Renatus’ Weekly M&A Newsletter – 30/04/2023April 30, 2023
Renatus’ Weekly M&A Newsletter – 14/05/2023May 14, 2023
Renatus Weekly M&A & Company Performance Private Equity Newsletter 07/05/2023
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
Thanks so much to Fitzgerald Power, Bank of Ireland Byrne Wallace, The Currency, The Panel, Davy and all our speakers who made it a special event last Wednesday.
We have uploaded various videos from the day to our video platform.
Highlights video can be accessed by clicking here.
The Gene Murtagh Main Interview can be accessed by clicking here.
The Gene Murtagh Presentation can be accessed by clicking here.
For various snippets from other speakers including;
Kevin O’Loughlin on the risk of companies overselling, customer retention, finding deals and integrating them.
Gene Murtagh specifically on what he looks for in people, going public and acquisitions.
Niall O’Callaghan on identifying acquisitions.
Vicki O’Toole on due diligence and the emotion of selling a business.
Jacqueline O’Donovan on life post-acquisition.
PJ Flanagan on owning numbers, taking on investment and vision.
Tom Lane on taking on having a growth strategy and taking investment from Renatus.
Click here for all the above snippets.
The brochure from the Real Deal contained some insightful thought leadership pieces which are well worth a read and highlighted below:
The Brochure can be accessed here (pg 8) and the topics covered include:
Mark Flood (Renatus) – Life After an Exit
Stuart Fitzgerald (Fitzerald Power) – Due Diligence Lessons
Jillian Clarkin (Bank of Ireland) – Outlook for 2023
Feargal Brennan & Eamonn Carey (ByrneWallace) – Business Exits
Ian Kehoe (The Currency) – Timing Matters
Paul McArdle (The Panel) – Talent Pools
Sharon Malone (Davy) – Financial Planning
Elephant in the Room- Support Mental Health
We have partnered with ‘Elephant in the Room’ for The Real Deal. Elephant in the Room is a movement to show of support and commitment to destigmatising and normalising conversations around mental health issues and to show that companies across Ireland are willing and ready to support talking about mental health and in doing so support their employees. All proceeds go to the Samaritans. Please click to support.
Nostra acquires Definitive Solutions
Deal Details: Nostra has acquired Definitive Solutions. Deal consideration was not disclosed.
Nostra is a Dublin-based IT services provider, with other offices in Galway and Cork. The business is majority owned by Kevin O’Loughlin, CEO, who co-founded the business with his brother Barry, Gary Byrne and Senan Finucane. The business’ 2022 turnover is reported to be c. €33m.
Definitive Solutions is an IT support and managed service company, based in Swords, Co. Dublin. It was owned by Peter Meade and Dorothea Lewis. In FY Dec 21 it reported turnover of c. €2.8m which converted to EBITDA of c. €0.1m.
Deal Advisory: Grant Thornton led by Gareth Cosgrove.
Legal: McCann FitzGerald led by Rory O’Malley.
Banking: Bank of Ireland.
Corporate Finance: Davy.
Legal: Flynn O’Driscoll led by David Ryan, supported by Elaine Cully and Alastair Baird.
Renatus Comment: For those in attendance at The Real Deal this past Wednesday, you will have heard Kevin O’Loughlin reference this deal. As part of the panel discussion on ‘Growth by Acquisition’, the audience was treated to a fascinating insight into Nostra’s acquisition strategy as it continues to grow rapidly.
Nostra has three main rationale for acquisitions – revenue, talented people and opportunities for existing staff to grow long-term. Interestingly, Kevin also noted the difficulty in recruiting expert technical people organically and why over-selling and poor retention rates are two major red flags when he looks at potential target bolt-ons. This is the company’s 6th deal since 2016, acquiring Passax Business Systems just last month. Nostra’s rapid pace of dealmaking seems set to continue with O’Loughlin also stating that it has two more acquisition deals in advanced stages. Nostra has a fantastic growth story and it was great to hear it told in Goffs this week.
Source: Business Plus
Viatel acquires Irish arm of Sungard AS
Deal Details: Viatel has acquired the Irish arm of Sungard AS for an undisclosed amount.
Viatel is a Dublin-based digital services provider that delivers managed security, networking, cloud, and communications services. The business has been in operation for 26 years with additional locations in Cork, Limerick, and Louth. Viatel is 100% owned by Digiweb, which is ultimately owned by Colm Piercy of Chirisa Investments alongside Quay Ventures. The business has forecasted annual revenues of €90m for 2022 following the acquistion .
Sungard AS is a US-based provider of IT production and recovery services with offices in 12 countries internationally. The Dublin data centre provides cloud hosting, disaster recovery, managed IT services, and consulting services. The business does not report turnover or EBITDA information.
