Kevin Meyer and Aubrey Calderwood sell their UK tax incentives business to Gateley for £2.72 million

Gateley (Holdings) Plc has announced the acquisition of Capitus, a UK specialist tax incentives advisory business.  Capitus, to be renamed Gateley Capitus, is the first acquisition that Gateley has made since its admission to AIM in June 2015.

Terms of the deal

Consideration payable comprises £1.59 million in cash, funded out of the Group’s existing cash resources and the issue of 1,122,753 ordinary shares in Gateley, which, based on Gateley’s closing share price on 8 April 2016, gives a total consideration of £2.72 million.  The acquisition is being made on a net working capital neutral basis. Capitus is a profitable and well established business.  In the year ended 30 June 2015, Capitus had revenues of £1.38 million and generated an operating profit of £593,000.  The Board expects the acquisition to be immediately earnings enhancing.

Background to Capitus

Established in 1997, Capitus is a UK specialist tax incentives advisory business, advising institutional and professional investors on their commercial property transactions.  Capitus co-founders, Kevin Meyer and Aubrey Calderwood have over 50 years’ combined industry experience.  Capitus has offices in London, the Midlands, Northern Ireland and the Republic of Ireland, allowing it to serve the entire UK market, as well as providing its services to overseas projects.  Capitus’ tax incentive advisory services extend to capital allowances, international tax depreciation, investment incentives (for regeneration and sustainability) and research and development tax reliefs.

In the capital allowances market, press sources have estimated that there are in the region of £96 billion of “unclaimed” allowances in the UK, illustrating the scale and financial significance of this allowance alone.  It is a core market where Capitus has combined accumulated skills from two highly complementary disciplines, surveying and taxation expertise, to enable it to offer a premium specialist client service.  Capitus’ management believe that recent changes to tax legislation in the UK will lead to further increased demand for expert advice in these areas.

Acquisition rationale

The acquisition of Capitus is consistent with Gateley’s growth strategy to acquire businesses offering complementary professional and other specialist services to clients in Gateley’s target markets.  Capitus has developed a strong blue chip client base of national and global companies which provide regular, repeat business.  The addition of Capitus to the Group also provides Gateley with expertise in a range of tax incentives, opening up attractive and growing markets and diversifying the Group’s income streams.  A number of new business opportunities have already been identified within the Group’s existing real estate and tax practices.

Integration

Gateley Capitus will operate as a wholly owned subsidiary of the Group with its own existing dedicated management team and employees.  An operating board, made up of senior management from both Gateley and Capitus will oversee the ongoing delivery and development of the business.

Commenting on the acquisition, Michael Ward, CEO of Gateley, said:

“I am delighted to welcome Capitus to Gateley; its addition to the Group is in line with the strategy we outlined at flotation last June, to make selective acquisitions which offer complementary specialist services.  Capitus is a recognised and highly respected tax incentives advisory business and I am particularly excited by the additional expertise and cross referral opportunities the business will bring to the Group.”

Commenting on the acquisition, Kevin Meyer and Aubrey Calderwood (pictured), co-founders of Capitus said:

“This is a very exciting opportunity for Capitus.  It provides us with an excellent platform for our continued growth and allows us to expand the range of services that we offer.  We have, for some time, realised that having access to high quality legal expertise, particularly in the areas of real estate, construction and tax, would enhance the quality of services that we can offer our clients.  Our tie up with Gateley, which we believe to be the first between an RICS regulated firm and a full service national law firm, gives us access to this expertise and provides us with many additional commercial opportunities.  We are confident that this shall help us achieve our aim of becoming the number one fiscal incentives practice in the UK.”