Agent gone bust

[tim123]

As the Pendragon contract is now null and void from the date they become insolvent

Unless the contract actually says this, then that is not correct.

the contract, with all its future obligations intact, is still valid and is a tradable asset, with a value, that the receivers can sell to a third party.

tim

[tim123]

Not if they have cash reserves as protection, rather than company drained of cash. Take one example, 15 contractors on one site = commission of minimum £75 a day = over £280,000 a year. Easy money, especially if those contractors are onsite for lenghty periods, and very easy to build a cash position to protect from potentially non-paying clients

Do you really think that the comission sits in a pot waiting for a day to spend it?

Nope, it funds day to day office costs and agents comission. As a rule of thumb 50% of the comission goes directly to the agent in one form or another and another big chumk will got to the sales manager as his slice of the pie.

Agent's simply do not have a fall back position if they incure a sizable bad debt, however well they are run.

tim

[perplexed]

Unless the contract actually says this, then that is not correct.

the contract, with all its future obligations intact, is still valid and is a tradable asset, with a value, that the receivers can sell to a third party.

tim

Agreed. Given the "new" agency appears to be using the Pendragon end client base, I'd expect those contracts to have been bought for a very nominal fee prior to liquidation beginning.

The fall out of all of this, given some investigation over the weekend is that there is now a sizeable number of recruitment agencies in bristol I'll not be working with again.

[perplexed]

Eh, missed brazenhussy's post.

I'd add to that in that I'd suspect Maxine Fack is also involved.

The interesting part for me is that, if bh's post was true, assets were sold prior to the liquidation process going on - which I'd suspect would be for less than market value, given Pendragon was started by people leaving Sanderson.

Devil's advocate, Pendragon were hardly in the best financial state to drive a hard bargain, but... doesn't show directors looked out for creditors interests.

[Jo Strummer]

Do you really think that the comission sits in a pot waiting for a day to spend it?

Nope, it funds day to day office costs and agents comission. As a rule of thumb 50% of the comission goes directly to the agent in one form or another and another big chumk will got to the sales manager as his slice of the pie.

Agent's simply do not have a fall back position if they incure a sizable bad debt, however well they are run.

tim

As a rule of thumb no way does 50% go to the agent, just about the maximum an agent will get is 40% and that is assuming that he is running 15+ contractors and making circa £30K a month profit for the business and even then he/she would be getting 40% at about £30K +. In the current market that is going to be exceptional rather than the norm.The Manager will not get a big chunk, try 5-10% max. Do you think companies like S3, Harvey Nash etc are content getting less that 50% of the profit and paying basics and office costs in the middle of London.

A more likely model is the agent gets between 15-20%.

[SuperZ]

Do you really think that the comission sits in a pot waiting for a day to spend it?

Nope, it funds day to day office costs and agents comission. As a rule of thumb 50% of the comission goes directly to the agent in one form or another and another big chumk will got to the sales manager as his slice of the pie.

Agent's simply do not have a fall back position if they incure a sizable bad debt, however well they are run.

tim

But they shouldn`t be getting rid of all of it just for the sake of it, they have plenty of cash to build reserves with over the years. Not doing so, well,putting themselves at risk and their employees.

I invest in cash rich companies, those that can survive downturns etc, and those that don`t over reward themselves or employees during the good times. You usually find those at the top of such companies have a different mentality (among ofther things). Such companies usually survive the long haul through the bad times

A successful business should understand the market they work in, the risks, and be able to handle most eventualities (prolonged bad market conditions). It sounds liek Pendragon should be in a decent situation as they still have clients. I worked with a tiny agency in the past who had few clients, have had none recently, yet still survive/

To enable me as a contractor to be successful I have reserves in my company. I take a little more than a permie salary and the rest kept in reserve for any bad times that might come along.

All IMO of course

[tim123]

As a rule of thumb no way does 50% go to the agent, just about the maximum an agent will get is 40% and that is assuming that he is running 15+ contractors and making circa £30K a month profit for the business and even then he/she would be getting 40% at about £30K +. In the current market that is going to be exceptional rather than the norm.The Manager will not get a big chunk, try 5-10% max. Do you think companies like S3, Harvey Nash etc are content getting less that 50% of the profit and paying basics and office costs in the middle of London.

A more likely model is the agent gets between 15-20%.

In a "normal" market an agent will expect to get close to 100K OTE for placing 15-20 contractors (if he doesn't, he won't be your employee for long).

So that's 5-7.5% of each contractor's billing. Depending upon the margin this could be 30-50% of that margin.

Agreed in the current market (s)he may not be getting quite so much

tim

[Jo Strummer]

In a "normal" market an agent will expect to get close to 100K OTE for placing 15-20 contractors (if he doesn't, he won't be your employee for long).

So that's 5-7.5% of each contractor's billing. Depending upon the margin this could be 30-50% of that margin.

Agreed in the current market (s)he may not be getting quite so much

tim

in the last month I have interviewed 3 "former" contract rec consultants, all working in London all claiming to run between 10-15 contractors none were billing more than £12K a month. The market is very lean in the UK the only agency consistantly exceeding 30% margins are S3 ( who are also the most robust financially strangely enough ). So to answer your question if they are running 15 guys in the City at £100 a day margin yeah they are probably making circa £90-100K. Thats a margin of circa 20%. the average contract IT margin in the UK is circa 11% year. The average profit per consultant across the top ten IT consultancies is circa £110K be it perm or contract and that includes your S3, Aston Carter etc. So they are paying their guys about $35-40K. there will be top performers but thats the top 10% across the business

[tim123]

in the last month I have interviewed 3 "former" contract rec consultants, all working in London all claiming to run between 10-15 contractors none were billing more than £12K a month. The market is very lean in the UK the only agency consistantly exceeding 30% margins are S3 ( who are also the most robust financially strangely enough ). So to answer your question if they are running 15 guys in the City at £100 a day margin yeah they are probably making circa £90-100K. Thats a margin of circa 20%. the average contract IT margin in the UK is circa 11% year. The average profit per consultant across the top ten IT consultancies is circa £110K be it perm or contract and that includes your S3, Aston Carter etc. So they are paying their guys about $35-40K. there will be top performers but thats the top 10% across the business

I don't know where you get this average 11% from. That may be true of PSLs, but in 30 years of contracting I have never seen a margin below 16% and I was not being ripped off - that is as low as they will go for what I do (which pays circa 240-300pd to me)

tim

[stek]

Err, have I missed s/th here?

An agent on 10% commission running 15 contractors each billing say a reasonable 10k a month each is;

£180k a year?

Where do I sign!!!? I can ring people up, I could do that, go on, gizza job, I know u've got one, go on, gi' us it....