Legal: Venture Legal Services.
Banking: AIB Capital Markets.
Renatus Comment: Viatel has been a notably acquisitive player having completed its eighth acquisition in two years. Ireland is the European hub of over 1,000 leading multinational companies and the need to have a complete set of digital service solutions is becoming increasingly important, as hybrid working models continue to increase. This acquisition will provide Viatel with new AWS capabilities in addition to its existing expertise in Microsoft Azure solutions and will give the business access to a substantial multinational customer base, as well as additional capacity with Sungard AS’ data centre facilities in Park West and Profile Park.
Source: Viatel Press Release
The Ellerker Group acquired by Crown Workspace
Deal Details: The Ellerker Group has been acquired by Crown Workspace. Deal consideration has not been disclosed.
The Ellerker Group is a commercial relocation and move management business based in Dublin. It was owned by Ivan and Lindsay Ellerker. It does not report turnover or EBITDA information.
Crown Workspace is a workspace management company based in the UK. In FY Dec 21 it reported turnover of c. £25.1m which converted to EBITDA of c. £0.7m. It is part of the Crown Worldwide Group, a global logistics, transportation and storage business which is headquartered in Hong Kong.
Advisers: None mentioned.
Renatus Comment: Prior to the pandemic, the relocation services industry was expected to grow at a significant rate due to increasing globalisation and the need for businesses to expand their operations. However, the pandemic had a significant impact and the industry still faces challenges, evidenced by the vacancy rates of commercial property in Ireland hitting a record 14% in February this year. In late 2022, Big Tech firms such as Google, Meta and Salesforce were all seeking to abandon leased office space in Dublin.
Despite this slowdown, we are still seeing multiple multinational companies take up significant office space in the city. LinkedIn moved into Wilton Terrace in recent months, while Aon and PDD Holdings have also announced plans to take up more office space in the city.
Source: Business Plus
VentureWave Capital acquires majority stake in Funderbeam
Deal Details: VentureWave Capital has led a c. $40m investment in Funderbeam. Co-investors in the round include Mistletoe, Draper Associates and Funderbeam founder and CEO Kaidi Ruusalepp.
Venturewave is a Dublin-based VC investor focused on impact investing. VentureWave has 2 European and 1 US-based funds under management dedicated to impact investing with a global network of LPs including family offices, high-net-worth entrepreneurs, and institutional investors. VentureWave was founded by Alan Foy, Brian Martin and Kieran McLoughlin in 2020.
Funderbeam is an angel investing and trading platform founded in Estonia. Funderbeam holds investment firm licences in the UK, Estonia (covering EEA), and Singapore.
Deal Advisory:: Grant Thornton.
Renatus Comment: The acquisition will be used to expand VentureWave’s global presence as it will take an active leadership role in scaling Funderbeam’s technology across venture assets. According to KPMG’s latest Venture Pulse report, venture capital investment into Irish firms decreased 57% in Q1’23 compared to the same period last year. There have been a lot of macro factors including increasing interest rates, banking closures, and high inflation rates that have undoubtedly impacted the rate of VC investments. However, as technology continues to advance and disrupt traditional industries, VC firms will play an important role in identifying and supporting transformational start-ups.
Source: FunderBeam Press Release
North-West News Group acquires 4SM (NI) Ltd
Deal Details: Tyrone-based media company, North-West News Group (NWNG) has acquired B2B magazine and events company 4SM (NI) Ltd of Hillsborough. Deal consideration was not disclosed.
NWNG is a 122-year old local newspaper and web publisher with its head office in Omagh. The company produces a number of local newspapers and it also operates numerous digital platforms including the GAA website GaelicLife.com, Tyrone news site WeAreTyrone.com and recruitment platform MyIrelandJobs.com. The business does not report turnover or EBITDA information. Its largest shareholders are Veranne, Gerard and Austin Lynch. It is led by Managing Director, Dominic McClements
4SM (NI) produces B2B magazines including Export & Freight and Plant and Civil Engineer. The business was previously owned by Garfield Harrison and Helen Beggs who will remain with the company post acquisition.The business does not report turnover or EBITDA information.
Legal: Arthur Cox.
Legal: McKees Law.
Financial: Allen/ Fleming.
Renatus Comment: In December 2020, North-West News Group grew its offering upon acquiring Belfast based firm Kaizen which specialises in printing, branding and digital development. The addition of the 4SM (NI) stable of magazines and events will allow NWNG and Kaizen to expand its reach into niche transport and construction sectors.
