Renatus’ Weekly M&A Newsletter – 04/09/2022
September 4, 2022Renatus’ Weekly M&A Newsletter – 18/09/2022
September 18, 2022
Renatus Weekly M&A & Company Performance Private Equity Newsletter 11/09/2022
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT OF THE WEEK
Christine Lagard admitted that the ECB and international institutions and economists made forecasting errors because “it’s virtually impossible to actually anticipate and include in your models Covid, the war in Ukraine, the energy blackmail”. “So while I take the blame because I am the head of the institution and yes, we made forecasting errors, but those errors were made by all forecasters. We are not very different from them.” It calls into question the reliance on forecasts ahead from interest rates to economic growth etc. etc and plays into legendary investor Howard Mark’s most recent memo on the folly of forecasting
Marks is effectively saying that there are too many variables and too few precedents for a situation at a point in time because so much is different that it is impossible to forecast and business leaders are better to focus on the micro and not try and predict the macro beyond being ready for the worst and hoping for the best. He draws on some super quotes to support his essay and they are listed below:
The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.
– Daniel J. Boorstin
There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.
– John Kenneth Galbraith
Forecasts usually tell us more of the forecaster than of the future.
– Warren Buffett
The inability to forecast the past has no impact on our desire to forecast the future. Certainty is so valuable that we’ll never give up the quest for it, and most people couldn’t get out of bed in the morning if they were honest about how uncertain the future is. (“Big Beliefs,” Collaborative Fund, August 24, 2022)
I never think about the future – it comes soon enough.
– Albert Einstein
“It’s frightening to think that you might not know something, but more frightening to think that, by and large, the world is run by people who have faith that they know exactly what’s going on.”
– Stanford behaviourist, Amos Tversky
Marks’ memo can be read here.
M&A ACTIVITY
DCC Healthcare acquires Medi-Globe
Deal Details: DCC Healthcare has acquired Medi-Globe Technologies in a deal reported to be worth €245m. The deal is subject to approval in Germany and France.
DCC plc is an international sales, marketing and support services group that operates in the energy, healthcare and technology sectors. DCC Healthcare provides products and services to healthcare providers and health and beauty brand owners through its DCC Health & Beauty Solutions and DCC Vital divisions. This is DCC Healthcare’s largest acquisition to date and significantly expands the group’s presence in the medical device sector. DCC was founded by Jim Flavin in 1976 and is headquartered in Dublin. It was listed on the Dublin and London stock exchange in 1994. It is currently led by CEO Donal Murphy. In FY22 the business had a turnover of c. €21.0bn, which converted to an EBITDA of c. €885m. DCC’s Healthcare division reported revenues of c. £765m in FY22.
Medi-Globe Technologies develops and manufactures minimally invasive medical device solutions used for endoscopy. It was founded in 1990 and is headquartered in Germany. Martin Lehner leads the business as CEO. Medi-Globe’s investors include Duke Street, Deutsche Asset Management and Harwood Capital LLP. It will become part of DCC’s healthcare subdivision DCC Vital. The business is reported to have revenues of c. €120m and employs c. 600 people.
Advisers:
DCC:
None mentioned.
Medi-Globe:
Financial: Moelis.
Legal: White & Case.
Tax: PWC.
Commercial: EY-Parthenon.
FDD: Alvarez & Marsal.
Renatus Comment: DCC is positioned in 3 high growth sectors (Energy, Healthcare and Technoglogy) and has completed a string of bolt-on acquisitions over the last number of years. The business’s healthcare footprint has grown in recent times with last year’s acquisition of Worner Medical. 2021 saw a 22.9% growth in operating profits, with c. 33% of this growth being attributable to the acquisition of Worner Medical and the remainder being organic. The primary and secondary care markets in which DCC operates are growing and typically government funded. DCC Vital is well placed to benefit from these trends given its scale and global customer base, which is being further expanded through the acquisition of foreign companies.
DCC’s scaling strategy has been discussed previously by CEO, Donal Murphy, on the Renatus Podcast.
Source: DCC Press Release
Blue Zinc acquired by ClearCourse Partnership
Deal Details: Blue Zinc has been acquired by ClearCourse Partnership. Deal consideration has not been disclosed.
