Renatus’ Weekly M&A Newsletter – 30/10/2022
October 30, 2022Renatus’ Weekly M&A Newsletter – 13/11/2022
November 13, 2022
Renatus Weekly M&A & Company Performance Private Equity Newsletter 06/11/2022
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT OF THE WEEK
This week, the Minister for Social Protection, Heather Humphreys, announced a double Child Benefit payment of €280 which will directly benefit 1.1 million children across the country. This follows the double payment of the state pension a fortnight ago. Also this week, the first of three €200 electricity credits will have landed in people’s accounts. Along with the inevitable goodwill this will create among customers to counter cost increases, there was also some positive economic indicators and perhaps reasons that maybe the glass might be half full with regard to the Irish economy. The unemployment rate was recorded at just 4.4%, a 20-year low. Through the first ten months of the year, the government is running a €7.3bn surplus. This is very promising, especially when compared with the €7.4bn deficit we faced at the same time last year.
M&A ACTIVITY
Switcher.ie acquired by Mediahuis Ireland
Deal Details: Switcher.ie has been acquired by Mediahuis Ireland. Deal consideration has not been disclosed.
Switcher.ie is an Irish price comparison site for broadband, energy, mobile, money and mortgages. The business earns income through commission from service providers and hence offers its comparison services to customers for free. The business was founded in 2011 and is headquartered in Dublin. It is owned by Carl Gaywood. In FY21 the business had a turnover of c. €2.9m, which converted to an EBITDA of c. €830k.
Mediahuis Ireland, formerly Independent News & Media, is a print and digital media publisher that produces 12 weekly regional newspapers including the Sunday Independent, the Belfast Telegraph and the Sunday World, as well as running various online platforms. Independent News & Media became part of the privately-owned European media group, Mediahuis N.V., which is headquartered in Belgium. In FY21, the business had a turnover of c. €304.2m, which converted to an EBITDA of over €26m.
Advisers:
Mediahuis:
Legal: Flynn O’Driscoll LLP led by Alan O’Driscoll and Jonathan O’Beirne.
FDD: PwC led by John Casey.
Tax: PwC led by Colin Smith.
Switcher:
Legal: Gore Grime Solicitors led by Darragh O’Dea and Robert Scanlon.
Renatus Comment: This acquisition is the latest instalment in Mediahuis’s mission to expand its online presence and follows its acquisition of Carzone.ie, which we covered in last week’s newsletter. Comparison websites are increasing in popularity, and this trend is expected to continue as the cost-of-living crisis worsens. A recent survey conducted by Capitalflow on Irish consumers found that 91% of people surveyed had changed providers of at least one service over the last five years. Where respondents have opted to remain with a current provider, a key reason for doing so is due to the hassle of shopping around and switching. Services such as those offered by Switcher.ie eliminate this hassle and will further strengthen Mediahuis’ online presence.
Source: Mediahuis Press Release
MJ Scannell Safety acquired by Groupe RG
Deal Details: MJ Scannell Safety has been acquired by Groupe RG. Deal details have not been disclosed.
MJ Scannell Safety is a personal protection equipment (PPE) business that provides products and services to government, semi-state, construction, food and manufacturing industries. The business is headquartered in Dublin and has a second facility in Cork. The business was founded in 1982 by Micheal J. Scannell, and the business was owned by Gavin, Niall, Ruth and Rachel Scannell. In FY21, the business had a turnover of c. €24.6m, which converted to an EBITDA of c. €931k.
Groupe RG is a French distributor, designer and manufacturer of personal protective equipment (PPE). It manufactures its own brand, Ergos, as well as supplying major brands across Europe. It was founded in 1987 by Ardain, a private investment house, alongside management and Latour Capital. In FY21, the business had a turnover of c. €111.6m, which converted to an EBITDA of over €12.0m.
Advisers:
MJ Scannell Safety:
M&A Advisory: Deloitte led by Jan Fitzell, Denis Murphy, Paul O’Neill and Michael Grufferty.
