A FORMER secondary school teacher has sold his Paisley-based Spark of Genius business, which provides residential care and education for children with complex needs, for up to £9.2 million.
Tom McGhee, who is staying with the business along with his senior management team under the new ownership of specialist social care provider CareTech Holdings, highlighted his belief that the deal would help enable Spark of Genius to expand its services.
Mr McGhee, who taught English at Renfrew High and Loudon Academy, founded Spark of Genius in 1999.
The company provides residential care and education services, through arrangements with local authorities, for children with social, behavioural, and emotional challenges.
Mr McGhee noted that Spark of Genius, which employs about 300 people, also provides services for children on the autism spectrum.
He said: “Even though there is a change of ownership, there is going to be no change at all for our partners, our customers, our staff group and, most importantly, for our children and young people. I am staying on, and the whole of the senior management team are staying on.”
Mr McGhee declared that the key thing for him had been that CareTech was just as committed as Spark of Genius to achieving “excellent outcomes” for children and young people.
He said: “We have had a lot of interest over the years in what we do. Spark’s approach is innovative. The key thing for me has always been the outcomes for the young people and the children we support.”
Asked if he was glad he had set up Spark of Genius, Mr McGhee replied: “It can be challenging work but it is a fantastic feeling when kids who have been demotivated or have had a pretty tough time in life are turned around.
“It is something in Scotland we should be aware (of), that these looked-after young people are a real asset for our country.”
Spark of Genius looks after 46 youngsters across nine small residential homes in Scotland.
Mr McGhee noted most of these residential homes were in Ayrshire. Outside Ayrshire, he added that Spark of Genius had residential homes in Stirlingshire, Midlothian, and Argyll.
The company also runs three schools in Scotland, at Glengarnock in Ayrshire, Glasgow, and Musselburgh.
Many of the youngsters in Spark of Genius’s residential homes attend these schools, which also educate day pupils.
Spark of Genius also operates in Stockton-on-Tees.
And it offers employability training and leaving-care services for those over the age of 16.
Hertfordshire-based CareTech, which was founded in 1993 and began trading on the Alternative Investment Market in 2005, said the total consideration of up to £9.23m for Spark of Genius comprised an initial payment of £7.48m in cash and an earn-out of up to £1.75m.
CareTech noted that Mr McGhee was the sole shareholder of Spark of Genius.
Farouq Sheikh, executive chairman of CareTech, said: "We are delighted to announce the acquisition of Spark, whose impressive growth in the past few years reflects the quality and innovation of its services and the strength of its local authority relationships.”
Mr McGhee said: “Becoming part of CareTech is a very positive step for all our stakeholders. It will support our growth whilst we continue to offer excellent outcomes for the children and young people in our care."
CareTech noted that, for the year to March 31, Spark of Genius had recorded revenues of £10.9m and pre-tax profits of £1.2m.
It said that, of the consideration payable to Mr McGhee under the earn-out, £250,000 had been settled on completion of the acquisition through the issue of 100,000 Ordinary shares in CareTech at a price of 250p each.
CareTech added that the remainder of the consideration under the earn-out, of up to £1.5m, would be determined with reference to Spark of Genius's earnings before interest, tax, depreciation and amortisation over the four financial years ending September 30, 2019.
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