How about this for a credit-crunch conundrum? In an economic climate where cash isn't just king, but emperor of all it surveys, John Bowmer has lots of money to spend – and a list of potential target companies to spend it on. But he still isn't happy.
Bowmer is co-chairman of the AIM-listed recruitment company, Kellan Group, which reported its annual results on Thursday. The numbers tell the tale of what Bowmer and fellow co-chairman (and fellow football nut) Tony Reeves have got into the habit of doing: building recruitment businesses, driving profitability, and selling. In the year to end June, the acquisitive Bowmer and Reeves reversed their latest vehicle, Berkeley Scott, into the larger Quantica for £28.3m, rebranded the group Kellan (Gaelic for powerful or strong, or very good at diddly-diddly dancing – I forget) and took turnover to £25.4m from £8.3m.
More to the point, despite restructuring costs, the company reported a profit of £1.3m compared to a loss of £1.2m the year before. But, there's always a but nowadays. The fact is that Kellan Group's share price has been, let's be delicate, a right old dog – and that's why Bowmer's not happy.
Or, as he puts it himself: "I'm pissed off, actually." Yes, the market gives and the market takes away.
Presumably, that's why the share price is languishing at 16.5p, down from 47p a year ago. Bowmer's disappointment with this is palpable: "Events in the wider world have affected us. They've affected everyone. The plan was to use our stock with a proper valuation and acquire targets at a non-dilutive price. Now our emphasis has to be more on execution, on showing the market we've acquired good assets and we can make them perform well.
"We continue to look for specialist or niche players that retained higher margins in sectors such as IT, finance and accountancy, legal, some types of engineering and even some high-end clerical business. Now we're moving to the second phase of this unique downturn, some staffing sectors, especially finance, are under increasing revenue pressure from the recent declines in overall employment. We think if this intensifies, those companies that haven't managed their cash well may be forced to sell. In the past, firms with excellent brands have run into temporary difficulties and have been sold. If this situation arises, then Kellan will be ready and able to make acquisitions."
Confident words, indeed. Bowmer made his first fortune in recruitment through piloting small companies to growth, a career path that ended up with him as chairman of Adecco, one of the biggest recruitment players. He and Reeves then did it all over again, taking low-end clerical recruitment specialist Hot Group to critical mass through growth and acquisition, and selling it in 2005 to Trinity Mirror for just over £50m. But a lot of that acquisition was done with paper.
The market price of Kellan has put a brake on the company's short-term ambitions: "We can still look at acquiring companies with a value of up to £10m, without resorting to equity," Bowmer says. "We're considering a few companies. We're looking, but not very close to making an offer."
You get the feeling that this is a man who loves the chase and thrill of acquisition. He loves the game, but the market has had the impertinence to steal the ball. "I have to say the deal flow has really slowed," he intones mournfully, in an accent that retains a flavour of his native Derbyshire. "We were getting a dozen or so propositions a week, a year ago. We're probably getting that many a month now."
Bowmer spends most of his time in his northern Californian home. But he's over here now for the Kellan results, to have a bit of fun with Reeves, and he's also looking out for something to spend that cash on: "I'm doing a recce for a company that services the IT and accounting sectors in the south of England. It would be a good fit for the Quantica operation, whose main strength is in the North."
But even for a cash buyer, it's still not exactly what you'd call a buyer's market: "People are retrenching. They think the market's undervaluing their companies, and so private owners won't sell. The undervaluation is what's scuppered the Michael Page-Adecco deal. It's very difficult to do a deal when both buyer and seller know that the market valuation is well below what an asset is actually worth.
"We're waiting for things to get so bad the price of the stock's justified. That hasn't happened yet. Just about all analysts say that recruitment companies will lose about 30 per cent of sales. But the market's valuing companies on making about half the profit they're actually reporting."
That might seem like a rather familiar bit of bleating. But Bowmer radiates a steely determination to support the price and drive it up from present levels.
Although the coming economic downturn will see many people lose their jobs, Bowmer argues that fewer permanent jobs mean more temporary employment, as employers cut back, then realise they actually need some bodies to get the work done.
This is an area which Kellan specialises in, and Bowmer mellows slightly when he addresses the issue: "I think we're reaping the benefits of deregulation and the openness of the UK economy to foreign labour. Lots of people from overseas, now they find themselves out of a job, will go home. Britain's attitude to things allows us to deal with hot and cold. Our flexibility is a built-in stabiliser, unlike the labour markets in France and Germany, where things are more rigid."
In a competitive world, Bowmer is noted for his will to win. A fanatical golfer, he hates losing so much that he will routinely spend five minutes looking for a lost ball. He's determined, competitive and patient. Qualities – in spite of all the robust figures the business is reporting now – you feel Bowmer's going to need.
John Bowmer: The will to win
1962-65 Gained science A-levels, from Herbert Strutt School, Belper, Derbyshire
1966 Graduated from Keele University, BA (Hons) in Economics and Politics
1967-70 Moved up from graduate trainee to senior financial analyst at Ford Motor Company
1972 Graduated from the London Business School with an MSc
1974-81 Starting as financial controller of the marketing division at Polaroid (UK) Ltd, he went on to become general manager
1981-87 Chief executive (Pacific) at MAI plc, he then became chief executive of personal financial services 1987-2005 Moved from chief executive of Jonathan Wren to become chief executive of Adia to take the job of chairman of Adecco
2007 Co-chairman of Berkeley Scott Group; co-chairman of AIM-listed recruitment company Kellan Group, along with Tony Reeves