Legal Flynn O’Driscoll led by Diann Cannon, Alan O’Driscoll and Shauna Mulry.
Groupe RG:
Legal: Philip Lee led by Eoghan Doyle and including Hugo Grattirola, Patrick Egan and Tom Conway (Real Estate)
Corporate Finance: Grant Thornton led by Gareth Cosgrove and colleagues Thomas Roche, Bruce Waldron, Jack Cosgrove and Jack Edwards.
Tax: Grant Thornton Sinead McKeaney and Niall Hanton.
Renatus Comment: Groupe RG has been private equity backed since 2017, with Ardain and Latour Capital acquiring the business from LBO France. The PPE market has seen significant growth in recent years with offerings beginning to go beyond steel-toed boots and protective eyewear. The industry now offers more state-of-the-art gear such as body temperature monitors and thermoplastic-coated protective gloves. A recent McKinsey report expects the industry to grow at a CAGR of 12.5% to 2024. MJ Scannell Safety will support Groupe RG’s ambitions of European expansion and will give an Irish base to the business that already operates in France, Italy, Spain, Germany, Switzerland and Slovakia.
Source: Deloitte
Boulder Media acquired by Princess Pictures
Deal Details: Princess Pictures acquires Boulder Media from Hasbro for an undisclosed amount.
Boulder Media is a multi-award-winning Irish animation business founded by filmmaker Robert Cullen in 2000. The business is based in Dublin and has garnered several awards and nominations such as BAFTAs, EMMYs, ANNIEs, IFTAs, British Animation Awards, Irish Animation Awards, and many more. The business reported turnover of c. €17.5m in 2021.
Princess Pictures is an Australian-based film and television production company founded in 2003. The business did not report turnover or EBITDA information.
Advisers:
Boulder Media:
Legal: William Fry.
Princess Pictures:
Legal: Riordan & Riordan (Australian counsel), Brendan O’Brien, Eoin Ryan and Cal Kane of Walkers Ireland LLP – (Irish counsel).
Renatus Comment: This is the second time that Boulder Media has been acquired, having previously been acquired by Hasbro in 2016. The rationale for both deals has been Boulder Media’s top-class production capabilities, with it being one of Ireland’s largest animation studios. Boulder Media’s seamless integration with Hasbro in 2016 will be particularly encouraging, with the business managing to double its revenues from €8.7m to €18.5m in just 12 months following that acquisition. Interestingly, another key rationale for Princess Pictures is the producer’s desire to bring more international content to the US, citing the exponential growth of YouTube and global streaming as a key driver of US appetite for more international content.
Source: CapIQ
Doyle Mahon Insurances acquired by Arthur J. Gallagher & Co.
Deal Details: Doyle Mahon Insurances has been acquired by Arthur J. Gallagher & Co. Deal details have not been disclosed.
Doyle Mahon Insurances is a retail insurance broker providing commercial and agricultural solutions to clients throughout Ireland. It was founded by Pat Doyle and Colm Mahon in 2009 and is headquartered in Wexford. In FY21, the business had turnover of c. €1.3m, which converted to an EBITDA of c. €528.6k. The business employs 20 staff and was owned by founders Patrick Doyle and Colm Mahon.
Arthur J. Gallagher & Co. is a global insurance brokerage, risk management and consulting services firm. The business was founded by Arthur J Gallagher in 1927 and is headquartered in Rolling Meadows, Illinois. The company was listed on the New York Stock Exchange in 1984. In June, Gallagher acquired Innovu Group, a Wexford-headquartered insurance company that has seven Irish offices and a strong track record of successful M&A activity. The group will rebrand as Gallagher from next week. In FY21 the business had turnover of c. €6.0bn, which converted to an EBITDA of c. €1.5bn.
Advisers: None Mentioned.
