A recruitment firm which had ambitions to become a £50 million business by 2020 was sold for just £130,000 before administrators were appointed, documents filed at Companies House reveal.
The business of PRG Recruitment LLP, which had been one of Scotland’s best-known agencies, was sold to its management team in August in a pre-pack deal after hitting cash-flow difficulties.
The company, which had been founded by chief executive Steve McCutcheon in 2002, specialised in professional services recruitment and opened offices in Edinburgh, Glasgow and Aberdeen, but in recent times had been impacted by the oil and gas downturn.
A report by administrators Paul Dounis and Adrian Allen of RSM Restructuring Advisory said that the firm had encountered difficulties following the closure of its Aberdeen office in April 2015.
It said steps were taken to return the business to profitability including halving the workforce from its peak of around 50 full-time staff, but the company still struggled.
The report says that the sale of the business to the management team was for £130,000 to be paid in instalments over a year.
The administrators said that the sale produced a better result for the creditors as a whole than it would have had the company ceased to trade and the partnership been wound up.
The business was bought by Colesco Consulting, headed by former PRG executives Margaret Richmond and Lynne Macdonald.
At the time of the deal Dounis said: “Preserving the value of the business and continuity of service to key clients were our key priorities and we are extremely pleased to have been able to achieve both objectives.
“The deal allows for the preservation of a long established business and saves a number of jobs in Scotland.”
Richmond, who previously headed up PRG’s Glasgow office and is now managing director at Colesco Consulting, said at the time of the sale that it had “enabled a talented, dedicated and high performing team to continue to deliver a quality service”.
Macdonald, operations director of Colesco, spent six years as an associate director at PRG.
PRG specialised in recruitment in sectors including accountancy and finance, business change and IT with clients in industries including oil and gas.
In an interview with The Scotsman last year McCutcheon signalled ambitions to grow the company into a £50m business by 2020 after he said turnover rose by more than 70 per cent to £10m in 2014.
McCutcheon went into the recruitment industry in the late 1990s, having initially studied law and working in a legal firm for a couple of years before becoming a business analyst.