Catwalk client: Elixirr clients include LVMH, home of Louis Vuitton
Management consultants have a bad name. Accused of charging thousands and delivering very little, they are associated with some of the worst excesses of the corporate world.
Elixirr chief executive Stephen Newton knows the industry’s pitfalls only too well. A former managing partner at consulting giant Accenture, he left in 2009 to start something different, an advisory firm that provided practical, hands-on help for companies.
The strategy is working. Having grown steadily as a privately owned business, Elixirr listed on the junior AIM market in July 2020, one of a handful of businesses to float at that troubled time. It is also one of the most successful listings of recent years, joining the market at £2.17, since when it has more than doubled to £5.50.
The soaring price reflects strong growth in sales and profits and there should be plenty more to come. Companies spend around £200 billion a year on management consultants and the industry is growing by 10 to 12 per cent annually around the world.
With a stock market valuation of £260 million, Elixirr is a minnow by comparison with giants such as Accenture and McKinsey, but the group has increased sales by an average of more than 30 per cent a year over the past decade and is expected to grow faster than the rest of the market for some time to come.
Industry leaders are often criticised for selling customers whatever they have on the shelf, regardless of whether it truly fits the bill. Newton and his crew pride themselves on offering a more bespoke approach, based on practical advice, tailored to customers’ individual requirements.
The group has also developed close relationships with cutting-edge technology entrepreneurs in Silicon Valley, New York, London, Tel Aviv, Cape Town and Sydney. When businesses come to Newton with problems, therefore, the network can be called upon for clever ideas above and beyond normal advice.
Sometimes, Elixirr distils the network’s best suggestions for its customers. Other times, businesses meet members of the network directly. Whatever the process, the emphasis is on initiatives that can make a tangible difference, rather than airy-fairy notions that sound good on paper but have no basis in the real world.
Newton is also keen to make his staff feel and act as if they own the business. To that end, employees are given share options and access to a generous share scheme, under which Elixirr matches any stock that employees buy, in effect doubling the number of shares they hold.
Bespoke advice, technological knowledge and committed workers have created a potent cocktail. Surveys indicate that many businesses rate Elixirr more highly than much larger rivals and customer numbers are on the rise, including high-profile names such as Tesla, Burger King, HSBC and luxury goods group LVMH, home to fashion brand Louis Vuitton.
Elixirr generated revenues of £30 million and profits of £5.8 million in 2020, its first year as a public company.
Figures for 2023 will be unveiled in April but a recent trading statement confirmed that sales will amount to almost £90 million, with brokers forecasting profits of around £24 million.
Continued growth is expected, with revenues of £108 million pencilled in for this year and £119 million next. Profits growth should be equally robust, with earnings climbing to £28.5 million in 2024 and more than £31 million next. The group has always been committed to paying dividends but, in a sign of confidence and maturity, Newton recently announced a move from annual to twice-yearly payments. A total dividend of 12.3p is now expected for 2023, rising to 14p for 2024.
Midas verdict: Some management consultants have had a tough time recently, forced to lay off staff and streamline costs in response to difficult economic conditions. Elixirr is moving in the opposite direction, adding new customers, expanding its workforce and acquiring boutique operators that complement the business.
Newton and his team are determined to continue in that vein, setting their sights on a £1 billion stock market valuation over the next few years. Progress has been encouraging to date and, with 28 per cent of the shares, Newton is certainly motivated to deliver results. At £5.50, the shares are a buy.
Traded on: AIM Ticker: ELIX Contact: elixirr.com or 020 7220 5410
