Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
This week in Renatus we met a founder who ran their business for years before subsequently stepping back and hiring a successor. However, as is often the case, this simply didn’t work out and they were forced to return to the fold to run the business once again.
We have seen this a lot since we started our journey nearly ten years ago. People, including the entrepreneur in question, often think this is an issue confined to the world of SMEs because of the fact that they can sometimes struggle to attract talent vs. larger companies with bigger budgets. However, it is not as simple as that.
There are countless high-profile examples of leading executives of giant multinational companies having been pulled back into a business following a failed transition. These include Steve Jobs (Apple), Jerry Yang (Yahoo), Jack Dorsey (Twitter), Richard Branson (Virgin), Phil Knight (Nike) as well as Howard Hughes, Henry Ford, Michael Dell and Michael Bloomberg, all of whom struggled to walk away from their respective eponymous ventures.
It is an interesting phenomenon and there will be rainforests cut down to print academic theses dedicated to the subject. The simple lesson we take away from the above is that the skillset of a successful entrepreneurial leader is very hard to emulate and weave into the DNA of a company in such a way that it carries on when they are no longer around. Appointing a successor is not a simple thing and it needs plenty of planning and consideration to increase the probability of success.
The Bray Air Display, renowned as one of Europe’s best air displays, and Ireland’s biggest aerobatics show, takes place on the 29th & 30th July 2023 in Bray, County Wicklow. The show is directed by Captain Sé Pardy, founder of Renatus portfolio company Simtech Aviation.
Including both Irish and international acts from as far afield as the Kingdom of Jordan as well as the best of Irish aviators it promises to be an unforgettable weekend – and all completely free to enjoy. While the Bray Air Display is a free family weekend, Flight Deck and corporate hospitality packages are available for those looking for an extra special airshow experience.
Deal Details: Kingspan has acquired 51% of Steico. The deal is reported to be worth an initial €251.4m (some of which will be paid in Kingspan shares). The sum could increase significantly if Steico hits certain profitability targets. Kingspan will also hold the option to acquire the remaining 10% of the shares owned by Steico’s founder Mr. Udo Schramek.
Kingspan specialises in a range of building products including high-performance insulation and building materials solutions. It describes its offering as ‘completing the envelope’, offering a full range of building materials. It is headquartered in Kingscourt, Co. Cavan. The Kingspan Group was founded by Eugene and Brendan Murtagh in 1965 and has grown to be a global leader in this sector. The business is now led by Eugene’s son Gene Murtagh. Kingspan Group reported FY Dec 22 turnover of c. €8.3bn which converted to EBITDA of c. €1.0bn.
Steico is a German-based company that specialises in the production of natural insulation and wood-based building envelope products. The company employs approximately 1,900 people across its four large production sites in Poland & France. In FY Dec 22, Steico reported turnover of c. €445.9m which converted to an EBITDA of c. €88.3m.
Advisers: None mentioned.
Renatus Comment: Kingspan continues to be a serial acquirer in the acoustic, waterproofing, and insulation space with other recent acquisitions including LRM, TreeTops A/S and Troldtekt. This most recent deal has also reaffirmed Kingspan’s commitment to achieve Net Zero Carbon Manufacturing in its own operations by 2030 with Steico viewed as the world market leader for ecological wood fibre insulation.
At The Real Deal conference 2023 Gene Murtagh said that Kingspan views its growth as ‘two thirds acquisition-led, one third organic-led’ but that a key driver when it identifies M&A targets is that bolt-ons must have the potential to grow organically themselves. You can watch some of Gene’s discussion with Matt Cooper here.
The public markets have clearly recognised the value that is being created by this dual-pronged strategy to growth with Kingspan’s share price up 32.8% year-to-date.
Source: Kingspan Press Release
Deal Details: Granite Digital has acquired Armour. Deal consideration was not disclosed.
Granite Digital is a Cork-based digital marketing and strategy agency founded in 2008. The business has a client base of over 1,200 organisations. It is owned by co-founders Seamus White, Rob Carpenter and Ger O’Shea as well as Conor Buckley, Seamus White, Alf Smiddy (chairman), Cormac O’Neill and Gary Corcoran. The business does not report turnover or EBITDA information.
Established in Galway in 2010, Armour specialises in creating enterprise-level digital products. The business has over 150 customers across Ireland, the UK and the US including Pfizer, Supermac’s and Intel. It does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: This acquisition is expected to generate c. €14m in revenue for Granite Digital this year as Armour becomes set to work as the product development wing of the business. This is the 14th Irish digital services firm acquired by Granite Digital following the acquisitions of Dublin-based Willows Consulting and Continuum in 2022. After further solidifying its position as Ireland’s largest independent digital agency, Granite Digital intends to further its expansion into the US market.
