Immedis acquired by UKG, Macro Works acquired by APEM Group, GoReport receives investment from ScaleUp Capital and more in our latest newsletter.
Renatus Weekly M&A & Company Performance Private Equity Newsletter 11/06/2023
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT FOR THE WEEK
An article by Gillian Tett in the Financial Times this week weighed up whether investors should feel optimistic or pessimistic about the future, given both known threats as artificial intelligence and inflation, coupled with recent shocks such as Covid-19 and the war in Ukraine. The conclusion? Investors should be prepared to expect the unexpected, with even US Federal Reserve chair Jay Powell admitting that nobody knows where the economy will be a year from now.
Models used by investors can’t capture everything and historical precedent may not contain the answers to the future which it previously has. While omissions which are stable in nature and small in impact may not present a major issue, more prevalent issues are emerging which have not previously been factored into models used by investors, with even data giants such as Bridgewater admitting to recent errors in assumptions.
Below are five key issues investors should remain vigilant of today that may influence future outcomes, which have often been excluded:
Technological Change – Specifically its impact on consumer patterns and the accelerating pace at which information is shared globally.
Climate Change – The pace of implementation of green policies is ever-changing, with newer initiatives being announced as the issue becomes more prevalent.
The Impact of War – Violent conflict rarely ranked in the Top 10 risks for the World Economic Forum’s annual meeting, but recent confrontations such as the war in Ukraine and tensions between China and Taiwan have seen the risk become ever-more tangible.
The Political Economy – Government intervention in ‘free’ markets has become more acceptable than in the Friedman era of the 20th century, with regulatory controls in finance, tech and healthcare having the potential to differ from those seen in the past.
Health Risks – The pandemic has increased the attention given to infectious disease risks by governments, but issues such as mental health and addiction, along with changing demographics such as the potential shrinking of China’s population, owing to its one-child policy, all having the potential to misfire established economic projections.
As investors, we must focus more than ever on evolving trends which history has no precedent for.
Deal Details: Immedis has been acquired by UKG. Deal consideration was reported to be in excess of €500m.
Immedis is a Kilkenny-based global payroll provider established in 2016. It is part of Terry Clune’s Clunetech which was established in 1996. Immedis is majority owned by Terry Clune along with Richard Limpkin, Ruairi Kelleher, Mark Graham and other employees as part of a broad ESOP pool. Immedis also previously received investment from US-based Lead Edge Capital and the Ireland Strategic Investment Fund through its investment in Scottish Equity Partners. In FY Dec 21 it reported turnover of c. €20.5m.
UKG is a US-based HR and payroll business. It was established in 2020 following the merger of Ultimate Software and Kronos and has c. 15,000 employees. It does not report turnover or EBITDA information.
Advisers: Immedis: Deal Advisory: Qatalyst Partners. Tax Due Diligence: PWC. Legal: A&L Goodbody led by Richard Grey and including Phil Fogarty, Sam Sheridan, Conor Maginn, Tara McGrath, Kevin O’Connor and Sarah Long.
Advisers to some shareholders: Legal: DLA Piper and Clerkin Lynch.
Renatus Comment: This is yet another amazing milestone for Terry Clune. CluneTech was established in 1996 and has grown to employ over 1500 people. Its ecosystem of brands across global payroll, tax returns and cross-border payments, among other areas, includes TransferMate, Taxback International, Sprintax, Benamic and Visa First. Just last year, TransferMate reached a ‘unicorn’ valuation in its own right, following a $70m funding round.
Immedis was born in 2016 as a solution to a challenge that Clune was experiencing himself in trying to manage payroll activities across multiple jurisdictions and currencies. He quickly recognised that his solution would likely prove valuable to other global organistaions and this has been proven correct with Immedis now operating in over 150 countries, just seven years later.
Macro Works acquired by APEM Group
Deal Details: Macro Works has been acquired by APEM Group. Deal consideration was not disclosed.
Macro Works is a Dublin-based Landscape and Visual Impact Assessment (LVIA) business. The business was established in 1999 and it has clients from both the public and private sector. The business produces photomontages, 3D visual simulations, glint, and glare reports, and it offers landscape designs for a broad spectrum of energy, infrastructure, and commercial developments. The business is owned by Richard Barker and it does not report turnover or EBITDA information.
