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Time for a ReThink

Created:
19 June 2008
Written by:
Graeme Davies

Getting any sort of float away at the smaller end of the market in the current conditions is a significant achievement, never mind floating a recruitment company in the teeth of biting headwinds from a worsening economic environment - but that is what ReThink has managed this week.

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Floating a recruitment company now, and indeed investing in one, might seem like madness and this may be reflected in the modest £800,000 ReThink managed to raise. But, at a time when predictions about the number of companies that look likely to remove themselves from the lower reaches of Aim are rising sharply, what on earth prompted them to open themselves up to the rigours of a public quotation and risk, at a market capitalisation of less than £10m, becoming just another small fish in a very big pool?

Managing director John Butterfield admits he thought the float 'was going to be almost impossible' but was surprised by the level of interest. He credits 'a great set of advisors' for pushing the deal through as well as the fact ReThink is established and profitable.

ReThink specialises in IT professionals and white collar construction recruitment, both permanent and contract. It says neither sector has yet to suffer any significant slowdown despite the worries about the wider economy. A further leg of the business offers IT project delivery and a recently opened plain vanilla recruitment office in Exeter named Integritas offers a further leg to the business.

In December ReThink acquired Southend-based KeyPower Consultants, a £10m turnover IT contractor business with operations in London and Lancashire, both of which have been integrated into ReThink. The Southend office remains as a satellite office. A similar revenue performance from KPC this year will enhance ReThink's overall revenues by a third.

ReThink's management are confident they can dodge the economic slowdown and take advantage of it to snap up struggling rivals. They have considerable experience in the recruitment sector to fall back on and clearly enough confidence in their abilities to dare to float at this time. Only time will tell but they are going to have to swim very hard and shout very loud to get much attention among the lower reaches of the Aim market. To its credit ReThink's shares rose from 10p to 12.25p on the day of the float and are unchanged now, but it is too soon so judge the company on its longer term prospects, especially with the economy teetering on the brink of a serious slowdown.

MORE ON SMALLER COMPANIES

See also: Recruitment's day of reckoning and Harvey Nash reassures on trading

Read more SmallWorld columns, devoted to smaller companies and their managers, on the SmallWorld page

Read more articles and share tips for Aim companies on the Aim companies page.

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