Blue Zinc is a solution provider for the management of patient referrals, clinical pathways and clinics for the physical and mental health segments of the healthcare sectors. The business was founded in 2002 by Kyle Lunn and Ronnie Johnston and is based in Belfast. Blue Zinc recently acquired Collab IT, an Australian software company that was the sole distributor of its TM3 products in the region. The business does not report turnover or EBITDA.
ClearCourse is a group of technology brands that provides software solutions and an integrated payments platform. The business was founded in 2018 by Gerry Gualtieri and has since been backed by Aquiline Capital Partners. It is headquartered in London. In FY20 this business had a turnover of c. £39.7m, which converted to an EBITDA of c. -£2.0m.
Advisers:
Blue Zinc:
Legal: Tughans led by James Donnelly, supported by Ben Sims, Tiarnan McKenna and Patricia Rooney.
Corporate Finance: Alpha Helix Corporate Finance led by Sam Rolls
Accounting: PGR Accountants
Clearcourse:
Legal: Squire Patton Boggs led by Louisa Hine
FDD: Grant Thornton
Tech Due Diligence: Crosslake
Renatus Comment: Blue Zinc’s focus on the musculoskeletal and mental health areas are both areas that are in high demand within the healthcare sector. This has been amplified by the pandemic.
1-in-4 individuals in the UK suffer from some musculoskeletal condition and this accounts for c. 30% of GP consultations.
The World Health Organisation reported mental health disorders to be one of the most prevalent public health challenges across Europe, with 25% of people suffering from a mental health disorder each year. Blue Zinc has recently launched Click, the first clinic management solution for the talking therapy market.
Hence, this clinic management software has great expansion opportunity on a global scale.
Source: ClearCourse Press Release
PIB Group acquires Sheridan-Colohan
Deal Details: Sheridan-Colohan Insurance Brokers has been acquired by PIB Insurance group. Deal consideration has not been disclosed.
Sheridan-Colohan Insurance Brokers is a professional financial service provider offering personal and commercial insurances such as motor, household, travel and commercial property insurance as well as life assurance, pensions, savings and investments. The business was founded by Eamonn Sheridan in 1981, who owned the business alongside Georgina Sheridan, Linus Devlin and Jackie McCabe. It is headquartered in Wicklow town and employs 15 people. In FY20 the business had a reported turnover of c. €1.6m, which converted to an EBITDA of c. €398.5k.
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 firms Apax Funds and The Carlyle Group. It is headquartered in London. In FY21 it recorded a turnover of c. £230.9m, which converted to an EBITDA of c. £44.5m.
Advisers:
PIB:
Legal: Matt Cole and Chris Murnane of DLA Piper.
Sheridan-Colohan:
Legal: Gar Smyth, Sean Hiney and Kathryn Mitchell at Wallace Corporate Councel.
Renatus Comment: Our weekly newsletter is rarely published without an insurance deal. PIB Group is a relatively new entrant to the list of companies working to consolidate the market having only completed its first Irish acquisition last year. However, it is catching up quickly, with Sheridan Colohan marking its eighth acquisition made in Ireland so far and the fifth this year. Irish acquisitions have made up 5 of 13 deals for PIB in 2022, demonstrating its focus on the market here. PIB’s other Irish acquisitions this year includes Mike Murphy Insurance, Sullivan Insurances, Fingal Insurance Group, and Alan Tierney & Partners.
Source: PIB Press Release
Delmec acquires FocusPlus Ltd
Deal Details: Delmec has acquired FocusPlus Limited. Deal consideration has not been disclosed.
Delmec is a provider of telecoms infrastructure solutions and services that has significant capabilities in portfolio management, telecoms infrastructure consultancy, steelwork & structures and infrastructure build. It was founded in 1975 as D&P Delaney Ltd by brothers Danny, Liam and Patrick Delaney and is headquartered in Carlow. The business is owned by Laura, Dillion and Daniel Delaney Jr and is led by CEO Kealan Delaney. In FY22 it had a turnover of c. €22.5m, which converted to an EBITDA of c. €2.7m.