APEM Group is a UK-based environmental consultancy firm specialising in freshwater and marine ecology and aerial surveys. WestBridge invested a reported c. £9.8m in March 2019 when it backed the management buyout of the business. In FY Dec 21, the business reported turnover of c. £21.1m which converted to an EBITDA of c. £4.6m.
Advisers: APEM Group: Corporate Finance: DSW Corporate Finance Financial Due Diligence: DSW Transaction Services Legal: Capital Law and Ogier Leman Tax: BDO Ireland and Parisi Tax Commercial Due Diligence: CIL
Macro Works: Deal Advisory: Benchmark International
Renatus Comment: This marks APEM Group’s third acquisition in Ireland, with other acquisitions including Woodrow and AQUAFACT. Geospatial data is used in several industries to help gather existing information, collect new information, analyse data, produce plans, manage projects, and deliver accurate data. In this data-driven age, we are seeing the rapid development of sensing technologies and autonomous devices. In 2018, the UK government established the Geospatial Commission to help unlock public sector geospatial activity, highlighting the increasing demand for these services.
Source: Business Plus
GoReport receives investment from ScaleUp Capital
Deal Details: GoReport has received investment from ScaleUp Capital. Deal consideration was not disclosed.
GoReport is a Belfast-based software company that allows property surveyors to digitise inspecting, reporting and analysis. GoReport’s existing management team includes David Bell, Gavin O’Neill and Simon Donaldson. Existing shareholders include the management team, Crescent Capital, Invest NI and a number of angel investors. The business does not report turnover or EBITDA information.
ScaleUp Capital is a London-based investment firm established in 2002.
Advisers: GoReport: Deal advisory: Key Capital led by Richard Tunney. Legal: Davidson McDonnell led by Vicky Dummigan and Louise McCaffrey
ScaleUp Capital: None mentioned.
Renatus Comment: Operating within a niche of professional services, GoReport is well-positioned to capitalise on key trends impacting the space, with a Forbes article citing an increasing speed of business, digital delivery of services and a shift towards an outcome-based model (as opposed to rate-based) as the primary drivers of change.
A 2023 SCSI report also states that Ireland will face a shortage of qualified quantity surveyors if the economy grows by 4% per annum over the next four years, providing GoReport with the opportunity to ease this supply constraint by offering increased efficiencies in the process to help cater for this forecast demand.
Source: Belfast Telegraph
Rainmaker acquired by Skymetrix
Deal Details: Rainmaker Business Technologies has been acquired by Skymetrix. UK-based private equity firm Ventiga Capital Partners provided the funding for the deal. Deal consideration was not disclosed.
Rainmaker Business Technologies is a Dublin-based aviation crew cost software specialist, established in 2005. Rainmaker’s shareholders include co-founders Pat Byrne (who founded Cityjet) and Brendan Fuller (CEO), Anthony Carville (CTO) along with a number of other backers including Enterprise Ireland and the Harcourt Venture Fund, part of Investec. The business does not report turnover or EBITDA information.
Skymetrix is an aviation fuel and cost management business that was established in 2021 following the merger of FuelPlus and Airpas. Its customers include over 100 of the world’s leading airlines including Lufthansa, Ryanair, Emirates and Spirit Airlines. The business is led by Michael Scheidler.
Advisers: Rainmaker Business Technologies: Deal Advisory: Pegasus Capital led by David Lawrence, Peter Hyde and Conor McDonald. Legal: Flynn O’Driscoll LLP
Skymetrix: None mentioned.
Renatus Comment: As airlines strive to recover and adapt to the post-pandemic landscape, they are increasingly seeking innovative technologies and operational strategies to manage costs. This is further exacerbated by the Green agenda that is gaining momentum in the industry. A report from Bain & Co. this week stated that the cost of sustainable aviation fuels (SAF) will remain up to four times higher than jet fuel until 2050. Skymetrix manages over 28% of commercial aviation fuel annually. By adding Rainmaker’s crew cost and contract management capabilities, it can offer airlines an all-around cost management service. This is important for consumers as increasing costs are likely to lead to increases in air fares of c. 15% over the coming 2-3 years, according to recent comments from Ryanair’s CEO, Michael O’Leary.
Source: Skymetrix Press Release
Granite Digital acquires Digital Division of NY Agency LCM247
Deal Details: Granite Digital has acquired a reported c. 75% stake in the digital division of LCM247. It is reported that a total of €1m will be invested in the US business and 12 staff will be added to Granite Digital’s team of 110.
