16 May 2018 | 02.28 pm
Sigmar Recruitment’s French Connection
Inside the biggest recruitment agency trade sale for years
16 May 2018 | 02.28 pm
Engineering graduate Adie McGennis, chief executive of Sigmar Recruitment, has had quite a ride during his career. He was a board member of Marlborough plc when in 1997 it became the first service business in Ireland to float on the stock exchange. When that business flared out (not McGennis’s fault), he was a co-founder of Sigmar in 2002, which hitched its wagon to Newcourt plc in 2004.
Five years later, Newcourt also hit the rocks, after the mini-conglomerate loaded up with property debt. Once again, McGennis was the innocent bystander, and he had to scramble to buy back Sigmar from the Newcourt receiver.
“A lot of people in the company invested, and some of them even sold their cars to find the cash to put into the business for working capital,” McGennis recalls. “The unity and the trust that was built up put us in really good stead later on. The whole collective positive attitude of everyone mucking in and getting on with it was our proudest moment.”
The Newcourt episode in 2009 coincided with a hiring slump, but as the economy recovered so did the financial performance of Sigmar’s operating company, MFM Recruitment Ltd. For the recruitment agency market leaders such as Sigmar, sourcing the candidates employers want is a wonderful business, with gross margins of 35% to 50%.
Fourteen years on from the Newcourt fiasco, McGennis (53) and nine colleague shareholders have once again sold control of Sigmar, though this time their partner choice looks a safer bet. The new owner is Groupe Adéquat, a family-run French recruitment business based in Lyon that had gross turnover (including contractor and temporary staff salaries) of around €900m last year.
Deal details are being kept under wraps, though McGennis says there is an earnout period of up to five years, which he describes as a staged investment. “We retain control the Irish operations so we are absolutely happy with the arrangement. We are very much aligned insofar as we had a five-year plan already.”
MFM Recruitment, which owns Sigmar, has ten shareholders. McGennis speaks for 39% of the equity, with directors Frank Farrelly and Robbie Mac Giolla Phadraig each owning 19%. The other principal shareholders are Barry Rudden (8.7%), Dervla Owens (4.3%), Malwina King (3.6%), Lorraine McGovern (2.5%) and Elaine Murray (2.5%).
Jean-Marc Brun was 40-years-old when he established Groupe Adéquat in 1987. The founder is now chairman of the supervisory board while Arnaud Brun is the deputy managing director. The family, and managing director Jérome Rieux, have expanded the company in a small way into Belgium, and now they want to explore Anglophone territories, not just Ireland but also America. They identified Sigmar as a suitable beach-head to achieve this goal, and McGennis believes the Irish and French companies are a good fit.
“Ireland is held in high regard worldwide in the staffing industry and there is a reasonable amount of consolidation happening internationally,” says McGennis. “Groupe Adéquat approached us and we had a few conversations. They haven’t made an investment of this scale internationally before, so obviously we both had to understand the way it might work.
“In the past we had other approaches and what we always said to our staff was that we would only consider a deal if we found a partner to facilitate international expansion, and who was culturally aligned to our values. That’s not to say we are perfect, but we do some things our own way. If the right partner came along and it helped our growth, we always said we’d consider it.”
Part of Sigmar’s attraction to Groupe Adéquat is that, for a company of its size, the Irish firm is well connected in the US, especially in Boston and San Francisco. “We have had a lot of success in managing startup operations for US companies coming to Ireland,” McGennis explains. “Some of those companies have asked us to do hiring and resourcing projects in Europe and the US, and we run that out of an office in Tralee.”
Sigmar Recruitment has 125 permanent staff. Most of the business centres on permanent placements, though there are also around 500 contractors on the books. McGennis is expecting turnover through 2018 of €36m, with a target profit of €3.5m.
“I’d like to think we’re seen as thought leaders in terms of providing talent solutions, and we are doing that very well in Ireland,” says McGennis. “We are still pretty agile and we have a good training and development programme for people coming in. After this deal there will be very little change in our approach to scaling up in Ireland.”
The Sigmar/Groupe Adéquat combine places this staffing business in the top 50 in the world. The strategy now is achieve 50% growth, which would move the new group into the global top 25. For this to happen, the French need to ensure that the Irish are as enthused as they are.
“The relationship with the French guys has been extremely positive and rightly so,” says McGennis. “Their senior people have been over here a lot and they met everyone in the company on the day we agreed everything. That was hugely important to us, as the most important aspect if this is the relationships. Hopefully we are going to be partners for a long time and see out this adventure.”
Photo: Groupe Adequat directors Jerome Rieux (left), Philippe Guichard (right), and Arnaud Brun (third from right) with Sigmar principals (left to right) Robbie Mac Giolla Phadraig, Adie McGennis and Frank Farrelly