Renatus Comment: Gallagher has established an on-the-ground presence in the ROI following the acquisition of Innovu in June. Innovu made five acquisitions in the Irish market since 2019 and has a customer base of c. 45,000. This acquisition will add a further c. 4,000 clients to Gallaghers Irish base. The consolidation within the insurance brokerage space seems to be keeping pace despite rising interest rates and the changing macro environment (we wrote about the trend here.)
Ronan Foley who joined as CEO when MML bought Sheridan Insurances in 2018 and it became Innovu, is now CEO of Gallagher Ireland and aims to continue to expand Gallaghers presence in Ireland with the acquisition of right-sized businesses such as Doyle Mahon Insurances.
Source: Arthur J. Gallagher & Co. Press Release
Flint Studios acquired by Pinnacle Computing
Deal Details: Flint Studios has been acquired by Pinnacle Computing for an undisclosed sum.
Flint Studios is a Belfast-based web solutions and digital transformation service provider. It was established in 2011 and was owned by Jeremy Biggerstaff (Managing Director), William Mathers (Head of Operations), Peter Hanlon (Head of Creative) and Mark McCann (Director). The business does not report revenue or EBITDA information and employed c. 30 staff in FY21.
Pinnacle is a Belfast-based business management solution provider. It was established in 1992 and will now employ over 200 people. There are various shareholders listed for the business with the Montgomery (Margaret, William, Steven, WIlliam and Sarah-Jane) and Spencer (James and Kay) families having the largest holdings. The business reported an FY21 turnover of c. £17.1m, which converted to EBITDA of c. £1.4m.
Advisers: None mentioned.
Renatus Comment: Pinnacle has been very acquisitive in recent times with this being its fifth acquisition in the last 14 months. The business has expressed intent to become a leader in business management software in the UK with its deals to date centering around expanding its product offering relating to Sage accounting, ERP systems and digital transformation. It has recently acquired the Sage businesses of both TMS Scotland and K3 Business Technology Group along with Cardiff-based Sage 200 partner, Prosys Computing. This deal represents Pinnacle growing its presence at home in Northern Ireland following recent expansion in Scotland and Wales. The focus will be on using Flint’s acquired technology to facilitate integration between back office systems and ecommerce platforms for its customers.
Source: The Irish News
Keyhouse Computing acquired by Dye & Durham
Deal Details: Keyhouse has been acquired by Dye & Durham for an undisclosed amount.
Keyhouse is a Dublin-based provider of technological solutions for law firms across Ireland and the UK. The business did not report turnover or EBITDA information. The business was owned by Stephen Keogh and Brian Sweeney who will remain in Keyhouse post-acquisition along with the existing team.
Canadian publicly listed business Dye & Durham provides cloud-based, efficient workflow software for legal and business professionals in Canada, Australia, Ireland, and the UK. In FY22, the business reported a turnover of c. $474.8m CAD, which converted to an EBITDA of c. $195m CAD.
Advisers: None Mentioned.
Renatus Comment: Keyhouse will join Dye & Durham’s growing portfolio of Irish legal services companies, including Brady & Co, Rochford Brady Group and Hibernian Legal. Dye & Durham has pursued an aggressive growth strategy, completing more than thirty acquisitions in the company’s history, eleven of which were in the last two years. Recent reports by Gartner estimate that globally, legal departments will increase their legal tech spending threefold by 2025. With the UK government recently announcing plans to invest £4m to modernise the UK legal industry through its LawTechUK programme, tailwinds in the sector appear strong and Dye and Durham are well positioned to capitalise on this growth.
Source: Keyhouse Press Release
Brooks Group acquires Kildare Builders Providers
Deal Details: Brooks Group has acquired Kildare Builders Providers. Deal consideration has not been disclosed.
