Good afternoon, and welcome to the MHA plc investor presentation. Today, we are joined by Rakesh Shaunak, Chief Executive Officer, and Steve Moore, Chief Financial Officer. Questions are encouraged throughout this webinar and can be submitted via the Q&A box situated on the panel on the right-hand side of your screen. I'll now hand over to Rakesh to begin the webinar. Over to you, Rakesh.
Brief intro from Scott earlier, but just to sort of go into a bit more detail. Rakesh Shaunak, Chief Executive Officer, CEO of MHA. Also a client service partner, and a qualified chartered accountant and tax advisor. Steve.
Good afternoon, everyone. Likewise excited to be here. Steve Moore, Chief Financial Officer, responsible for the firm's finances, significant involvement in post-merger integration, and worked on the board with Rakesh for the last 15 years.
A very high-level view of MHA. Who are we? A full-service firm based across the U.K. and in Ireland, and I'm very pleased to say that as of Sunday, now based in South East Europe as well, so a much broader footprint than the map you see to the right of this slide. Also have an office in Cayman, and we have two offices in Ireland which came on board on the 1st of July 2024. Very pleased to have all those offices on board. We rank number 13 in the Accountancy Age League Tables. If those are of interest to anybody, they're based on size of firm, and it's quite important, and that's the reason I mention it, because our why the IPO and why this conversation is based on that.
Rank 13 in 2024, and we were the fastest-growing firm in the top 15 in that league table. We have some stats on the right-hand side, just below the map. It shows you the total headcount, the number of partners, the number of offices, and our overall revenue. The key messages from today, and some of these will be repeated and drilled down in a fair degree of detail and summarized at the end. The first message is a strong FY 2025 performance. We've announced, and you will have seen that, and very proud to say, a very successful IPO with a number of supportive investors behind us now, and we're really privileged to be in that position. 45% revenue growth. Momentum built up in 2025 continues into 2026.
We have a March year-end, so we're four and a half months into our 2026 year, and we can see that momentum continuing. Below that you see some narrative, which says trading on track. The GBP 500 million revenue, the why. I referred to the why on the first slide. Why this conversation? Why the IPO? We set a very clear goal to be in the top 10 in the U.K., and we feel that a GBP 500 million revenue will get us there, and position us very clearly in that space. We have a slide on that later. That's the why and the GBP 500 million revenue, just to give you some context there. I mentioned the South East earlier. Baker Tilly South East Europe merger earlier. Through our other mergers as well, we have a really good platform to continue the inorganic growth strategy.
Our strategy is both organic and inorganic growth, and more about that in a few moments. This is a very high-level financial and operational highlights slide. Maybe I could go to the symbols and the icons on the right-hand side. AIM listing in April 2025. A momentous occasion for the firm, but also I would like to think for AIM and U.K. PLC as well. We showed our faith both in our business, the strength of our business, in us as a partner group, and in all our colleagues, and also in U.K. PLC as well. Really proud to do that and really proud at the successful outcome. We've achieved growth across all our sectors and service lines, and more about that in a couple of moments. We've successfully integrated a number of firms in 2024 and 2025. I made reference to two of them earlier.
Obviously the most recent highlight, the expansion into Europe, the foray into Europe, the acquisition merger of Baker Tilly South East Europe, which was completed at the beginning of the week. I won't labor the points on the left-hand side because Steve will be going through those in a bit more detail, other than to say 45% revenue growth. Really, really pleased with that. Of that, 20% is organic, and all the other numbers, as you'll see, are very significant pluses with a three in front of them, 31%, 36%, 32%, and really good cash conversion. Over to you, Steve.
Before I get into the actual numbers, just a bit of explanation. In FY 2025, we were actually a partnership, and we operated as a partnership, and the partners owned a corporate group, and 100% of the profit gets distributed to the partners under that model. What we've had to do is overlay an adjustment to these numbers. They're our numbers to March 2025. They're consolidated, and then we put through a partner remuneration charge on the basis of the model that we've introduced under the IPO. The numbers that you see there are partnership numbers for FY 2025, adjusted for partner remuneration to give profit numbers after that charge, and they're comparable to how we did the numbers in the admission document.
