InsightsNewsletterRenatus’ Private Equity M&A Newsletter – 21/01/2024

Renatus’ Private Equity M&A Newsletter – 21/01/2024

Thought for the Week

We recently came across an insightful passage in a book about the success of one of Ireland’s most famous exports: The Search for God and Guinness: A Biography of the Beer That Changed the World. The extract reads:

“We followed our traditional policy of considering long and acting quickly. It was the Guinness way. Once the facts were in and the data processed, once the context was understood and all variations considered, then action was taken and taken decisively. But only then. First, myths had to be exploded, lazy thinking exposed. Junior men had to be sent back for more research and conventional wisdom challenged until it proved itself. It was an approach that undid impatient men, but the heads at Guinness didn’t care. Impatient men hadn’t built fortunes and brewed history-making beer. Impatient men were driven to mistakes by their eagerness to simply move on. No, impatient men had to be tempered, checked, and chastised, while wise men held off decisions until the knowledge they needed was complete…

In an age in which knowledge increases nearly exponentially, it is easy to become lazy and move too fast. No, the wise man today, like the wise man in the first Arthur’s day, defies pressure, in order to ponder and even to pray. And then he acts, when he knows who he is and what he should do, when he has anticipated the results and when his resources are rightly prepared.”

Whether brewing beer, investing or carrying out any other type of business, there is wisdom to be taken from the words above that have stood the test of time. They could be summarised by the adage of ‘measuring twice, cutting once.’ Ample time should be taken to gather all relevant information before reaching important conclusions but once it becomes clear what is needed, action should be taken decisively and without delay.”

M&A Activity

Kairos Sports Tech acquired by Teamworks

Deal Details:  Kairos Sports Tech has been acquired by Teamworks. Deal consideration iss reported to be c. £15m.

Kairos Sports Tech is a Belfast-based messaging and scheduling platform for the sports industry. The company was co-founded by Gareth Quinn and Andrew Trimble who will both remain with the company post-acquisition along with Kairos’ 20 employees. The company serves around 100 professional sports organisations currently. It does not report turnover or EBITDA information.

Teamworks is a US-based provider of sports-focused operational software. The business has raised total funding of c. $165m since inception. It is managed by founding CEO, Zachary Maurides and has over 350 employees across 10 countries. The business does not report turnover or EBITDA information.

Advisers
Kairos Sports Tech:
Legal: A&L Goodbody
Corporate Finance: Beltrae Partners led by David McCloy.

Teamworks: None mentioned.

Renatus Comment: This deal follows Kairos’ 2021 fundraising led by Techstart Ventures which valued the business at c. £2.45m. The company has grown an impressive client portfolio which includes the likes of the 2023 European Ryder Cup winning team and also Rugby World Cup champions, South Africa. In fact, South Africa’s head coach Rassie Erasmus recently described the platform as “vital” to the success of the squad in its 2023 campaign. 

Software continues to play an ever-increasing role in the world of sports. It is clear that Teamworks is pursuing an acquisition-led growth strategy in the space, having completed five acquisitions last year alone, according to Cap IQ.

Source: Business Post

Aryza acquires Oyster Bay Systems

Deal Details: Aryza has acquired Oyster Bay Systems. Deal consideration was not disclosed.

Aryza is a Dublin-based provider of financial IT services and software solutions. The business received investment from Pollen Street Capital in 2017 and subsequently from Macquarie Capital in 2022. It is led by CEO Colin Brown. In FY Dec 21 it reported turnover of £31.2m which converted to EBITDA of c. £9.2m.

Oyster Bay Systems is a UK-based end-to-end loan and lease management software company. The business was owned by Anne, Michael, Martin, and Emma Breach. It does not report turnover or EBITDA information.

Advisers: None mentioned.

Renatus Comment: This deal marks Aryza’s 8th acquisition since 2018. Its targets have grown its offering in the areas of insolvency, financial services and debt management whilst also expanding its geographical presence into new markets such as Australia, DACH and Benelux. It is focusing on building out a complete suite of software products to automate both the credit and debt lifecycle and has said it aims to continue to consolidate the UK lending market.

Source: Aryza Press Release

Shelbourne Hotel to be acquired by Archer Hotel Capital

Deal Details: The Shelbourne Hotel is to be acquired by Archer Hotel Capital. Deal consideration was not disclosed.

