One of the most important factors of scaling a recruitment business is ensuring you have the cash flow to support the growth. Overstretching your growth can lead to additional pressures and worst-case scenario you’ll have to downsize and start again. Cashflow management is important for:
Recruitment Entrepreneur is one of the most successful private equity investors in recruitment businesses. We typically invest in £250k in a new portfolio partner; this investment enables the business to rapidly scale and build something of true value. Our investment also enables our founders to earn a competitive salary from day one, whilst simultaneously investing in their future by creating personal wealth through equity.
James Caan CBE and his investment team personally invest alongside the founder, making each investment a true partnership.
The culture within Recruitment Entrepreneur is focused around both wealth creation and building a strong income stream. Most entrepreneurs never really get the opportunity to build real value in their businesses; our platform and philosophy are based around James Caan CBEs personal experience and journey as an entrepreneur.
James is one of the few entrepreneurs in the UK who’s not sold one company, but eight. Each of the recruitment businesses he's sold has been able to achieve a premium value, based on his track record and reputation for building world-class businesses. As part of the Recruitment Entrepreneur portfolio, partners we invest in have the advantage of leveraging all the knowledge, experience, and expertise from James, the senior management team, and the wider group portfolio founders to support them on their journey of wealth creation.
At the point of realisation and exit of the last group of businesses James sold, they had a combined GP of $81m and EBIT of $18.6m. Due to the scale, size, diversity, geographical spread, and quality of earnings we were able to achieve a multiple of 8.6x earnings. Our current strategy in Recruitment Entrepreneur is to replicate the same success we achieved here.
The ultimate objective of partnering with Recruitment Entrepreneur is to build a successful business and achieve a profitable exit.
Recruitment Entrepreneur invests alongside the founders in any business venture. Our model ensures all founding entrepreneurs have the opportunity to repay their investment before a realisation event, in the most tax efficient way. Investments are in the form of loans which are paid back when cash flow in the business allows, which is typically within year two of operation, and are fully repaid between year two and four.
Recruitment Entrepreneur enables all founding partners to maximise their incomes to create a good quality of life whilst building their businesses. As soon as the initial investment has been repaid and the company is profitable dividends start to be paid. Dividends are paid out of any free cash flow in the business that isn’t needed to fund future growth. Ongoing dividends are paid out in accordance with company performance and future profitability.
On average, our portfolio partners begin to receive dividend payments in year three, however this is variable and dependent on a businesses’ individual performance. In 2020 we paid total dividends of $2.4m.