Brooks Group is a timber and builders merchant comprising of Brooks Builders Merchants (“Brooks”) and Dublin Plywood and Veneer (‘DPV’). It was founded in 1790 and was acquired by Newry-based Murdock Builders Merchants in June 2021. Following the acquisition, Brooks will have 9 outlets across 7 counties. In FY21, the business had turnover of c. €74.3m, which converted to an EBITDA of c. €4.9m.
Kildare Builders Providers is a building supplier that offers products from foundation materials to finishing products and everything in between. It was founded by John Crofton and Conleth McCarthy in 2006. The business does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: In the 12 months to September 2022, wholesale prices of construction materials rose by 17%. This coupled with rapidly increasing energy prices is making homes much more costly to build. However, the underlying demographic changes underpinning the ever-increasing demand for houses continue to grow more stark.
The Currency reported this week that based on preliminary Census 2022 data, the annual housing requirement is now in the region of 42,000 to 62,000 homes, much more than the figure of 28,000 that underpins the government’s ‘Housing for All’ strategy. For this reason, it is hard to see any slowdown in residential development, even if this means significant house price inflation for buyers. As a result, building materials suppliers like Brooks should continue to perform well.
Source: Business Plus
Dickson & Co Insurance Brokers acquires Jim Burton Insurance Services
Deal Details: Dickson & Co Insurance Brokers has acquired Jim Burton Insurance Services.
Dickson & Co Insurance Brokers is a family-owned insurance broker established in 1992, with 8 locations across Northern Ireland. The business is owned by Margaret, William, Ian and Stephen Dickson. In FY21 it reported a turnover of c. £3.5m, which converted to EBITDA of c. £1.0m. The business also trades in the ROI, holding a 50% stake in Meath-based Dickson and Wilson Insurance Brokers alongside Shane Wilson.
Jim Burton Insurance Services is an Armagh-based insurance broker that offers both personal and commercial cover. The business does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Dickson & Co continues to expand its presence across the North, having made two acquisitions in 2021. The company also has a presence in the Republic through its Dickson & Wilson brand based in Meath. Consolidation in this space is nothing new but it is interesting to see an independent, family-owned operator pursue its own roll-up strategy. With the value of its Gross Written Premiums now in excess of £30m, the company is steadily becoming a significant player in the Northern Irish market.
Source: The Irish News
Wirefox acquires Ardgowan Hotel in St Andrews
Deal Details: Wirefox has acquired the 29-bedroom Ardgowan Hotel in St Andrews, Scotland for an undisclosed sum.
Wirefox is a real estate investment and development company. The business was founded in 2014 and is led by BJ Eastwood, the grandson of well-known businessman and former boxing promoter Barney Eastwood. It does not report turnover or EBITDA information.
The Ardgowan Hotel is located near the world-famous Old Course at St Andrews. It is operated by the Playfair Hotels Limited company which is owned by the McLaghlan family, led by former managing director Dr. Rory McLaghlan. The company does not report turnover or EBITDA information and employed an average of 25 people in FY22.
Advisers:
Wirefox
Legal: Davidson McDonnell Solicitors.
Playfair Hotels
Corporate Finance: Christie & Co. led by Brian Sheldon.
Legal: Thorntons Law LLP.
Renatus Comment: Over the past number of years Wirefox has focused its investments on retail and office real estate. It was an active acquirer throughout the UK and Ireland in 2016 and 2017, acquiring the likes of the Castle Court Shopping Centre in Belfast for c. £125m, nine office blocks across Scotland for c. £35m and the Capella building in Glasgow for c. £43.5m. This is the second hotel that the firm has acquired this year, having bought the Bushmills Inn in Co. Antrim back in May. It appears the group is changing its investment focus away from large scale commercial assets towards smaller hotels, situated close to premier golf clubs (Royal Portrush and St Andrews, respectively.)
Golf tourism is a major business, with the CEO of Visit Scotland stating in July that it brings £286m into the country from international visitors each year.
