy — reconcile client + DPS balances and confirm CMP.
10What the model still needs / the information we need (open DD)
- REDSigned FY25 statutory accounts + current-year management pack — confirm normalised earnings; reconcile the BQ (£332k vs £320k) and the £6,287 turnover/VAT gap.
- REDBrand / territory / non-compete — name + domains; any territory/licence agreement with the Flatman family; non-compete on both Barkers.
- REDFull debt & HP schedule — all debt + owner vehicles leave at completion; the £6,500 Audi VAT.
- REDPremises lease + freeholder relationship + flat sublet — openness to re-gear to a shorter, break-able term.
- REDClient-account & DPS reconciliation at a cut date; CMP/scheme; the 2025 correction.
- REDStaff — confirm the lettings person stays (terms/role); the sales person's notice/redundancy; reconcile the £90–92k wage line to the two-person list (~£63k).
- AMBERCause of the topline decline + true churn from the CRM export; the lettings CRM identity + a test export; the compliance schedule; redress-scheme; % of book on current signed terms.