The first set of our plc accounts will be for the year to March 2026, and when we publish those numbers, they'll be on a comparable basis to the numbers I'll go through now. Trading performance, Rakesh has already highlighted the 45% increase in revenue. We've got very strong revenue growth in this business. We've got very high recurring revenue in this business. The numbers on the left-hand side there then you can see, third row down is the partner remuneration. For FY 2025, that would have been roughly GBP 44 million, and that would give us an adjusted profit after that adjustment of GBP 36.3 million. That's up 31% on the previous year, and probably more importantly, our EBITDA number, GBP 41.1 million, also up sort of 32% on the previous year. The adjusted margin fell back from 20%-18%.
We expected that, and it's because at the beginning of FY 2025, we merged in a business in the northwest of the country called Moore & Smalley. Their operating margins were about 8% lower than our margins. We work over time to improve those margins, bring them back in line with our own. We have very strong cash conversion in this business. The numbers on the right-hand side of the slide show our lock-up. We put time on the clock. It sits in work in progress for about 21 days. We then bill our clients, and it sits in debtors for about 50 days. Our total lock-up, 71 days.
It's one of our main partner KPIs, and we publish a league table at the end of every month, and you can be red, amber, green on that league table, depending if your own lock-up KPI is better or worse than our firm-wide KPI. Very low CapEx in this business. We'd only spend some money if we were moving office, refitting an office, or we may spend some money on acquisitions. Strong historical cash conversions and the last couple of years profit through to operating cash flow is around 90%. Very proud of that. The numbers in the table, you'll see second line up, net payment to members, obviously a very high number, GBP 70 million in FY 2025. That's because, as I was saying at the start, we pay out 100% of the profit to the partners under the old model.
That's obviously stopped since 1st of April, 2025 when we're under the PLC model. Our net cash at year-end was roughly GBP 18 million, and today we have no debt in our business. The cash position's been improved by the money raised at IPO, and yeah, no debt in the business. This slide shows our fees by service line. We have four service lines: Audit & Assurance, Tax, Advisory, and a new service line, Wealth Management. We got into Wealth Management in 2022. We acquired a business. The reason for doing so was our tax advisors were working with external Wealth Management consultants, and someone else was getting the Advisory fees there. Someone else was getting the funds under management. That is a small part of our business and a part that we intend to grow in the future.
You'll see it's gone from GBP 3 million in FY 2024 to GBP 8 million in FY 2025. Because the other service lines are so large, Audit & Assurance accounting for just over 50% of what we do, that's around GBP 110 million of revenue. It's hard to move the dial on Wealth Management. The changes from FY 2024 to FY 2025, Audit & Assurance went down by 1%, and Tax and Advisory are both growing, so they've gone up by 1%. We think other than what I've said about Wealth Management, those service line splits will stay roughly the same going forward. Tax and Advisory, we're looking to grow at a faster rate. Just on the lower left, 87% of our revenue is recurring. Our partners are trusted advisors to their clients, and I'm a client-facing partner. Within my client base, I can see fees for the following year.
The clients have to have their statutory accounts prepared. They have to have those accounts audited. They have to file their corporate tax returns, and then we act for the high-net-worth individuals who own the businesses. They have to file their returns, and we do their children and their trusts, et cetera. Very high recurring revenue in this business. Then 5%, we say, is recurring. What we mean by that is I know that someone within the client base will be doing some planning work next year. At the moment, everybody's doing inheritance tax reviews. A number of clients are looking at restructuring for tax purposes or to sell a business. I can't always point out which client it'll be, but there'll always be someone doing it. That is recurring work. Then about 8% of what we do is transactional.
Insolvency work or corporate finance work. It always happens. This slide covers our sectors, and we go to market by sectors. Our partners are all aligned to at least one sector, and the sectors are led by partners who are passionate about the particular sector. They speak the client language, and they're specialists in whichever sector they're aligned to. We've got a really good spread, so we're not dependent on any one sector, and we have really strong organic growth. You see most of our sectors double-digit, and some of them even growing at 30%. In terms of clients, our largest client only accounts for 1% of our fee income. We've got a very diversified client base as well as very diversified sectors.
This slide shows our average fee growth, and if I talk about the bar chart on the right to start with, you'll see in FY 2021, this is our top 300 clients. In FY 2021, they accounted for revenue of just over GBP 20 million. By the time we get to FY 2025, the top 300 account for revenue of just over GBP 60 million. It shows the growth. Then the bubbles and the circles on the left-hand side, the top 10 clients, five years ago, the average fee was around GBP 500,000. It's now GBP 1.2 million. 150% growth. The blue circle, looking at clients from 100- 200, we've gone from just under GBP 60,000 average to GBP 140,000 average. Again, 140% growth. We're moving the client base upstream, so we've got a very good BD and marketing team behind all the partners.