FocusPlus Ltd is a provider of design and planning services for mobile telecommunication infrastructure operators and suppliers. It is headquartered in Switzerland where it was founded in 2000 and has offices in Ireland, Australia and Switzerland. Wayne Strugges is the founding director of the group and Stephen O’Brien leads the Irish arm of the business as managing director. The business does not publish turnover or EBITDA information.
Advisers:None mentioned.
Renatus Comment: Delmec has a wide list of customers both at home and abroad including Vodafone, Three, RTE, ESB, Ericsson, Mosaic, and BT. The business has expanded on a global scale in recent years after securing its first overseas contract with the help of Enterprise Ireland in 2010. Much of what the business does now is international. The business already holds a large market share in the Irish market with c. 70% of telecommunication towers on the island being supplied by them. This acquisition will give the business expansion opportunities in new geographies and improve its current offering to European customers.
Source: Delmec Press Release
Gateway Insurance acquired by Aston Lark
Deal Details: Gateway Insurance has been acquired by Aston Lark. Deal details have not been disclosed and the deal is subject to regulatory approval.
Gateway Insurance is a general insurance broker based in Athlone. It offers a wide variety of insurance products for both personal and commercial customers. The business was founded in 1981 by Tom Fitzgerald who led the business as managing director. In FY21 the business reported a turnover of c. €1.7m, which converted to an EBITDA of c. €192k. The business is owned by Bryan, Thomas and Kathleen Fitzgerald.
Aston Lark Ireland is a rapidly growing insurance broker. The business is led by CEO, Robert Kennedy and was acquired by Howden in March 2022. Aston Lark has been an extremely active acquirer in the Irish market over the past c. 15 months, with the acquisition of Sparrow Insurance in August being the most recent. The Irish arm of Aston Lark had an FY20 turnover of c. €7.1m, which converted to an EBITDA of c. €1.6m.
Advisers:
Aston Lark:
None mentioned.
Gateway Insurance:
Tax: RBK led by Fiona Murphy.
Corporate Finance: RBK led by Jennifer Brennan.
Renatus Comment: This is Aston Lark’s 12th Irish acquisition in the past 15 months since entering the market with the acquisition of Robertson Low in January 2019 as the insurance industry consolidation continues.
Source: Aston Lark Press Release
Panoramic Growth Equity acquires stake in Aluminium & Plastic Systems Limited
Deal Details: Panoramic Growth Equity has acquired a majority stake in Aluminium & Plastic Systems (APS) Limited. Deal details have not been disclosed.
Aluminium & Plastic Systems (APS) Limited is a stock-holding company that sells aluminium and PVCu products to the construction industry. It is a specialist in architectural glazing systems for commercial and residential buildings and has completed a large portfolio of projects to date. The business was founded in 2000, by Alan Denver and Ivan Bradford, who will step down following the acquisition. Gary McNeill will continue to lead the Lisburn-based business as managing director. It does not report turnover or EBITDA.
Panoramic Growth Equity is a Glasgow-based private equity company that specialises in investing in small and medium-sized businesses. This is Panoramic’s second investment in Northern Ireland.
Advisers:
Panoramic Growth Capital:
Legal: Shoosmiths led by Andrew Jennings and Kendra McCullough.
FDD: Consilium Chartered Accountants led by David Holt and Colin McCrann.
Insurance Due Diligence: TL Dallas led by Bernard Dunne.
APS:
Legal: Edwards & Co Solicitors led by Sarah Burrows and Amira Graham.
Corporate Finance: HNH Capital led by David Atkinson and Richard Moorehead.
Renatus Comment: Following a slowdown in construction activities during the pandemic, the Northern Ireland construction industry, a key market for APS, is projected to grow steadily over the next number of years.
Northern Ireland Construction Output volumes are forecast to grow by any average rate of c. 3.9% between the periods of 2021 – 2025, according to a report by CITB. The private housing space, a target segment for APS, is forecast to grow by c. 6.7% per annum for the same 2021 – 2025 period.
Source: APS Press Release
Fish Shack owners acquire Bad Ass Café
Deal Details: The owners of seafood restaurant Fish Shack have acquired Dublin’s Bad Ass Café, in a deal reported to be worth c. €2m.
