Integrity360 acquires Netsecure, Keywords Studios acquires Hardsuit Studios, Gleeson Insurance acquired by PIB Group and more in our latest newsletter.
Renatus Weekly M&A & Company Performance Private Equity Newsletter 14/05/2023
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT FOR THE WEEK
As central banks continue to increase interest rates to attempt to tame inflation, the cost and availability of debt capital in private markets is becoming increasingly serious. The 3-month base rates shown below are approaching c.4- 5% and when layered with margin and risk premium, the real cost of senior debt is getting close to 10%. This is a huge shift from the high availability of low single-digit % cost debt that encouraged growth in recent years.This high opportunity cost of capital, if sustained, will inevitably tame all asset prices over the years ahead.
Integrity360 acquires Netsecure
Deal Details: Integrity360 has acquired Netsecure. Deal consideration was not disclosed.
Integrity360 is a Dublin-based IT security business. It was founded by Eoin Goulding in 2005. In 2021 it was acquired by UK-based private equity firm August Equity. The company had FY Dec 2022 revenue of c. €85m.
Netsecure is a Swedish cybersecurity company founded in 2015 by Jan Lindblom. It is reported to be on track for revenue of c. €10m in 2023.
Advisers: None mentioned.
Renatus Comment: This deal sees Integrity360 continue its pan-Euopean expansion following its acquisition of UK & Bulgaria-based Caretower in February 2022. At an event hosted by The Currency and Pinsent Masons earlier this year, Eoin Goulding, who is now president of the company, spoke about how taking on private equity investment re-invigorated him after he ‘had fallen out of love with the business’. He put this down to what had become an un-manageable workload to deal with alone, which led him to take on a strategic partner and de-risk. He spoke highly of the benefits of private equity when it comes to strategy and achieving scale. With Goulding having since acquired the high-profile AI-startup Altada and continuing to talk about a potential Integrity360 IPO down the line, the coming months and years are likely to remain extremely busy for him.
Source: Integrity360 Press Release
Keywords Studios acquires Hardsuit Studios
Deal Details: Keywords Studios has acquired Hardsuit Studios. Initial deal consideration was reported to be c. $8.25m, split between $6.6m of cash, and $1.65m in new ordinary shares. This can increase to a maximum of $15m if targets are hit.
Keywords Studios is an international technical and creative services provider to the global video games industry. It was founded in 1998 by Giorgio Guastalla and Teresa Luppino and is headquartered in Dublin. The company went public in 2013 and is currently led by CEO Bertrand Bodson. The business had FY Dec 22 revenues of c. €690.7m, which converted to an EBITDA of c. €120.9m.
Hardsuit Studios is game development studio, based in Seattle, USA. It was founded in 2015 by Andy Kipling and Russell Nelson and has over 70 employees. It does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Keywords Studios continues to be one of the most active acquirers in the industry with this deal following its recent acquisitions of Labcom, Helpshift, Smoking Gun International and Mighty Games. The company has been extremely active in its acquisition strategy since its IPO in 2013, with almost 60 deals completed. Its share price is up over that period from £1.23 to £23.38 as of May 13th. M&A news in the video game space is currently dominated by the saga surrounding the blocked $70bn merger between Microsoft and Activision Blizzard. Interestingly, Hardsuit Studios worked on high-profile Activision projects Call of Duty and Crash Bandicoot.
Source: Keywords Studios Press Release
Somex Automation Teoranta and Ward Automation acquired by Medical Manufacturing Technologies
Deal Details: Both Somex Automation Teoranta and Ward Automation (Galway) Limited have been acquired by Medical Manufacturing Technologies. Consideration was not disclosed for either deal.
Somex Automation is a Cork-based provider of automation equipment for the medical device manufacturing industry. In FY Dec 21 it reported turnover of c. €3.0m. It was established in 2003 and was owned by Michael Wall.
Ward Automation is a Galway and Sligo-based provider of custom automation solutions. It was established in 1995 and was owned by David McMorrow and John Ward. It does not report turnover or EBITDA information.
Medical Manufacturing Technologies (“MMT”) is a provider of medical device manufacturing solutions based in North Carolina, USA. It is made up of several separate medical device manufacturing brands including Glebar, SYNEO, CATHTIP and Engineering By Design. In 2019 it received investment from Arcline Investment Management.