As I said, we go to market on the sector basis, but those partners are targeting larger clients in the sector they're aligned to. This slide is our revenue bridge. We had a fantastic year, FY 2025. Our organic growth was 18%. If I talk about the lost clients, we have a 98% client retention. That figure hasn't changed much over the previous few years. About 2% we lost in FY 2025. We lose clients if they go bust or if the client gets sold and the purchaser brings in their own advisors. We have a process called the 3 Rs, where we look at recoveries by client, and we may actively manage some clients out if we can't achieve the recoveries that we want. That releases resource, and we put that resource on jobs where we recover 100%. We lost about GBP 3 million worth of fees.
Our fee growth on our existing clients then comes in at about GBP 10 million. We've won new work through FY 2025. Some of that work we won in FY 2024, but delivered it in FY 2025. That was GBP 10.8 million. We also won work in FY 2025 and delivered it in FY 2025, so another GBP 10.4 million. Going into FY 2026, we have work that we won in FY 2025 of about GBP 10 million that we're going to bill in the current year. The rest of the growth, around GBP 40 million, was due to the acquisitions and the largest being the business based up in the northwest, which I mentioned earlier on. Just moving on a slide on M&A. Rakesh mentioned at the start that we completed the Baker Tilly South East Europe deal at the beginning of this week. That deal was originally negotiated at 6.2x EBITDA.
It actually completed at 7.7x EBITDA because it was done at a share price of GBP 1 originally. In terms of M&A activity going forward, culture's really important to us. If we can't get past the culture point, we walk away from the deal, and we walk away from a lot of deals where the culture doesn't fit. Assuming we get past that point, then all our acquisitions are strategic, so they can be strategic in terms of a new service line. I talked about the Wealth Management business that we acquired in 2022. It can be strategic in terms of a sector. If a firm had a sector specialism, we may be interested in that business.
They can be strategic in terms of location, and we don't cover the whole of the U.K. at the moment, so we're looking at businesses in the areas where we're not represented. We structure deals. Going forward, our deals will be a mixture of cash and equity. We don't do deals 100% for cash. We want people to come on board with us. We want people to have skin in the game. At the moment, all our partners have equity in the business, and if we're looking to do a deal with a target, we would want them to have equity in the business. If anyone wants to do a deal with us and it's 100% for cash, we take the view that they're probably not in this for the long term.
They want to be on the beach, and it might not be the deal for us. As I say, we walk away from a lot of deals. We then create value after we've acquired businesses. We may offer a lot more services than the target business. We introduce our policies and our procedures from day one. We have strong policies around measuring things like utilization. We make sure that everyone in the business understands what their utilization target is and where they are compared to that target. We sit down, we have conversations with people to make sure that they're always on target. Then just on this slide at the bottom there, you'll just see how we've grown some of the businesses that we've acquired. I'll now hand back to Rakesh to just cover market context.
Yeah. Thank you, Steve. Let's start with this slide. It's really important to understand where one sits in the market, and we have a very clear idea as to where we are, as to our market positioning. We sit in the white space between the Big Four and the smaller firms, and that's a really fertile ground to be in. The number of firms in that space is reducing. The barriers to entry are becoming higher and higher, and I think that is really hallowed territory, and we're really pleased to be there. I made reference to the league table earlier and on the left-hand side there you see the league table. There we are highlighted in green, number 13, and our revenue at that point. Well, you've just seen the revenue for the current year for FY 2025.
If you look at it on a like-for-like basis, that clearly shows movement, but we don't know what's happened above where we sit really. 13 in that year, fastest growing firm. The other point I'd like to make here is that the actual accounting and audit market in the U.K. is growing. It's growing and we're part of that growth. It's growing at 5.3%, but again, you'll see various growth targets, growth numbers in a column there, skewed by some lower levels of growth. 5%, but within that, masking that 5% are much higher levels of growth such as we've achieved. I mentioned the white space, and the fact that that was a really good place to be. What I mean by that is that there are significant industry tailwinds which mean that one reaps the rewards of being in that space.