We have seen significant consolidation in the press industry in recent months as smaller papers are being saved from closure whilst bigger players are looking to expand their editorial offerings. The newspaper industry has experienced some decline as people have migrated to digital but there Is still a cohort of adamant readers looking to engage with hard copies.
Source: NWNG Press Release
Lumenia Consulting management team completes MBO
Deal Details: Lumenia Consulting has been acquired by three senior management team members in a management buyout. Deal consideration has not been disclosed.
Lumenia is an independent ERP consulting organisation, specialising in business transformation through the implementation of Enterprise Resource Planning and related enterprise software applications. The business was owned by Sean Jackson prior to the transaction. It is based in Galway. The business was originally spun out from BSM Group in 2013. It does not report turnover or EBITDA information.
The MBO team consists of Ursula Browne, John Donagher and Ian O’Toole. Each will serve as managing partner following the acquisition.
Corporate Finance: RBK led by Chris Ball.
Legal: Ronan Daly Jermyn.
Corporate Finance: Focus Capital Partners.
Legal: Regan Wall.
Renatus Comment: As highlighted by Indeed, some of the critical factors for a successful ERP implementation include commitment from management, a defined scope for what you want your ERP to achieve, employee involvement and executive support. It also highlights the importance of selecting a complementary brand partner for implementation, which is where players such as Lumenia come in. Having a partner on board with experience at the design and configuration stage can be the difference between a (somewhat) seamless ERP integration and an expensive, disruptive project which can draw management’s focus away from the critical day-to-day running of the business.
Source: Lumenia Press Release
DEAL UPDATES & OTHER NEWS
Dexacom announces €300m Galway investment
Dexacom has announced plans to construct an advanced medical device manufacturing facility in Athenry, Co. Galway, creating up to 1,000 jobs. The investment seeks to increase the business’ capacity to scale quickly and meet market demand, with revenues having grown from $600m in 2013 to $3.5bn this year.
Source: Business Post
Westbank Group Limited trading as “Park Electrical Services” is a Belfast-based supplier of specialist electrical power, control, and automation products. The business is owned by James McConachie.
In its financial year to August 2022, the business generated a turnover of c. £94.5m, an increase of c. 43% year-on-year. This converted to an EBITDA of c. £9.7m, an increase of c. 34% year-on-year.
The business finished the year with a cash balance of c. £1.3m. Significant post-EBITDA cash movements include payments to acquire tangible assets of c. £3.9m and working capital investment of c. £7.9m.
The business employed an average of 204 people in FY22 at a total cost of c. £8.5m.
Findlater Hotels Limited. is the operator of the Castle Hotel on Gardiner Row in Dublin. The hotel is 4-star and has 121 rooms. It is owned by Fionn MacCumhaill.
In its financial year to March 2022, the business generated a turnover of c. €11.7m, an increase of 276.5% year-on-year. This converted to c. €0.8m EBITDA, up from a loss of c. €1.8m during the heavily Covid-impacted period in FY March 21. The increase in EBITDA was driven by an improvement in trading conditions following Covid, an increase in gross margin of 0.9% and the realisation of operating leverage in the business.
The business finished the year with a cash balance of c. €4.0m, a c. €2.4m increase on FY21. Significant post-EBITDA cash movements included c. €5.1m in cash released from working capital and the c. €4.5m re-payment of a short term loan.
The business employed an average of 169 people during the period at a total cost of c. €5.2m.
Who: Elkstone, an Irish venture capital and investment firm, led by Alan Merriman
What: The business has raised €5m in capital from a number of investors, including Pat McCann, former Dalata Hotel group CEO.
Why: The capital raised will be used for continued investment, with the business planning to expand its operations in Northern Ireland.
Source: Business Post
Who: Cilter Technologies, a child-protection software company, founded in Dublin by Rena Maycock.
What: The business has raised €1.67m in a seed funding round.
Why: The funding will be used to get the software ready for market and create 14 jobs.
Who: Sumer Group Holdings, the UK-based SME accountancy and business services platform, backed by Penta Capital.
What: The business has secured a new financial package from BlackRock alternatives.
Why: The funding will be used to support its growth and acquisition strategy in Ireland and the UK.
Penta Capital / Sumer:
Debt Advisory: Many Waters Capital led by Andrew Mantle.
Legal: Dickson Minto.
Financial and Tax DD: KPMG.
Source: Penta Capital Press Release
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.
The AIB Irish Manufacturing PMI for April, down from 51.3 in March, signalling a contraction in manufacturing activity according to @AIBIreland
The year-on-year increase in new car sales in April, according to @SIMI
The number of consecutive months that the ECB has hiked deposit interest rates, according to @Reuters
The month-on-month fall in retail sales in Eurozone countries in March, according to @EU_Eurostat
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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:
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