Advisers: Ward Automation: Corporate Finance: DHKN led by Mark Gibbs. Legal: MacSweeney & Company led by Gavin Bluett.
Somex Automation: None mentioned.
Medical Manufacturing Technologies: None mentioned.
Renatus Comment: These two deals were announced separately this week and show the strength of the Irish medical devices industry. Ireland is Europe’s second-largest exporter of medical device products and is its largest per capita employer of medical device professionals. Both Ward Automation and Somex Automation offer specialised robotisation and integrated solutions for the industry which enable the high level of precision and accuracy required by the world’s leading medical device companies like Baxter, Stryker, Medtronic, Boston Scientific etc., all of whom have operations in Ireland.
Source: Medical Manufacturing Technologies Press Releases
Gleeson Insurance acquired by PIB Group
Deal Details: Gleeson Insurance has been acquired by PIB through subsidiary Campion Insurance for an undisclosed amount.
Gleeson Insurance is a Clare-based insurance services provider that has been in operation for over 35 years. Primary products include car insurance, home insurance, farm insurance, and commercial insurance. The business is owned by Jeanne, Michael, Katherine, Laura, and Megan Gleeson. In FY Oct 21, the business reported turnover of c. €0.7m which converted to an EBITDA of c. €0.1m.
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: Gleeson Insurance Legal: Wallace Corporate Counsel led by Gar Smyth and Sean Hiney.
PIB Group Legal: DLA Piper led by Matt Cole and Blayre McBride.
Renatus Comment: PIB is making its 14th acquisition in Ireland as it adds Gleeson Insurance to its operations. The business made its first Irish acquisition in 2021 and it continues to view the Irish insurance market favourably with recent acquisitions including McGivern, BHP, and Landmark to name a few. Ireland is one of the largest exporters of insurance services in the EU. It is notable that consolidation in the industry has continued at a solid pace amidst interest rate hikes and persistent macroeconomic challenges.
Source: Business Plus
Caragon acquired by Agilio Software
Deal Details: Caragon has been acquired by Agilio Software.
Caragon is an automated data solutions supplier based in Kildare. It was established in 2015 by Garron Mosley and Tony Rudden. Other shareholders included Julija Rudden, Giovanni Matera, Sean Reilly, Patricia O’Gorman, Michael McGrath, Derek O’Doherty and Enterprise Ireland. It does not report turnover or EBITDA information.
Agilio Software is a SaaS-based compliance, HR and e-learning service provider. It was formerly known as Code and was owned by Paul Mendlesohn. It was acquired by UK-based August Equity in 2019. It offers software and support to over 100,000 dental practitioners and 4,000 GP practices & hospitals. It does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Like Integrity360 referenced above, Caragon is also the centre of a buy-and-build strategy from August Equity. Caragon’s software makes for a natural fit within Agilio’s growing software platform and marks its eighth acquisition. Caragon currently manages payroll for 10,000 associate dentists and also offers finance and data management capabilities for 80% of the largest dental service organisations in the UK. The adoption of technology in dentistry and healthcare continues to be driven by regulatory requirements surrounding patients’ data and also increasing costs faced by operators. Digital solutions increase efficiency and save time which can significantly improve operating margins for dentists, GPs and other healthcare operators.
Source: Agilio Press Release
Webtext acquired by SharpenCX
Deal Details: Webtext has been acquired by SharpenCX. Deal consideration was not disclosed.
Webtext is a Galway-based provider of voice-only contact centres with messaging support. It was established in 2014. Colm Keating, Anthony (A.J.) Cahill and Michael Cahill were the three largest shareholders prior to the sale. The business does not report turnover or EBITDA information.
SharpenCX is a US-based platform provider for unified contact centers. It received investment funding from TELEO Capital in December 2022. It does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: The acquisition of Webtext will add a suite of message solutions to SharpenCX’s product range. SharpenCX’s current offering uses AI to capture call centre data to help improve the quality of customer interactions. Through the acquisition of messaging-first capabilities with Webtext, the business will create an omnichannel experience. The evolution of AI has been a significant player in data-driven tasks as it can provide in-depth analysis that can help drive higher levels of engagement.
Source: Webtext Press Release
Nortev acquired by Pari
Deal Details: Nortev has been acquired by Pari GmbH. Deal consideration was not disclosed.