The Shelbourne Hotel is a five-star hotel located in Dublin City Centre. It was previously owned by Kennedy Wilson. As of early 2023, the 265-bedroom hotel was valued at €236 million. Planning permission was acquired in 2022 for a seven-story extension to include 88 additional bedrooms, a luxury spa and a multi-use event space. In FY Dec 22 the hotel reported turnover of c. €16.0m.

Archer Hotel Capital is a European investment group owned by affiliates of APG Asset Management. It currently own 13 hotels across Europe with a gross asset value of c. €2bn.

Advisers: None mentioned.

Renatus Comment: The Irish hotel market saw a decline in deal activity in 2023. Savills reported that the total hotel transaction volume for 2023 was c. €350m which was c. 30% below the historical average. However, as we enter 2024, the market appears poised for growth. Lifestyle Hospitality Capital (LHC) Group is preparing to finalise the acquisition of The Dean Group in Q1 2024 for an anticipated €350m, matching the total transaction value from last year. Alongside this, Apollo has initiated a €500m sale process for Tifco, the second-largest hotel group in Ireland. 

Source: The Times

Deal Updates & Other News

HealthBeacon to be acquired by Hamilton Beach Brands

Deal Details: HealthBeacon is set to be acquired by Hamilton Beach Brands in a deal reported to be worth c. €6.9m. HealthBeacon is a Dublin-based digital health company that IPO’d in 2021 before subsequently getting into financial distress. Hamilton Beach Brands is a US-based seller of home appliances.

This deal will see senior creditors recover full contributions along with unsecured creditors receiving 55% of what they are owed. This scheme arrangement was created by Shane McCarthy of KPMG who was appointed to HealthBeacon as examiner when the company ran out of cash in October 2023. The rescue deal will see the company delisted from the Irish stock market with its market cap valued at c. €1.2m when share-trading was haulted in mid-October having fallen from a market cap at IPO of c. €100m.

Source: The Irish Times

Company Performance

EBITDA  is an accounting term and is often the best indicator of profitability in non-capital intensive businesses before financing and tax are considered. In capital-intensive businesses EBIT or EBITDA less average Capital Expenditure are often better measures. YoY is an acronym for the year-on-year movement in turnover, EBITDA, etc.

Murnane & O’Shea Ltd is a property development and building contracting company that focuses on commercial construction projects. The group is wholly owned by Patrick Murnane.

​​​​​In the year to March 2023, the company generated a turnover of c. €47.5m, an increase of c. 17.6% year-on-year. This converted to an EBITDA of c. €2.0m, an increase of 117.7% year-on-year. The growth in EBITDA was driven by gross margin expansion from c. 6.4% to c. 7.5% and a reduction in admin costs of c. €274k.

The business finished the year with a cash balance of c. €6.0m, an increase of c. €1.3m from FY Mar’22. Significant post-EBITDA cash movements included the repayment of a short term loan and cash released from working capital.

The business employed an average of 64 employees during the period at a total cost of c. €4.2m.

Fundraisings

Who: Lative, a software platform that provides clear information on a business’ sales performance, costs and ROI, allowing companies to make more informed decisions.

What: The business raised €3m in a seed funding round led by Elkstone Ventures with support from Enterprise Ireland.

Why: The funding will be used to develop the platform and hire six individuals in various departments at its Dublin headquarters.

Source: Irish Times

Executive and Board Appointments

William Darmody

Source:
(Google Images & LinkedIn)

Paul Sweetman

Source:
(Google Images & LinkedIn)

James Eyre

Source:
(Google Images & LinkedIn)

Seán Molloy

Source:
(Google Images & LinkedIn)

@RenatusCapital Tweets

35%

The proportion of Ireland’s total electricity output produced by wind farms in 2023, according to @WindEnergyIreland

4.6%

The level of inflation in the Irish in economy in December, according to @CSO

9.1%

The increase in the average price of home inusrance in 2023, according to @CSO

58%

The proportion of employers who do not anticipate current hybrid working arrangements to change over the coming year, according to a recent survey by @Hays

About Renatus

Renatus was established in 2014 to provide growth funding to growing Irish SMEs and to partner with ambitious management teams to help companies reach their full potential.

Renatus targets companies with sustainable earnings of €1m+ and valuations typically in the range of €5m – €20m. Our typical solutions include:

  • Succession planning
  • Management buyouts
  • Management buy-ins
  • Growth financing – both organic and acquisition growth financing
  • Full and partial share sale

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