Gary Ashworth knows how to make a company successful, having made a mint for investors with Abacus Recruitment in the late nineties. Just be sure not to mention brokers in his presence.

Making a genuine splash on AIM isn’t as easy as it used to be. A company can often feel like ‘a pea in a bag of frozen peas’. So says Gary Ashworth, executive chairman and founder of IT recruitment specialist InterQuest, which listed in 2005 with a £4 million funding at 55p that valued the company at £14 million.

Ashworth admits that ‘AIM has only started working for us during the last six months, but it has taken 18 months for us to get on the radar’. He attributes this slow start to the appointment of a broker that wasn’t quite right for InterQuest.

A new broker was appointed at the end of last year that is, says Ashworth, hungrier
to pursue what’s in the best interests of the business. ‘The problem with brokers is that you can pay thousands in fees but you’re not really their client: they work for the fund managers [and institutional investors],’ he says.

It’s a view that’s been reached after a year of rapid growth to December in which turnover grew by 107 per cent to £57.22 million, with gross profits sparking up by 84 per cent to £9.01 million.

Bolt on and build

While 15 per cent of the growth was organic, the surge in turnover was largely attributable to two acquisitions: People Co, which specialises in SAP, software development and testing, and Sand Resources, which is focused on public sector organisations. The companies were purchased for £5.4 million and £5.2 million respectively.

Ashworth says that, at the current 105.62p, InterQuest is now fairly valued at £34 million. His goal from here is to create a £200 million business posting profits in the region of £20 million. Ashworth observes that ‘in a timely way, we do want to deliver dividends’.

Of course, there will be many other executives on the junior market with similarly lofty ambitions, but the laid-back Ashworth certainly has experience on his side. In 1999 he sold Abacus Recruitment to Lord Ashcroft’s Carlisle Holdings for a tidy £17 million, giving initial investors a tenfold return. That venture was backed by entrepreneur and Channel Four head-honcho Luke Johnson, who is a non-exec at InterQuest.

‘Going forward, we will be looking for chunkier acquisitions,’ says Ashworth, noting that operating within niche sectors is the key to achieving good margins. These recruitment channels include retail and “e-tail”, public sector, SAP [accounting software], banking, and communications.

When it comes to acquiring a company, Ashworth has a clear policy: if executives are to leave, he advocates a short earn-out period. By contrast, if they are retained, he prefers to offer a mixture of share options and cash.

In essence, InterQuest has adopted a bolt and build strategy: ‘We keep a tight control on the financials but we manage operations with a lighter touch. By that I mean we don’t try to integrate. We want our acquired companies to keep their own culture as their own brand is important.’

Fishing for profits

Restlessness is a trait with entrepreneurs and Ashworth is no exception. He’s recently taken an eyebrow-raising 33 per cent stake in the ailing restaurateur and fishmonger FishWorks. ‘There is an honesty about Fishworks. I like the concept of the business – it isn’t faddy. It appeals to a broad range of people and ages,’ he says.

Losses at the AIM-quoted seafood chain were exacerbated by the decision to open seven restaurants within ten months. Says Ashworth: ‘FishWorks is a good idea that was poorly managed. The business model will stay the same but you need to get the staff right. Some of them had taken their eye off the ball.’

And yes, Johnson, with his experience as former chairman of Pizza Express and Belgo, is involved with this venture too.