Nortev is a Galway-based manufacturer of the equine nebuliser Flexineb, a device for respiratory therapy in horses. It was founded in 2008 and was owned by Declan Moran, Gavan O’Sullivan, Declan McCarron and Bernadette McCarron. It also previously received backing from Enterprise Equity Venture Capital. The business does not report turnover or EBITDA information.
Pari is a German manufacturer of medical devices with a focus on inhalation devices. It was founded in 1906 and is currently led by CEO Arne Dirks. It does not report turnover or EBITDA information.
Advisers: Nortev Legal: Regan Wall led by Adrian Wall and Sarah Connolly. Corporate Finance: Deloitte led by Jan Fitzell, Derek Murphy, Sharné Reeves and Michael Grufferty. Tax: Deloitte led by Fergal Cahill and supported by Sinead Dooley
Pari: Legal: Taylor Wessing
Renatus Comment: Nortev is another example of a company born out of the thriving Irish medical devices scene. Gavan O’Sullivan and Declan Moran had both worked on human nebulisers with Aerogen, prior to launching their own company. They recognised an opportunity to apply their knowledge in another niche, in which Ireland holds a leading position globally – the horse industry. Respiratory problems are common in thoroughbred horses when kept in stables due to the high levels of dust inhaled. Nortev’s device offered a simple but effective solution and quickly gained recognition internationally. The company has since gone from strength to strength, opening offices in Canada and most recently, the US.
Source: Pari Press Release
Maguire International Limited is a logistics company based in Ballinode, Co. Monaghan. The business was established in the 1980s and offers temperature-controlled distribution to bulk tankers and curtain sided trailers across Ireland, the U.K. and Europe. It is owned by Niall and Dermot Maguire.
In its financial year to June 2022 the business generated a turnover of c. €17.4m, an increase of 14.7% year-on-year. This converted to c. €2.6m EBITDA, an increase of 14.4% year-on-year. The increase in EBITDA was driven by the increased turnover in the business, with EBITDA margins remaining flat year-on-year.
The business finished the year with a cash balance of c. €0.9m, a c. €0.1m increase on FY21. Payments to acquire tangible assets and working capital investment were the most significant post-EBITDA cash movements.
The business employed an average of 107 people during the period at a total cost of c. €3.2m.
Brian Geary Car Sales Limited is a Limerick-based Toyota car dealership owned by Brian Geary.
In its financial year to June 2022, the business generated a turnover of c. €32.6m, an increase of 21% year-on-year. This converted to an EBITDA of c. €1.5m, an increase of 28% year-on-year. EBITDA improvements can be primarily attributed to a reduction in operating expenses as a percentage of revenue.
Significant post-EBITDA cash movements include working capital investment of c. €1.6m and advances to related parties of c. €1.5m. The business finished the year with a cash balance of c. €3.2m, an increase of c. €1.0m year-on-year.
The business employed an average of 55 people in FY22 at a total cost of c. €2.4m.
Who: Everseen, a provider of AI-powered computer vision and hyper-automation solutions, based in Cork.
What: The business has raised a €65 million Series A follow-on funding round led by Crosspoint Capital Partners.
Why: The funding will be used to continue investment into Everseen’s computer vision AI technology and help the company scale.
Advisers: Advisory: Focus Capital led by Martin Higgins, Owen Hackett, John O’Sullivan and Dermot Brennan. Legal: Arthur Cox led by Connor Manning and Sophie Frederix and including Tim Gleeson and Ellen Gaffney (Corporate and M&A) along with Orrick, Herrington & Sutcliffe LLP led by Karen Dempsey.
Source:Everseen Press Release
Who: Amara Therapeutics, the Galway-based medtech company established by Brendan Staunton, Dr Emma Carr and Prof Geoffrey Cundiff in 2021.
What: The company has raised €3m in funding to develop its bladder health technology BladderBoss, from Enterprise Ireland, the Western Development Commission, a group of private investors and the Disruptive Technologies Innovation Fund.
Why: The funding will be used for continued product development and entry into new markets. A €5m seed round is planned for later this year to fund further growth.
Who: Jolt, an Irish co-founded business that has developed fast-charging EV stations
What: The business has raised €150m in a funding round led by InfraRed Capital Partners.
Why: The business anticipates to use the funding to develop thousands of charging stations.
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.