The importance of being profitable

by Catherine Woods - Friday, 19th October 2007 -

Growth is good; everyone knows that. But too much growth can put an FD trying to take a company to the next level in a tricky situation, as Eden Brown’s Michael Sterling discovered.

Eden Brown, a recruitment company, was privately owned and one of Sterling’s roles was to help the owners decide what their objectives were.

“We spent two years deciding how to grow the company. The options were floating, a trade sale or pursuing private equity,” he says.

The problem was the company had “almost become too large to be acquired”.

“It had grown dramatically, which restricted the number of buyers although the venture capitalists didn’t see it that way.”

In June 2007, Eden Brown was acquired by Hamilton Bradshaw Human Capital, an investment fund specialising in the staffing sector.

Sterling says the team at Eden Brown realised that to get a certain amount for the company, a certain level of profitability had to be achieved. “We had been chasing growth at the expense of the level of profitability that the industry expected.”

Eden Brown employs more than 250 people and current year turnover is expected to top £180m. In addition to offering recruitment services, Eden Brown also has a vendor management business.

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