Granite Digital is a Cork-based digital agency firm that has been recognised as part of Deloitte’s Fast 50 list for the past four years. It is reported that the overall revenue of the business is expected to exceed c. €13m this year. Shareholders of the company include Alf Smiddy, who is also chairman, Conor Buckley, Cormac O’Neill, Robert Carpenter, Sean Byrne, Ger O’Shea, and Seamus White.
LCM247 is a US-based creative agency and television production studio founded by Patrick Heaphy. The business does not report turnover or EBITDA information.
Renatus Comment: The market for design and digital agencies has seen significant M&A activity in recent years. However, it is still a fragmented market with smaller firms having a niche local focus. This deal is reported to be Granite Digital’s 13th acquisition. The business acquired Continuum, Connector, Webtrade, MediaOne and Apps Made Easy in recent years as it working to grow at pace globally. The acquisition of a US-based agency will lead to the formation of a US entity, LCM by Granite, with the US team expected to double within two years.
Source: Business Plus
Around Noon Foods acquires The Soho Sandwich Company
Deal Details: Around Noon Foods has acquired The Soho Sandwich Company. Deal consideration was not disclosed.
Around Noon Foods is a Newry-based food-to-go manufacturer established in 1989. In FY Dec 22 it reported turnover of c. £41.6m which converted to EBITDA of c. £2.1m. The business is owned by Gareth Chambers, Howard Farquhar, Sheila Chambers, Patrick McAliskey, Guy Truman and Wesley Jenkins.
The Soho Sandwich Company is a London-based packaged sandwich manufacturer. It was owned by Daniel Silverston and A.J. Gilbert. In FY Jun 22 it reported turnover of c. £23.0m which converted to EBITDA of c. £0.9m.
Advisers: None mentioned.
Renatus Comment: Appearing to operate in a more niche part of the convenience food market than the likes of Greencore, this is the third acquisition carried out by Around Noon Foods since Howard Farquhar and Gareth Chambers did an MBO of the business in 2016. The companies previously acquired were London-based sandwich manufacturer Chef-in-a-Box in 2017 and Drogheda-based healthy convenience food firm Simply Fit in 2020. The industry is low-margin and extremely competitive, with numerous brands vying for market share. Maintaining consistent quality and taste across a wide distribution network presents significant challenges as does the need to ensure food safety and freshness throughout the supply chain. Despite this, Around Noon continues to grow steadily from what began as a family business at the Chambers’ kitchen table in 1989 to a business now employing over 800 people.
Source: Irish News
Innopharma receives investment from MML Capital Partners
Deal Details: Innopharma has received investment from MML Capital Partners. Details of the investment were not disclosed.
Innopharma Education is a Dublin-based provider of further education courses to the pharma, medtech and food sectors. Innopharma’s technical division also provides highly trained, contract technical resources to client companies within the pharma and medtech spaces. A third strand of the group, Innopharma Technology, designs and develops pharma 4.0 data and technology solutions for drug manufacturing. Innopharma Education was established in 2009 by Dr. Ian Jones, while Innopharma Technical Services was founded in 2017 and is led by Luke Kiernan. In FY Jun 22 the Group reported turnover of c. €13.0m which converted to EBITDA of c. €1.3m.
MML Growth Capital Partners Ireland Limited is an Irish-based private equity fund.
Advisers: Innopharma: Corporate Finance: Mazars led by John Bowe, Damian Connaughton and Sam Hastings. Legal: Philip Lee led by Andreas McConnell, Anna Hickey and Claudia Macklin.
MML: Legal: McCann Fitzgerald led by John Neeson. Financial Due Diligence: BDO led by Rory O’Keeffe, Andrew Frazer and Vaughan Coetzee. Tax Due Diligence: BDO led by Angela Fleming and Philip Nolan. Commercial Due Diligence: KPMG led by Chris Brown and David Walsh.
Renatus Comment: The up-skilling and re-skilling education sector as a whole is experiencing rapid growth due to the increasing demand for advanced manufacturing skills in both Ireland and the wider world. Lifelong learning is also an area that the government continues to promote heavily. In May, Simon Harris launched the EU ‘Year of Skills’ in Ireland, which aims to kickstart a Europe-wide push to have at least 60% of adults in training every year by 2030.