Regulatory demands and complexity are increasing on a magnitude, and therefore the perceived risk by the clients and the demand for our services is increasing. Clients are looking for the one-stop shop. They don't want to be passed across from one specialist to another, and we offer that. We're a global firm and most clients have global needs. We're the seventh largest brand, the seventh largest firm in the world. It's a really good position to be in. Clients, particularly the larger clients, at one point felt that a Big Four badge on their audit report was a guarantee of it. It was a kite mark and a quality guarantee. No longer the case, and the market's opened up quite significantly, and we see huge benefits from that. We've benefited from that. Steve made reference to the average fee growing, and it's in part due to those industry tailwinds.
Innovation, I mean, not just a business advantage now, but a business necessity. Very well advanced. We have a slide later on. Very well advanced as far as tech and analytics are concerned. We're very confident that that will play out really well in terms of how we deliver our services, how we enjoy delivering those services, and how the clients receive those services as well. We invested early. We don't believe in being the front of the pack, but certainly for being the leading pack, and we've managed to achieve that ambition. A number of market dynamics going on, which are playing really well into our plans and our strategy. There is consolidation and outsourcing of back and middle office functions. We outsource those functions or some of those functions.
We're looking very actively at how we harness that offshoring outsourcing by having a shared services center somewhere, so that rather than a transactional approach to it, we have an approach whereby we have our own people based in other jurisdictions. Just bringing the South East Europe merger into this conversation, which is that having a footprint now in locations where the cost of individuals is significantly lower than the U.K. means that we can take advantage of that cost arbitrage as well, i.e., recruit where it's cost beneficial to do that. Increasing globalization and cross-border needs, and in our Baker Tilly firm, we exist in 143 countries, and we're able to satisfy the needs of all our clients. Looking ahead, just some high-level thoughts here.
What we have with MHA, what you have with MHA as a proposition is a quality firm with significant potential and momentum built up, and you will have seen that in the FY 2025 results. That momentum is carried forward into FY 2026. I made reference to the fact that we're four months in and trading remains on track. We're expanding across all our service lines and our sectors and all our geographies, which means that we're not skewed by growth in any particular region or service line or sectors. Clearly, the progression in all those is at different scales and different levels, but nevertheless, increasing across the piece. We have a scalable platform. We have a GBP 224 million platform. The IPO has given us a huge springboard to bring in discipline or to apply discipline merger and acquisition activity into a market that still remains fragmented.
Just to emphasize that our mergers and acquisitions will be disciplined and done at our pace rather than at the pace set by somebody else sitting at the table. We have a very diversified client base, the point Steve was making earlier in the slides, which means that we're not at the vagaries of any particular sector or service line, and we're able to support our clients throughout the sector, which is good for the business, and all the sectors are significant sectors now. We're very pleased about that.
I keep on referring to the brand, and again, I'll emphasize the fact that we have a really powerful brand, the MHA brand, but sitting above that at the global level, the Baker Tilly brand, top 10, number seven brand in the world, and that's a really good position to be in. We're a people's business, and at the end of the day, it's really important to make sure that the team is deeply incentivized and motivated and aligned. I'm very pleased to say that we employed everything in our power to make sure the partner team was employed. We've thought through years ahead rather than the immediate. We have a really well-aligned, motivated team across the piece, employee team as well. We will be launching an employee share scheme, Save As You Earn scheme, so further opportunity for people to invest in their business.
I'm really pleased to say that at the time of the IPO, nearly 200 of our colleagues, our staff, actually invested in the business, which really was a very salutary experience and humbling experience in the fact that people believed in what they did, not just the partners, but investing in our business as well. Really pleased about that. Also make the point that we have a culture of accountability and performance. We're not a police state, but equally we expect people to deliver. The performance is rewarded and we're a meritocracy and everybody understands that. Everybody understands how they can progress and be rewarded more. Our financial strength. Steve's gone through the numbers. Significant cash on the balance sheet, g enerating even more cash.
We're a cash generative business, which gives us the tools to actually employ for further growth and further merger and acquisition activity. Again, the why, to get to the GBP 500 million and that top 10 U.K. position. The tech slide. Just to give you an indication of what's happening on the tech front, and just in very high-level terms, we've automated the front-end processes because that project started a little while ago, and now it's nearly complete, but in a really good place where all the manual tasks, as far as the front-end, the onboarding and AML are concerned, are largely automated. We started using bots in the preparation of some of our tax returns, and again, that's sort of gathering momentum.