Bad Ass Café offers a casual dining experience and bar on the corner of Temple Bar Square and Crown Alley. It opened in 1983 and was run by Martin Tynan of Benqueues Limited, who also owns Kennedys pub in Drumcondra. The business does not report turnover or EBITDA. The business is owned by Martin Tynan and Marina Nedocitanaja.
Fish Shack owners Colin and Eoin Pardy have secured the landmark location following what was reportedly a competitive bidding process. The building was offered for sale by CBRE last December at a guide price of c. €1.3m. The pair founded Fish Shack Café in 2015 and the restaurant has existing locations in Malahide and Sandycove. The business does not publish turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: There is likely going to be consolidation in the retail and hospitality space, particularly in the city centre of Dublin. There are some heavy balance sheets coming out of Covid, where Covid-type debt was added onto existing debt.
With city centre activity not fully reverting to normality with the work-from-home structural change driving footfall variations. This, compounded with energy price increases, is likely going to drive significant consolidation as opportunities continue to present themselves.
Source: Irish Times
Bua Fit acquired by Centred Wellness
Deal Details: Bua Fit has been acquired by Centred Wellness, with the combined entity believed to be worth c. $25m.
Bua Fit connects trainers and fitness fans for outdoor and online group fitness classes in London. It was founded in 2016 by Irishman, David Stapleton. David Stapleton owns the majority of the business. It does not report turnover or EBITDA information.
Centred Wellness is an invite-only B2B marketplace, with an offering in over 900 cities globally. The business was founded by CEO, Brian Chappon. The business does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: With Bua Fit’s existing offering focusing on London, becoming part of the Centred brand portfolio represents a key milestone in its ambitions to become a global brand.
Centred has a strong presence across the US, Australia and New Zealand, among other regions, providing immediate access for Bua Fit.
Centred already has a track record of working with fitness brands, with existing partnerships with Gymbox, which operates gyms across London, and F45, which has over 1,750 studios in 45 countries.
Source: Business Post
DEALS IN THE MAKING
BWG Foods to acquire McCarrick Brothers Wholesale
Deal Details: The proposed acquisition of McCarrick Brothers Wholesale by BWG Foods has been notified to the CCPC. The deal is subject to approval by the CCPC.
BWG Foods is a wholesale distributor of food and grocery goods to its affiliated stores and stores operated by independent retailers as well as food and beverages to food-service customers and the licensed trade. It also operates several cash and carry outlets. It was founded in 1963 and is headquartered in Dublin. In FY21 the business had a turnover of c. €1.4bn, which converted to an EBITDA of c. €60.7m.
McCarrick Brothers is a cash and carry business supplying a large range of grocery, mineral, alcohol and other products. McCarrick Brothers Wholesale was originally founded in 1945 by Arthur and Conor McCarrick in Athlone. A Longford branch opened in 1971 and the business subsequently split in 1976. The Longford arm has been run by Arthur and his sons Joe and Pat since. The business does not publish turnover or EBITDA information.
Source: CCPC
COMPANY PERFORMANCE
Based in Claremorris with a second location in Castlebar, J.J Griffith Limited, trading as Griffiths Motor Group, is a Ford dealership in the West of Ireland. The business deals in new and used models and also offers car hire, spare parts, and service.
Griffiths reported an FY21 turnover of c. €18.7m which converted to an EBITDA of c. €0.6m. Turnover was down marginally from the previous year while EBITDA was up almost 50%. This increase was driven by an improving gross margin which went from c. 5.3% in 2020 to c. 6.6% in 2021.
The business closed the year with a closing net cash balance of c. €4.6m in FY21. Significant post-EBITDA cash movements included a working capital unwinding of c. €3.4m, the purchase of tangible assets amounting to c. €36k, and proceeds from borrowings of c. €71k.
The business is owned by the Hughes family along with Yvonne Hackett. Griffiths employed an average of 41 staff throughout FY21 at a cost of c. €1.6m.
Porta-Fill International Ltd, t/a Portafill, manufactures mobile screening plant for use in the sorting of aggregates such as sand and gravel. The business is based in Co. Tyrone and owned by Malachy and Dolores Rafferty.