Source: Business Plus
Tim Duggan Insurances acquired by PIB group
Deal Details: Tim Duggan Insurances has been acquired by PIB Group for an undisclosed amount. The business will form part of PIB’s Irish division, led by Campion Insurance
Tim Duggan Insurances is a Limerick-based insurance broker. The business is owned by Hilary and Tim Duggan and had FY Dec 21 turnover of €890k.
PIB Group Limited is a group of insurance advisory businesses providing advisory, analytics, claims management, premium funding, and risk management solutions. The business was founded in 2015 by Brendan McManus and is backed by private equity firm Apax Partners. It is headquartered in London. In FY Dec 21, it recorded a turnover of c. £230.9m, which converted to an EBITDA of c. £44.5m.
Advisers: Tim Duggan Insurances: Legal: Sweeney Mcgann led by Gearoid Mcgann and Claire Hoctor. Deal advisory: Grant Thornton led by Dara Kelly.
PIB Group: Legal: DLA Piper led by Matt Cole and Jack Kelly.
Renatus Comment: The UK & Ireland was the European region that recorded the highest number of announced insurance transactions in Q2 2022, fueled by consolidation. According to FTI Consulting’s European Insurance M&A Barometer Report 2022, multiples were in the high teens with Eurazeo reportedly paying 17.5x EBITDA for BMS, Goldman Sachs paying a reported 18x EBITDA for The Clear Group, Howden announcing the purchase of global reinsurance broker TigerRisk for a reported 17x-18x EBITDA and the acquisition of the Swedish consolidator Säkra by Cinven for a reported 18x EBITDA. It will be interesting to see if the pace of consolidation in the space continues in 2023.
Source: PIB Group Press Release
Premier Periclase acquired by Gyrogy and Meridiam
Deal Details: A partnership of Meridiam and Gyrogy has acquired Premier Periclase’s. Deal consideration was not disclosed.
Premier Periclase Limited is an industrial company that produces Magnesium Oxide and Magnesium Hydroxide products from a site on the coast near Drogheda. It was established in 1979 and in FY Dec 22 it reported turnover of c. €9.1m. It was owned by Kieran Byrne, Geoffrey Angus, Ian Kerr, David McCloy, Matthew & Conor McCullough, James Mairs and Gregg Hamill.
Meridiam is a French global benefit corporation that specialises in the development, and management of sustainable public infrastructure. It does not report turnover or EBITDA information.
Gyrogy is a Dublin-based technology company that develops and operates sustainable energy Infrastructure. It is owned by Paul, Natalia & Philip McEnroe, Paul Phelan, Colin Kelly, Steve Budge and Enterprise Ireland. It does not report turnover or EBITDA information.
Advisers: Premier Periclase: Deal advisory: Beltrae Partners led by Matt McCullough, supported by Ian Kerr, Conor McCullough, David McCloy and James Donnelly. Legal: Carson McDowell led by Neasa Quigley. Tax: Baker Tilly Kirk.
Meridiam/ Gyrogy: Deal advisory: KPMG led by James Delahunt Legal: Philip Lee led by Alice Whittaker and Keelin Gavagan
Renatus Comment: The buyers have announced that they intend to replace the existing facility on Boyne Road in Drogheda and re-develop it as a mixed-use campus offering low-carbon energy solutions. This is an interesting sign of the times as a traditional manufacturing business with 85 years of history is re-born into one which will facilitate the wider Green transition. Sustainable economic growth and decarbonisation are two key objectives of the current government’s policy but as mentioned in our Thought of the Week last week, the country is falling well behind its emission targets. It has been reported the project will create over 500 jobs.
Source: Meridiam Press Release
DEAL UPDATES & OTHER NEWS
PFH Technology Group acquired by Ricoh Europe
Deal Details: PFH Technology Group has been acquired by Ricoh Europe, as covered in the main deals section on April 9th. The deal officially completed this week. Deal consideration was not disclosed though it was reported to be one of the industry’s largest deals of the year.
PFH Technology Group is an integrated digital infrastructure and managed services provider, based in Cork. Its partners include Dell, Lenovo, Microsoft, HP and VMware. It was founded in 1985 by its current Chairman and shareholder, Paul Hourican. In FY Jun 2021 it reported turnover of c. €139.9m which converted to EBITDA of c. €13.2m.
Ricoh Europe is a digital transformation business based in London. It is owned by the Ricoh Group which is a publicly listed company that was established in Tokyo in 1936. It has a market cap of c. $4.6bn.