This year we intend to employ this financial year and also tax year, we intend to employ that even more, both on the personal tax and the corporate tax side of things. Audit, which is the largest part of our business, as you saw on Steve's pie chart earlier, is a natural area to employ AI and technology. We've done a huge amount on that front using analytics, using AI, using various tools. Some of you may be familiar with tools such as Inflo, Extractly, DataSnipper, et cetera, which enables us to perform risk analysis in a much more scientific way, to make sure that the end product is consistent and up to speed. AI is also being used for report writing, across all our service lines. We produce a lot of reports, whether it's audit or tax reports for clients or corporate finance.
We employ GenAI on that. As you will have seen in the press release, ChatGPT is widely used in the business now as one example of AI being used. It's being used in the business quite extensively. 30% of our colleagues are trained in the use of ChatGPT, and 50% use it. Their training is in train, so well embedded in the business. The next point is about MI, Management Information. We're very keen to make sure that we have the appropriate information as a PLC board and as a management board to be able to make the right decisions. We have a very adequate and sophisticated reporting system already. What we want to do is overlay some dashboards and some reports so that we can focus on the key messages. That's very much. We have a project going on.
We have an organization, a consultancy organization, doing that for us. Making sure that we get the best of breed as far as MI is concerned. All that will result in efficiency. We mentioned here the potential for the impact on staff. It'll be the mix of staff. We'll be taking on more senior people who are able to do something with AI. Indulge me for a moment, but an example in the papers yesterday where somebody sort of bashed out into ChatGPT, I think it was, that they wanted to be weaned off salt, off sodium, and the response from AI or ChatGPT was, well, substitute bromide. Even to a non-scientist, bromide does nasty things to the inside. The point I'm making here is AI is fine, but it needs to be managed, and people need to manage that.
There will be an impact, but it just means that our training mechanism will be different and we'll be doing different things with it. Data. Data governance. We have a lot of data at our disposal, and there is a big project going on as far as data governance and data management is concerned. Now we do have the concluding slide. MHA, what is our unique proposition? MHA, leading with ambition. A resilient and diversified business. Resilient, equally important as diversification, resilient in terms of the spread of our clients, our sectors, and service lines. Also the alignment of the partners and the staff. Multiple growth engines, meaning that we're not reliant on any particular service line or sector. Favorable market backdrop, I went through that earlier on the slide. From Steve's earlier slide, you will have seen that we have a proven M&A platform.
Successfully integrated a number of mergers and acquisitions already, and we're very confident we have a clear process for that, which has been employed quite successfully. It bodes really well for future acquisitions. High quality of earnings for all the shareholders, including the external ones. Recurring double-digit growth. 87% recurring income, strong cash generation, and very low CapEx. Consistent financial performance, and this is looking back over a 10-year period, not just the numbers you've heard about today. Global reach, 143 countries. 43,500 people sitting in them, and a top 10 global brand, the Baker Tilly brand. Just to repeat the point I made earlier, we have a people first strategy. We're a people's business, a very aligned and motivated team.
I'm really proud and privileged and humbled to say that all the investors who came on board with us at the IPO are very supportive, are very aligned with us. We've interacted with a number of them already, and we'll be doing so over the next couple of weeks. Really good place to be. We're really motivated for the future. I hope that puts across to you what MHA is all about and what our proposition is. All I would say is thank you very much for joining us on the presentation today and making your time available. We hope what we've put in front of you has inspired you. We're terribly motivated and inspired by what we have. We hope we've managed to get that across to you as well. We look forward to hearing further from you.
I'll hand back to you, Scott.
Rakesh, thank you very much to both yourself and Steve for the presentation today. We're now going to move on to the Q&A session. If you would like to ask a question, please do so by entering a question in the text box provided. The first question is, how do you compete with the Big Four, and what advantages do you have over smaller firms?
Yes. We compete with the Big Four. We never want to win on price. Price is not a USP or a distinguisher as far as we're concerned. It's back to the point I was making earlier that a number of clients, we never aspired to be in the FTSE 250 space. That's a different space. In our market, which is the OMB market, that's 90% of our client base, and the mid caps, we are a leading firm. We're a leading brand, and people recognize us. We're on tender lists. We come out really well when we compete against the Big Four. We know our turf, w e stand firm on our turf. Where there is a Big Four firm, our win rates are very high. Two in three, if not three in three.
Against the smaller players, what we offer is a global solution. A toolkit which smaller firms don't have. Again, something really unique, and our win rates against that group is extremely high as well.
Thank you for that. Now, the increase in revenue of 45% is impressive. What growing pains are you experiencing, and how are you managing these?
Steve?