Source: The Irish News
DEAL UPDATES & OTHER NEWS
Alkermes PLC announces plans to separate its Oncology Business
Deal Details: Alkermes PLC has announced the approval by its Board of Directors to separate its Oncology Business into an independent, publicly traded company, Oncology Co.
Alkermes PLC is a global biopharmaceutical company that develops innovative medicines to address the unmet needs of people with serious mental illness, addiction, and cancer. The business is headquartered in Dublin and has a research and manufacturing facility in Athlone, it also has an R&D centre and manufacturing facility in two locations in the US. The business was founded by Michael Wall in 1987 and it went public in 1991. In FY20 the business had turnover of c. €918.6m.
The separation, if consummated, is expected to be completed in the second half of 2023. Alkermes anticipates Oncology Co. would be located within the company’s existing Massachusetts campus. The facilities and research and manufacturing operations in Ohio and Athlone will remain with Alkermes.
Source: Alkermes Press Release
Duke Street Capital in advanced talks to buy Suir Engineering
Deal Details: UK-based private equity firm Duke Street Capital is in advanced talks to buy Suir Engineeering.
Suir Engineering is a Waterford-based engineering company that specialises in electrical, mechanical and instrumentation solutions. It is owned by EDF Energy Services and employs more than 1,200 people. In FY20 the business reported turnover of c. €156.9m. Founders Jer Ryan and Noel Doyle sold the business to private equity firm Royal Imtech, in 2007. It was subsequently acquired by private equity firm Endless in 2015 before being again sold to EDF in 2017.
Duke Street Capital is a private equity firm based in London. It was established in 1988 as Hambro European Ventures. It targets mid-market investments in Western Europe.
Source: Sunday Times
COMPANY PERFORMANCE
Based in Cork, with four locations, McDonnell Bros. is one of Munster’s biggest independent Agri suppliers with a base of over 3000 farmer customers. The business was founded in 1977 by Denis & John McDonnell. The business offers feed, fertilizer, agri hardware, chemicals, seeds, farm plastics, minerals, grain and services.
McDonnell Bros reported FY21 turnover of c. €38.8m which converted to an EBITDA of c. €3.1m, representing a year-on-year increase of 17.0% and 61.2%, respectively. This improved EBITDA margin was primarily enabled by gross margin increasing from 16.0% in FY20 to 17.8% this year.
Significant post-EBITDA cash movements included a working capital investment of c. €1.8m and the purchase of tangible fixed assets amounting to c. €0.8m. The business closed FY21 with a net cash balance of c. €3.8m, a c. €250k increase on FY20. The business is owned by founders Denis & John McDonnell.
Kestrel Foods Limited is a producer of hand-crafted fruit and nut snacks, based in Co. Armagh. It is owned by Michael Hall and Mark Palmer.
In its financial year to April 2022 the business generated a turnover of c. £19.2m, an increase of 21.4% year-on-year. This converted to c. £1.1m EBITDA, an increase of 11.1% year-on-year. The increase in EBITDA was driven by revenue growth.
The business finished the year with a cash balance of c. £0.6m, a c. £1.2m decrease on FY21. The purchase of tangibile fixed assets for £2.0m was the most significant post-EBITDA cash movement.
The business employed an average of 108 people during the year at a total cost of c. £3.2m during the year.
RECENT FUNDRAISINGS
Who: Axial3D, a Belfast-based medical imaging technology firm that creates models of human anatomy to assist surgeons in critical operations.
What: The business has finalised a $15m investment round, of which $10m is coming from Stratasys in Israel, a leader in polymer 3D printing solutions.
Why: The funding will be used to provide a joint offering to make patient-specific 3D printing solutions for hospitals and medical device manufacturers more accessible, so it becomes a mainstream healthcare solution.
Source: The Irish News
Who: Davra, an Internet of Things (IoT) platform that allows system integrators, product builders, OEMs, cities and end customers to define, build and rapidly bring to market industrial-grade IoT applications.
Treemetrics, a software-based company that has developed a management system for natural resources.