Advisers: PFH Technology Group: EY’s Strategy & Transactions team, led by Luke Charleton, provided integrated services as below. Deal Advisory: EY Corporate Finance led by Rob Hussey and Ronan Murray with Michael Murphy and Antoine Daubigny Transaction Diligence: EY led by Marcus Purcell, supported by Maurice Kennedy, Sean O’Brien, Zia Salam Kayani, Sean Chibuye and Corrado Franchi. Financial Modelling: EY led by Simon MacAllister, Kevin Kelly, Herbert Dreyer and Kevin Dillon. Commercial Due Diligence: EY led by Helena O’Dwyer and Ronan MacGreevy Tax: EY led by Frank O’Neill Legal: Arthur Cox
Ricoh Europe: Legal (Corporate): Taylor Wessing led by Philip Shepherd, Edward Chapman, Adam Griffiths, Rachel Mc Causland and Ameer Gazder along with Matheson LLP. Deal Advisory: KPMG.
Source: Ricoh Press Release
PRM Group Ltd. is an Armagh-based holding company for three logistics businesses; PRM Distribution Ltd., PRM Enterprises Ltd. and PRM Ireland Ltd. The Group offers distribution, haulage and third-party logistics solutions across Ireland, the UK and Europe. The company was established in 1988 by Philip and Lynne Morrow.
In its financial year to Dec 2021 the business generated a turnover of c. £38.4m, an increase of 10.6% year-on-year. This converted to c. £1.5m EBITDA, an increase of 46.5% year-on-year. The increase in EBITDA was driven by operating leverage realised in the business with administrative costs as a percentage of revenue falling from c. 7.2% in FY Dec’20 to 2.7% in FY Dec’21.
The business finished the year with a cash balance of c. £1.5m, a c. £1.1m increase on FY20. Working capital investment of c. £0.4m was the most significant post-EBITDA cash movement.
The business employed an average of 41 people during the period at a total cost of c. £1.2m.
B.McCaffrey & Sons Limited is a Fermanagh-based quarry business. The business is owned by Sean McCaffrey and Paraic McCaffrey.
In its financial year to April 2022, the business generated a turnover of c. £14.6m, an increase of c. 21% year-on-year, c. 17% of revenue relates to Ireland sales with the rest relating to the UK. This converted to an EBITDA of c. £2.2m, an increase of c. 31% year-on-year. EBITDA improvements year-on-year are largely driven by the business realising operating leverage.
Significant post-EBITDA cash movements include loan repayments of c. £0.4m, Finance Lease payments of c. £0.3m and working capital investment of c. £0.5m. The business finished the year with a cash balance of c. £2.8m, an increase of c. 32% year-on-year.
The business employed an average of 101 people in FY22 at a total cost of c. £2.7m.
Who: Just Climate, a new fund launched by Al Gore’s Generation Investment Management.
What: The fund has received a €65m investment from the Ireland Strategic Investment Fund. Other investors include Microsoft Climate Innovation Fund, IMAS Foundation and Harvard Management Company.
Why: The fund will invest in growth stage companies that are aiming to reduce emissions in industries such as energy, mobility, and buildings.
Who: Wrightbus, the Ballymena-based bus manufacturer.
What: The business has received £32m in funding as part of a larger £50m package. The funding was provided by Barclays Bank with an 80% guarantee provided by UK Export Finance.
Why: The funding will be used to grow operations in international markets including Germany, North America, Singapore and Hong Kong.
Who: LetsGetChecked, a virtual care and home diagnostics company that provides direct access to diagnostic testing, genetics insights, virtual consultations and medication delivery.
What: The business raised c. €70m in December in a funding round led by Opium Ventures which also included other early investors including Elkstone Capital.
Why: The funding will be used to continue LetsGetChecked’s expansion and product development.
Who: Atoa, the Irish-founded, UK-based payments processor, founded by Cian O’Dowd.
What: The business has raised $6.5m in seed funding in a round led by Valar Ventures.
Why: The funding will be used to continue the development of Atoa’s product.
Who: GlasPort Bio, which has developed a series of additives that reduce the amount of methane produced by livestock.
What: The business has raised investment from Mark Bruzzi, who founded and sold Vetex Medical.
Why: The funding will be used to accelerate GlasPort Bio’s expansion.
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.