Yeah, we've got a back office function that's been built to handle a firm of a much larger size. We've got a really good track record of identifying suitable targets and then executing deals and then integrating them into our business. We have an integration director, Bridget Kelly. Bridget has a team underneath her who helps her with the integration. We've built the business such that we can add on other businesses to it, and grow the scale of the business. It takes time, and it's evolution, not revolution. We put businesses onto our platforms, our processes, our policies from day one. Yeah, we've got a successful track record of integrating them into our business.
Yeah, if I could just add a couple of sentences to that. In addition to that, don't forget that the last two mergers we had, the merger in the Northwest and the Baker Tilly South East Europe merger, were significant firms with existing structures. We look at our structures, the infrastructure, and the organogram on a firm-wide basis. We get incremental people with those to the point about resourcing and how do we scale up the resource we have. Well, the resource comes with the firms we acquire or merge with. We then look at it and where there's duplication, we redeploy. Where there's a gap, we fill that gap, really. Just to add a couple of words to what you were saying, Steve.
Thank you for that. Now staying on the acquisition line, how much growth will come from buying other firms versus organic growth?
Yeah. I'll take that one, Rakesh. Organic growth last year was 18%, which really was a fabulous year. Going forward, we're modeling organic growth at high single digit. I'm not expecting us to hit 18% organic growth every year. It'd be nice if we do. If we just take 10% organic growth over the next three, four years, that would get us up to GBP 350 million. To hit our target of GBP 500 million, we need to do, say, another GBP 150 million of inorganic growth, which based on the balance sheet that we've got, based on the cash that we've got, no debt in our business and the fact that we can issue equity, we don't see that particularly as an issue.
Thank you. Still staying on the acquisition side of things, how important will acquisitions be to growth? Why would a seller choose MHA? How would you then work with the acquiree? And do you have separate teams to deal with the integration from an acquisition? I appreciate some of those answers have been mentioned already, but maybe some of them you'd like to cover.
Yeah. Sorry, just give me them again, Scott.
Well, the first one was how important the acquisitions will be to growth, which I think you've probably mentioned, Steve.
Yeah.
The next one was why would a seller choose MHA?
Yeah. Why would they choose MHA? There's an awful lot of consolidation in the market at the moment. Lots of PE-backed businesses, and Rakesh talked about the white space on his slide. If we look at the firms from, say, number five to number 40, around half of them are already PE-backed firms. Those firms are going out and just acquiring businesses. Our USP is that we're not PE-backed. We're a business that's run by the partners, so the partners still have the majority of the shares in this business. If you go down the PE route, you're actually selling your business. PE will take a 51%-60% stake in your business. We actually looked at PE. We didn't go down that route. We decided it wasn't for us. We felt that a number of things happen in PE businesses.
There's lots of sort of short-term focus on EBITDA, and then there's a flip. three to five years, the business gets flipped, so you don't know where you're going to end up and who's going to be owning that business. Probably the most important point for us was we felt that PE businesses actually squeeze the younger partners. They're the people who are kind of squeezed for the long term and don't have the opportunity to create personal wealth. In our model, that isn't the case. We set up an EBT just before we floated, actually, we put 10% of the value of the business into an EBT, and that's there to allow us to reward future partners. It allows us to reward partners as they progress in our business.
Therefore, we have a unique proposition, an alternative to PE, and there'd be a lot of businesses out there that don't want to go down the PE route. They do want to remain independent. We would say, "We're independent. Come and be independent with us." It's a different model, and there's progression for younger people within that model.
Yeah. If I could just add one point to your eloquent point there, Steve, which is, I think, Scott, the other point is the why. Not doing anything, and we went through this process. We had two options. Continue as we are, which, as you have seen from the 2025 numbers, was actually not a bad place to be. Do you want to grow, and what are the options for growth? Steve's mentioned one of them, which we dismissed. We went the IPO option. I would proffer the view that not doing anything is not an option, because any responsible governance group, board, or whatever you want to call that, is looking at options. The growth option is one that everybody chooses. How do you grow?
Arguably, you've got PE or IPO, and we have a really, really powerful and unique proposition which nobody else on the market can offer.
Thank you. Next question. How do you make sure culture clashes don't derail the acquisitions?
Culture is step number one of our process. That is, if you like, the gateway. We look at that very carefully. We get involved in that right from the very beginning, in meeting the partners and the principals and just satisfying ourselves that the culture fit is right. If it doesn't pass the culture test, then it doesn't progress beyond that. Now, touch wood and fingers crossed and everything, we've been very successful in that assessment. Therefore, we've prevented cultural clashes or dealt with them where potentially there is a group or an individual who we feel may not fit in. We've had that conversation right from the outset and agreed an exit strategy for them. I'm pleased to say we're not complacent. I'm pleased to say, because we've worked hard on that's worked very successfully.