What: The two businesses have been awarded co-funding under the European Space Agency’s Earth Observation programme, with a total value of over €3 million.
Why: The funding will allow Davra to demonstrate the feasibility of combining data for use in the monitoring of mine tailings and will see Treemetrics utilising satellite imaging, data analytics and its advanced forest measurement technology to provide more accurate forest carbon credit estimates.
Source: RTÉ
Who: High Ridge Aviation, and LR AirFinance, a subsidiary of High Ridge Aviation, originate and manage aviation loans to support airlines, lessors and manufacturers across the world.
What: Pimco has backed the business for an undisclosed amount.
Why: This backing will help the start-up to focus on expansion, particularly in Hong Kong and Spain, and eventually increase the headcount from the current 12 founding partners.
Source: Irish Independent
Who: Bounce Insights, a consumer research platform founded in 2019 by Charlie Butler, Ronan Dowling-Cullen, Brian O’Mahony, Brandon Dooley and Josh Stafford.
What: The company raised funding of €1.1m with Gareth Lambe (former head of Meta Ireland), Anne Heraty (founder of CPL) and David Shackleton (co-founder of Ding), among the investors.
Why: The company will use the funds as it continues to grow and implement its strategy to disrupt traditional market research players.
Source: Irish Independent
Who: Everyangle, an Irish start-up which utilises customers’ CCTV cameras and computer vision applications to make sense of complex visual data, and transform it into crystal clear, actionable insights without the need for human review. The business was founded by David Owens in 2019.
What: The business has reportedly raised €2.7 million. The round was co-led by Sure Valley Ventures, Act Venture Capital and Furthr VC (formerly DBIC Ventures) and with participation from Enterprise Ireland.
Advisors: Baker Tilly, led by Greg Hogan, acted as lead corporate finance advisors to Everyangle. Baker Tilly also provided tax advice with Elaine McGrath of Reddy Charlton LLP providing legal advice.
Why: The funding will reportedly be used to help accelerate its expansion into international markets. It is also looking to double staff numbers with hires in areas that include roles in machine learning, data science, software engineering, product management and sales.
Source: Business Post
EXECUTIVE AND BOARD APPOINTMENTS
We in Renatus believe that more important than the deals are the people and we are pleased to provide you with details of key recent executive and board-level appointments.
@RenatusCapital Tweets
4.4%
The latest unemployment rate. Unemployment remained at a 20-year-low in October 2022 with 117,500 people classified as unemployed on a seasonally adjusted basis. According to @CSOIreland
47%
The proportion of Ireland’s energy requirements that were generated through wind farms in October 2022. This makes wind energy the primary source of energy across the country for the month. According to @WindEnergyIRL
40%
The proportion of companies that received government supports over the last two years and now have more staff members on the payroll than they did just before the Covid pandemic. This figure is 27% for the businesses that did not receive support. According to @CSOIreland
€7.3bn
The Exchequer surplus for the first ten months of the year, compared to a €7.4bn deficit at the same time last year. Corporation tax is the largest contributor to this surplus, with corporation tax receipts of €16.2bn in the 10 months to October. @IRLDeptFinance
84%
The percentage of Irish exporters that plan on entering new international markets within the next year. 62% stated increasing overseas market presence is their main priority. According to @Entirl
SIGN UP TO OUR NEWSLETTER
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.
OUR INVESTMENTS
LEARN MORE…
Renatus’ Knowledge Centre
Our Knowledge Centre is filled with insights from some of Ireland’s top business leaders on Succession Planning, Management Buyouts / Buy-Ins, Growth Financing and much more.
Subscribe to our Podcast
The Renatus Podcast, hosted by Renatus advisor and investor Greg Dilger, is a series of conversations with people in business – owners, operators, and investors.
Receive this Newsletter Direct to your Inbox
To receive the Renatus Weekly M&A & Company Performance Newsletter directly to your inbox, click the button below and subscribe.
