Monday, 9 February 2009

Morse closer to consulting exit

(By Anthony Miller). Morse has found a buyer for the largest part of its investment management consultancy (IMC) business, selling CSTIM to the UK arm of US management consulting firm, Navigant. Morse acquired CSTIM in April ’04 for some £6m and will get £1.3m cash up front from Navigant with another possible £400K profit-based earn-out. CSTIM fell into loss in Morse’s H1 (to 31st Dec. 08) and revenues had declined to £3.2m, so I wouldn’t necessarily be placing huge bets on the earn-out bit. The deal was ‘do or die’ for CSTIM – Navigant would only buy if Morse agreed to terms without the delay of going to shareholders, for which the UKLA gave approval - otherwise Morse would have had to close the business. The rest of the IMC businesses will be closed down or sold off.

Despite the ‘take it or take it’ nature of the deal and the associated £14m goodwill write-down, this was absolutely the right thing to do. As we said back in September (see Morse still aims for 7.2% margin), there’s really little option left for Morse CEO, Kevin Loosemore, other than to knock the five (soon to be four) Morse businesses into best possible shape and get the best possible price for each. So, one down ...

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