Yeah, that is always the big risk in a merger and acquisition, but we try and prevent that by focusing on that at the beginning. That's why the merger with other Baker Tilly firm, Baker Tilly South East Europe, is a really attractive proposition both for us and for them, because it's a de-risk scenario. Culturally, there's a culture fit. We know each other. We share the same brand and same ideology. Culture is really important. I'm laboring the point, but if it doesn't get the tick, then we walk away. The monetary side and the KPI side of things is not a consideration. If the culture's right, then we proceed.
Thank you. GBP 98 million raised through IPO. Is this mainly for acquisitions or where do you see the opportunity?
The money raised at IPO breaks down as GBP 22 million was the new money, so money for acquisitions, money to invest in new tech. The remaining money, GBP 77 million. GBP 35 million was to retired partners, so we had some ongoing annuity liabilities that we need to settle to partners who were already retired. That money got paid out to them, and GBP 42 million got paid out to the continuing partners. There's cash off the table for the continuing partners as well. The new money of GBP 22 million, that is for acquisition and for investment in new technology.
Thank you. Given the shortage of qualified accountants, how do you stop your best people from being poached by competitors?
Well, we have a very clear pathway for progression. We have a fully functional and resourced talent team whose role, including, of course, the role of the partners, is to make sure that we retain the talent that we want to retain. We have a very clear path for people to progress through the firm. We are able to offer people the variety and the range of skills that they wouldn't get anywhere. We're now a listed entity, which means that we have that USP of being able to offer people equity in their own business. Without being complacent, our retention rates are much better than the industry average, so the proof of the pudding's in the eating. Yes, we do have attrition like every other firm, but our retention rates are very good.
We continue to work hard at engaging people, making sure that we articulate the MHA employer value proposition, that there is opportunity. We've been very successful in that to date.
Thank you, Rakesh. Next question is, how much are you investing in AI and automation to improve efficiency? Are you building your own tools or buying them in?
Let me answer the second one, and then Steve will come in on the first one. No, we don't believe in reinventing the wheel, starting from scratch. There are solutions out there. We bespoke them. The other point I would make is that we look at a global solution. We are part of a $6 billion organization, and we look at investment and spend on a global basis. What's being done in the U.S. and in other parts of the world is equally transferable to the U.K. In terms of the spend, Steve, over to you.
Yes. We spend between 5.5% and 6% of revenue per annum on IT. One of the things we're looking to spend some of the money we raised on is a better CRM system. We'll probably spend between GBP 2 million and GBP 3 million on a better CRM system that'll allow us to improve the cross-sell. Most of the clients we act for are owner-managed businesses, about 90% of what we do. No restrictions on cross-selling services to that client base. We just want a better CRM system to help identify the opportunities there.
Thank you. Next question is, do you have any single clients representing more than 5% of your revenue?
No. Our largest client represents about 1% of our revenue, just over 1%. A very diversified client base.
Thank you. Next question. Retail investors might be a bit concerned. How are you handling the FRC investigations into ISG and past audit breaches?
Yes. Investigations are an inherent function of being in practice and being in the space we are. We're doing everything that's required of us by the regulator. We're cooperating with the regulator. We have a robust risk management policy. Clearly at the end of the day, investigations are outside our control. We have a robust PI policy, professional indemnity policy, which covers us for all risks really. To be specific about the question that you've asked and the client that you asked about, we're cooperating with the regulators and everything's going as one would expect it would.
Thank you. Do you have any plans around sustainability, like how you operate or serve clients in a more responsible way?
Yes. We have our ESG pledge and pledge to be carbon neutral by 2030. We have an internal ESG policy, various strands to that, to enable us to fulfill our pledge and our promise.
We also offer that service to our clients to help them identify their ESG exposure and the process by which they manage the ESG process. We call it a three-pillar approach to it, really. Now ESG, all aspects of it, environmental, societal, and governance sit right at the core of what the firm does, and we have a team looking at that on a regular basis and reporting to the board.
Thank you. Next question. How does the traditional partnership model work now that you're a PLC, and what does this adjustment mean for new partners that you're trying to attract?
Should I answer that, Steve?
Yeah.
