Status
Investment Case
Grafton.
PROJECT BARBARA · DEAL DOSSIER
Cover current as at 10 Jun 2026
Ref J300
Cover current as at 10 Jun 2026
Ref J300
Deal Memo · Acquisition Target
Glenn Flegg & Co
Langley, Slough SL3 · sourced via Adam J Walker (Julie Drake) · asset & goodwill purchase (partnership) · est. 1991
Verdict
🟢 Pursue — offer
Priority
1
Lettings-led, recurring-heavy book whose key person is an employee, not a partner — the floor protects capital at our £900k and the Base clears the hurdle.
Guide£1.10m (£1.01m ex-pipeline)·
Our offer£900k (in preparation)·
StructureAsset & goodwill, cash-free/debt-free·
SoftwareVeco (Eurolink)·
Sales pipeline£89,907 (paid as received, net of team commissions)
Owners & key people
- Glenn FleggFounder · 70s · retired in practice — the selling figurehead
- Simone & Nick GeorgesonDaughter + husband (25% each) · Nick weekly oversight (read: more involved than claimed) · Carr Williams conflict → non-compete
- Pat — Head of PMTHE key person (employee, not partner) · raised to £40k · TUPEs across · retention bonus at completion
KPIs at a glance
| Sales | Lettings | Total | |
| Revenue LTM to Mar-25 | £89,907 | £560,636 | £650,543 |
| Recurring fee 79% of lettings | — | £440,759 | £440,759 |
| Maintainable | Normalised | Reported | |
| Profit v5.2 · FY23 basis · post-RRA + Pat raise | £156,265 | £176,620 | £171,684 |
| × Recurring fee | × Maintainable | × Post-AI EBITDA | |
| Guide £1.01m ex-pipeline | 2.29× | 6.46× | 3.81× |
| Our offer £900k ex-pipeline | 2.04× | 5.76× | 3.39× |
| Managed | Rent-collect | Let-only | |
| Properties 373 let · 349 landlords | 289 | 66 | 18 |
| Avg rent (pcm) | Effective fee | Rec. fee / managed prop | |
| Book economics leakage vs 10% rack — verify in Veco | £1,318 | 8.2% | £1,525 / yr |
| Headcount | FTE (norm.) | RPE (norm.) | |
| Team | 14 people + partners | 8.4 | £77,630 |
Three-case underwriting (run-rate EBITDA, model v5.2 · entry × at our £900k)
Downside · Professionalise
£156,265
Maintainable earnings; exit at 2.4× recurring fee → £1.06m ≥ £900k. Capital protected with ~£160k margin. Entry 5.76×.
Base · Enhance
£216,310
+ off-the-shelf tech, right-sizing, fee discipline. Entry 4.16×.we underwrite to this
Upside · Transform
£265,436
+ the AI-native run-rate & roll-up leverage. Entry 3.39× — free optionality.
Sensitivity — the one dial: partner labour £30k/£45k/£70k → maintainable £171k/£156k/£131k. Unpriced upside: fee leakage (~£83k/yr ceiling) and the S13 fee ladder (~£40–55k/yr) — both pending Veco verification.
Chapter 3
Investment Case — the judgement, the offer, and the floor
Builds on Ch.1 Preliminary and Ch.2 Analysis · 10 June 2026 · model v5.2 · offer shape v3.
Recommendation — PROCEED: offer £900,000 (ex-pipeline). The business is a clean, lettings-led, recurring-heavy book whose key person is an employee (Pat, Head of PM), not a partner — the continuity risk we feared is smaller and purchasable. Our valuation playback of the broker's own sum-of-parts framework lands £900k at the centre of their method with abolished renewal income at nil — and the Downside still protects capital. Offer shape v3: 90% (£810k) at completion · 10% (£90k) 12-month holdback measured against 100% of current recurring income (£9k per point, exhausted at 90%) · sales pipeline paid as received net of team commissions.