Source: Irish Examiner
Deal Details: ATS Process Automation (‘ATS’) has acquired Odyssey Validation Consultants. Deal consideration was not disclosed.
Odyssey Validation Consultants is a Kildare-based provider of compliant IT solutions for the life-sciences industry. The business was founded in 2015 by Oisín Curran and Fionnán Friel and has experienced double digit year-on-year growth since. The business does not report turnover or EBITDA information.
ATS is an automation solutions company headquartered in Ontario, Canada. Founded in 1978, the company has more than 60 manufacturing facilities and over 80 offices globally. ATS employs more than 6,500 people in North America, Europe, Southeast Asia, and China. In FY Mar 22, it reported turnover of c. $2.6bn CAD, which converted to an EBITDA of c. $462m CAD.
Advisers:
Odyssey VC:
Corporate Finance: Grant Thornton led by Michael Neary and Robbie Doddy.
Legal: Dillon Eustace led by Adrian Benson and Jacinta O’Sullivan.
Tax: Grant Thornton led by Peter Vale and Christopher Crampton.
ATS Automation:
Legal: Flynn O’Driscoll LLP, led by by Alison Kenny, Rebecca Williams, David Ryan and supported by specialists Eliza O’Grady, Laura Myles, Sarah Harte, Nolene Treacy, Kate Duffy and Caoimhe Heery.
Financial Due Diligence: BDO led by Rory O’Keeffe and Vaughan Coetzee.
Tax Due Diligence: BDO led by Angela Fleming and Lee Kavanagh.
Renatus Comment: This is ATS’ second acquisition in Ireland following the acquisition of CIM, an industrial automation system integrator in 2021. Digital transformation in life sciences has the potential to revolutionise healthcare and biomedical research as it plays a crucial role in accelerating the delivery of new and innovative treatments. The importance of strict compliance for patient safety, product quality and data integrity continues to be highlighted as the legal and regulatory environment evolves.
Odyssey is yet another example of a successful indigenous SME that has established a foothold as a world-class provider to multinationals in the pharma and biopharma industries with customers including Pfizer, Amgen, Takeda and Alexion. It further reminds us of how advantageous the presence of these multinationals is for associated supplier industries and for promoting entrepreneurism.
Source: Business Post
Deal Details: East Coast Catering Ireland Ltd. has acquired the Crowne Plaza Dundalk from Tifco Hotel Group. The deal is reported to be worth c. €11m.
The Crowne Plaza Dundalk is located just off the M1 motorway, close to Dundalk town centre and features 29 guest bedrooms and suites, nine meeting rooms, a gym and two restaurants. It also offers conference facilities and a 160-space car park. The hotel opened in 2007.
East Coast Catering is a Canadian company that specialises in remote workforce catering and accommodations. The company is led by Dundalk-born businessman Patrick O’Callaghan. Across its operations, the company provides accommodations for over 5,500 people and serves close to 26,000 meals every day. It does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Despite challenges such as inflated business costs and capacity constraints, the hospitality sector remains resilient and trade has returned to near pre-pandemic levels this summer. This is driving activity in the sector as we have seen the Imperial Hotel Cork, Clonmel Park Hotel Tipperary, Killashee Hotel Kildare, and the Gateway Hotel Mayo all involved in recent deals. Constructed at the end of the Celtic Tiger, it is likely that the cost to build hotels like this one was multiples of the value being placed on it today.
This is East Coast Catering’s second hotel acquisition in Dundalk following the purchase of the former Fairways Hotel for c. €2.5m in 2015. Following that purchase they redeveloped the site to create a neighbourhood scheme featuring amenities like a supermarket, coffee shop, and pharmacy. Alongside these facilities, 48 contemporary apartments were constructed as well as a new Fairways Hotel offering 113 rooms. It will be interesting to see what their intentions are for the Crowne Plaza following this acquisition.
Source: Irish Times
Deal Details: NIBE Industrier AB has acquired 77.5% of the shares in Ceramicx Ireland Limited, with the remaining shares to be acquired by 2025. Deal consideration was not disclosed.
Founded in 1992, Ceramicx is a leading producer of infrared ceramic and quartz heating products. The company employs nearly 70 people in its factory in West Cork, supplying its products to 80 countries worldwide. The business does not report turnover or EBITDA information.
NIBE Industrier AB is a Swedish company that specialises in providing energy-efficient solutions for indoor climate comfort and sustainable energy use. Founded 70 years ago, NIBE has grown into a global group c.21,300 employees worldwide. In FY Dec 22, the business reported turnover of c. $3.9bn which converted to an EBITDA of c. $620m.
