Key facts
- Connecting Excellence Group (XCE) is acquiring a specialist UK and U.S. recruitment business.
- The target business generated £1.79 million in revenue and £431,000 in EBITDA over the past 12 months.
- The target company holds 8.216 Bitcoin.
- XCE's strategy is to use M&A to acquire profitable businesses and allocate earnings towards Bitcoin.
- The deal is subject to due diligence, funding, and a definitive agreement.
Connecting Excellence Group (XCE) has entered into binding Heads of Terms for its first proposed acquisition, targeting a specialist recruitment business in the UK and U.S. This target company generated £1.79 million in revenue and £431,000 in EBITDA over the past 12 months and notably holds 8.216 Bitcoin. The transaction is contingent on further due diligence, securing funding, and a definitive purchase agreement.
XCE's strategy is to acquire profitable recruitment businesses, retain a significant portion of their earnings, and use the generated capital for growth and to increase its Bitcoin holdings. The company aims to acquire businesses with strong earnings power and growth trajectories, similar to its own existing business, Spencer Riley, which saw revenue increase by 20.6% year-over-year. The acquisition target also demonstrated robust growth, with revenue up 21.5% over the same period.
The proposed deal involves an initial cash consideration of £575,000, with an estimated net cash outflow of approximately £150,000 after accounting for vendor settlements. Further payments are structured, with a portion due in 2028 and the remainder deferred and linked to EBITDA performance through fiscal 2029. XCE anticipates retaining between 75% and 85% of the acquired business's cumulative EBITDA during this earn-out period.
Beyond earnings, XCE's model includes acquiring balance sheet assets, such as cash reserves, and potentially converting them to Bitcoin. In this specific acquisition, the target already holds Bitcoin, which XCE plans to purchase at market value, effectively exchanging cash for an equivalent amount of Bitcoin while also acquiring the underlying business and its earnings stream. This approach aims to simultaneously expand XCE's operating business and its Bitcoin assets.
XCE plans to operate acquired companies with autonomy, maintaining their existing brands and management teams, positioning itself as a decentralized acquisition compounder. The company has been actively growing its Bitcoin holdings, reporting 72.94 BTC as of September 1, an increase from 9.27 BTC at its IPO. This growth has been fueled by capital markets activity, including a recent 10 BTC contribution from investor Adam Back.