In its financial year to December 2021, Portafill had turnover of c. £9.5m, which converted to an EBITDA of c. £1.3m. This represents a rise of 12.8% and 46.9% year-on-year respectively. The rise in EBITDA can be partly explained by gross margins rising from 26.9% ot 28.9% year-on-year.
The business finished the year with a cash balance of c. £5.5m, a fall of c. £856k versus the previous year. Significant cash movements included a c. £1.2m investment into working capital, the acquisition of property for c. £832k, along with tax and loan repayments of c. £200k and £105k respectively.
The business employed an average of 56 people over the year, at an annual cost of c. £1.8m.
RECENT FUNDRAISINGS
Who: Ronspot, a workspace management software developer and provider, offering desk, parking and meeting room booking systems, as well as integrations.
What: It has raised a reported €1.1m in a round of funding led by Furthr VC and including HBAN Angel Network and Enterprise Ireland.
Why: Following dramatic growth in the hybrid working and space management market, this investment will allow Ronspot to employ an additional 10 people over the next 18 months and implement a 3-year growth strategy to increase revenues by 400% year-on-year to 2025.
Source: Ronspot Press Release
Who: xWave Technologies, uses technology and data analytics to ensure patients worldwide receive the best test first to improve patient outcomes and produce multi-billion-euro savings for health payers.
What: The business has raised a reported €1.3m in an oversubscribed seed funding round from multiple private investors, including a €250k investment from Enterprise Ireland.
Why: This investment will allow xWave Technologies to capitalise on commercial opportunities in the Irish, UK and Northern European markets, as well as further rolling out xRefer, xWaves smart radiology platform that enables clinicians to send referrals from anywhere to any hospital or imaging centre.
Source: Irish Times
Who: LetsGetChecked, a virtual care and home diagnostics company that provides direct access to diagnostic testing, genetics insights, virtual consultations and medication delivery.
What: Morgan Health, a JPMorgan Chase business unit focused on improving employer-sponsored health care has announced a reported $20m strategic investment in LetsGetChecked.
Why: This funding will increase access and reduce barriers to convenient and affordable at-home healthcare for those who need it most.
Source: JP Morgan Press Release
Who: LegitFit, a business management software for gyms, studios and fitness professionals that covers membership management, scheduling, payments, and a website builder.
What: The business has raised a reported €1m in a seed funding round led by Delta Partners.
Why: This funding will be used to speed up growth in the UK market and fulfil its ambition of doubling its consumer base in the next 12 months while exploring opportunities such as franchises and chains.
Source: Irish Times
Who: Johnson Hana, a legal management provider that outsources services from large companies to SMEs that both reduce legal costs and help speed up transactions.
What: AIB Equity Capital, the investment arm of the Irish pillar of AIB has taken a strategic stake in the business for an undisclosed amount.
Why: The funding will be used to assist expansion and enter the US market.
Source: The Currency
Who: Iheed, a medical education company.
What: The business has raised a reported €2m in funding from existing investors, which include Cambridge Education Group, Act Venture Capital, and Ray Stafford.
Why: The funding will be used to expand its online course offering.
Source: Sunday Times
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
0.75%
The increase in @ecb interest rates, bringing the rate to 1.25%. This is a 1.25% rise from July when interest rates stood at 0%. @IrishTimesBiz
€6.3bn
The Irish Exchequer surplus as of August 2022. This compares to a €7.7bn deficit at the same time last year. The surplus is mainly attributable to a boost in corporation tax, income tax and VAT receipts. According to @IrishTimes @dfatirl
10,500
The approximate number of grant applications for solar panels in Ireland for the first eight months of 2022. This is more than double the 4,072 applications received throughout all of 2021. This comes as homeowners plan to reduce energy bills. According to @SEAI_ie
4.5%
The reduction in the volume of building work in the Irish economy in Q2 2022. There was however a 3.2% increase in activity in comparison to the same period in 2021. According to @CSOIreland
10.2%
The inflation rate for the OECD in July. This is a slight decrease on the 34-year high of 10.3% that was recorded in June and is the first decrease in inflation since November 2020. @OECD
40%
The increase in Irish electricity prices in the year to July 2022. Gas (56%), home heating oil (92%), petrol (35%) and diesel (44%) were also up during this period. @RTEbusiness
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.