Yeah. Should I do it? Within our structure, we still have a partnership. We thought that was very important to maintain a partnership underneath the PLC structure because that's really where the culture comes from. We've kept that structure. In terms of recruiting new partners, we've managed to recruit a number of partners from Big Four firms. We've recruited a number of partners from PE-backed firms and then from other firms within the market. We're able to offer market-rate salaries. Very much aligned with where the market sits for the individuals coming in. We're also able to offer the options over the shares from our EBT. We've had no issues in terms of trying to recruit talent to the firm.
Could I just emphasize a point you made, Steve, and which is the culture and what we offer them is everything that Steve's mentioned just now, but also what he mentioned earlier, which is that partnership culture. We are a PLC and accept all the responsibilities that go with it as a board. Fundamentally, our culture is collegiate and a partnership culture. It's not a corporate culture.
Thank you. The next question says, thank you for the presentation. Could you provide some guidance for the FY 2026 revenue and EBITDA? And could you provide some guidance on how you will determine the size of the first dividend to be announced within the H1 2026 results?
Yeah. I think it'd be wrong of me to quote numbers, but I can quote the Cavendish numbers. The investor note's been put out, the revenue is just shy of GBP 250 million. In terms of the dividend, our first dividend will be paid in December 2025, and we'll pay dividends quarterly. For FY 2026, we'll pay the first dividend in December 2025, then one in March, one in June, and the final one in September. The reason it follows that profile is because that's how we used to distribute the partner profits. They got distributions every quarter, so now the dividends will follow every quarter. In terms of the profile of the dividends, it'll be 20%, 20%, 20%, and then 40%, the September one at the end when we've got the audited numbers for FY 2026.
In the admission document, we set out the policy, which is to pay out 50% of the profit after tax as dividend.
Thank you for that. Are there any specific geographic locations that you're looking to target for expansion?
Yeah. I think we obviously can't be specific about where or what's happening. I would just say that our IPO and our successful merger, we always call it a merger because that's our MO. Firms coming together to create a much greater organization. There has been interest that's been piqued throughout the Baker Tilly world, and wider as well. We will be looking and watch this space is all I can say at this point in time, really. They will be strategic. Steve went through our methodology earlier. There will be areas which are natural fit. South East Europe was a natural one, both in terms of being the arrowhead into Europe, but also the fact that we worked closely with them already. There are other jurisdictions where we work very closely. We'll continue to have those conversations and see where it gets us.
Thank you. Now, have you seen strong growth in any specific sectors or services, and which areas are you most excited to grow in, like Audit, Tax, Advisory, Wealth Management, et cetera?
Yeah. We're growing in all our sectors. We had the slide earlier. They're all double-digit in terms of organic growth and some of them at 30%. Maybe if you talk a bit more to the service lines, we're looking to grow the Wealth Management, and we see there's a significant opportunity there with cross-sell from Tax Advisory, as I said before. All our service lines are growing, and all our sectors are growing. We're pretty much, we're excited about all of them. We would like to get Wealth Management up to a bigger slice of that pie.
Yeah. If I could just add a sentence to that, really. We've been very successful in winning the Audit & Assurance work for some of the larger clients or some of the smaller listed clients, but some large clients. What we want to do is replicate that in tax as well. Where the Big Four firms are conflicted, for example. In other words, make the market aware that the MHA capability and skill is equivalent, if not better than a Big Four firm, so that we're doing in compliance tax what we've done in the audit space as well.
Final question. Do you see acquisitions in wealth/financial planning businesses as an option, given it is currently a relatively small part of the business, and is it an area of growth?
The answer is yes. Those types of businesses have higher multiples. You'd end up paying a higher multiple than you would for, let's say, a traditional accounting or tax business.
What I would say is thank you very much for joining us on the presentation today and making your time available.
It's certainly an area that we're looking at and yeah, we're currently investigating a number of options in respect of those businesses.
We hope what we've put in front of you has inspired you. We're terribly motivated and inspired by what we have.
Superb. Thank you very much for that, Steve. Now, that sort of concludes the questions for today. Rakesh, maybe I could pass back to you for any closing remarks.
We look forward to hearing from you.
Yeah. Thank you, Scott.
Thank you very much. I'd like to thank both Rakesh and Steve for their presentation today. That obviously concludes the MHA investor presentation. Please take a moment to complete the short survey following this event. The recording of this presentation will be made available on Engage Investor, and I hope you've enjoyed today's webinar. Thank you very much.