1The earnings, honestly stated (v5.2)
Two re-bases since Ch.2. Normalised EBITDA today is £176,620 (Ch.2 said £142,620): the Nick call re-priced partner labour £70k → £45k central (Glenn retired in practice; Simone background; Nick weekly oversight) and added £9k prudent of the £18k family wages (the kids are leaving). Maintainable EBITDA is £156,265 — the new underwriting anchor: normalised less £15,655 RRA-abolished renewal fees and £4,700 for Pat's raise (retained — she is the person the book depends on). Corroboration: the sellers' own Mar-26 projection sits £15.8k below LTM — almost exactly the renewal slice. The one dial: partner labour £30k/£45k/£70k → maintainable £171k/£156k/£131k; Ed's read of Nick's true involvement ("once a week" ↔ "not full time" is a wide range; he still runs it fairly closely) supports holding £45k central. Settled by Xero payroll + team interviews.
2Three cases — the floor holds at our price
| Downside · Professionalise | Base · Enhance | Upside · Transform | |
|---|---|---|---|
| Run-rate EBITDA | £156,265 | £216,310 | £265,436 |
| Entry × at £900k | 5.76× | 4.16× | 3.39× |
| Read | Exit 2.4× rec. fee ≈ £1.06m ≥ £900k — protected | The case we underwrite | Free optionality |
At £900k the floor test passes with ~£160k of headroom (it passed only barely at guide). Fee leakage (effective 8.19% FM vs 10% rack; ceiling ~£83k/yr) is recorded as unpriced upside pending per-property verification in Veco — in no case.
3Continuity — the Pat pivot
The operational truth from the Nick call: Pat (Head of PM, 2y, raised to £40k) and the Property Manager hold the landlord relationships and TUPE across with the business. Glenn is retired in practice; the partners' consultancy is de-emphasised. Retention design: £5–10k bonuses for Pat (and the PM) at 6/12 months, agreed at completion; the customary 2-weeks-in-office + 3-months-on-call from the sellers; anything more by paid side letter. The glide-path narrative (selling since ~2024; backfill team hired; 13 new instructions/yr vs 90 re-lets) reads as a harvested book with the growth engine switched off — dormant upside, not decline.
4The book as a contract asset
The 2026 Terms of Business are silent on assignment → benefit assigns; the rest by notice + conduct; consent is commercially moot (a 4-week-notice book — the asset is behavioural, not contractual). The caveat that matters: the 2026 ToB is the new post-RRA template — the 349-landlord book sits on older, unseen vintages. The vintage census (Veco signed forms) is a critical DD item and a condition of our offer. The S13 fee ladder the sellers themselves priced (£180/£360/£600) ≈ £40–55k/yr gross potential at near-zero marginal cost under our automation — again unpriced.
5Structure & execution
AcquisitionCo receives the assets and goodwill (right to nominate another group company as transferee pre-closing); team under TUPE with direct consultation (<50 employees) run in parallel with legals; exchange 3–4 weeks from agreed heads; deliberately short conditions (May management accounts; book and compliance verification per property; ToB census; client-money reconciliation; TUPE particulars).
6Risks
- REDToB vintages unknown — the book's actual paper; census conditions the offer.
- REDXero verification outstanding — gates the offer; Simone has offered access.
- AMBEROffice move 1 July (pre-completion, to Link Spaces — a desks-only serviced space): high-street presence loss unproven — priced via the 10% discount; July/Aug churn data will speak; landlord-comms plan a DD ask. Key holding for ~350 properties undiscussed (contractor access, viewings, emergencies) — new DD item.
- AMBERPartner-labour dial (£131–171k maintainable range) — settled in DD.
- AMBERBroker urgency (the "Emeria 3-week clock") — treated as colour, not fact; we move quickly for our own reasons.
- GREENFloor protected at £900k; key person purchasable; Veco well-adopted (ride day one per the tech roadmap).
7The offer package
Heads of Terms v3 (this offer, structured) · DD plan = the 16 structured items in the deal room (Xero, census, Veco access, RRA evidence, per-property compliance) · 90-day memo — to follow before completion (Pat retention, GBP/reviews migration, the landlord pulse, the mirror build).