Advisers:
Ceramicx:
Corporate Finance: IBI Corporate Finance led by Raymond Donegan, Ben Murphy and Sarah Grouse.
Legal: O’Flynn Exhams led by Richard Neville, Fiona O’Connell and Des Lynch.
Accounting: Abacus & Co. led by Declan O’Malley.
NIBE:
Legal: Delphi Sweden & Reddy Charleton led by Elaine McGrath and Caoimhe McCrea.
Due Diligence: PwC Sweden.
Renatus Comment: As the world grapples with climate change, there has been a significant focus on sustainability as
Source: Cap IQ
Deal Details: Baader has acquired a majority stake in Emydex. Deal consideration was not disclosed.
Emydex is a Dublin-based software firm that specialises in providing scalable manufacturing execution software (MES) for the food processing sector worldwide. Founded in 2004, Emydex has over 40 employees with its technology used in food processing facilities across Canada, New Zealand, Australia, and South Africa. The business does not report turnover or EBITDA information.
Baader is a worldwide manufacturer of innovative machinery for the food processing industry. The group is headquartered in Luebeck, Germany- and operates across 100 countries, employing over 1,600 people. The business does not report turnover or EBITDA information.
Advisers:
Emydex:
Corporate Finance: Capnua led by Paul Keenan and Tracy McNulty.
Legal: Venture Legal Services LLP led by Peppe Santoro.
Baader:
Corporate Finance: Crowe LLP led by Naoise Cosgrove and Eimear Grier.
Tax: Crowe LLP led by Lisa Kinsella and Philip Holahan.
Legal: Matheson LLP.
Renatus Comment: The MES market is forecasted to grow to $5.4bn by 2031 according to a Forbes report. This is fuelled by a need for increased production efficiency to adapt to a rapidly fluctuating market demand, labour challenges and evolving regulatory environments.
Demand for Emydex’s solutions continues to grow particularly from large-scale global customers with CEO David McMahon viewing this move as an ideal fit to fund the growth opportunity. This move enables Emydex to further grow its market reach through Baader’s global presence. Emydex will profit from attaining customers in the red meat and poultry industries who benefit greatly from their MES solutions.
From Baader’s perspective, this acquisition will enhance the group’s digital capabilities and enable the company to implement new technologies such as artificial solutions.
Source: Irish Times
Deal Details: EQA Ireland has been acquired by Amtivo Group. Deal consideration was not disclosed.
EQA Ireland is a Dublin-based certification company that offers independent certification services across ISO management systems and the security industry. It is accredited by INAB and approved by the Private Security Authority. The business was owned by David and Christine Daly. It does not report turnover or EBITDA information.
Amtivo Group is a provider of UKAS-accredited ISO certification services to SMEs throughout the UK, Europe and South East Asia. The company was formed in 2018 by UK-based private equity firm August Equity who sold the business to Charterhouse Capital Partners LLP in 2022. In FY Dec 21 the business reported turnover of c. £23.8m which converted to EBITDA of c. £4.4m.
Advisers:
EQA Ireland:
Corporate Finance: Benchmark International led by Cian Murphy.
Amtivo Group:
None mentioned.
Renatus Comment: This deal is Amtivo Group’s second of 2023 and its 17th since it was formed in 2018, under the stewardship of CEO Mike Tims. The Testing, Inspection and Certification (‘TIC’) space has historically been extremely fragmented and this has led to significant consolidation in recent years as both large trade players and private equity-backed groups have snapped up smaller targets.
According to a report by Capitalmind Investec, Europe has been the most active region for this deal activity over the past decade with 48% of all M&A in the industry taking place in the continent. This compares with just 34% in North America. Large companies such as SGS, Bureau Veritas, Eurofins and Dekra account for the vast majority of deals. Amtivo Group appears to have integrated its numerous acquisitions to date extremely effectively, to the benefit of its previous owners August Equity, who reportedly returned c.8x their investment in just four years when they exited in 2022.
Source: Benchmark International Press Release
Deal Details: High Wire Post Production has been acquired by Bizet Media.
High Wire Post Production is a Dublin-based production and VFX company. It was established over 25 years ago and is led by Mark Quinn, Mike Quinn and Gigi Corcoran. Recent projects it has worked on include Citizens of Boomtown, Barber and 100 Years of Ulysses. The business does not report turnover or EBITDA information.
Bizet Media is a UK-based media and production company. It is owned by Bal Samra, Jagjit Mundi, Harry Samra, Charlie Samra, Samuel Mundi, Hannah Mundi, Nadja Mundi. It does not report turnover or EBITDA information.
Advisers:
High Wire Post Production:
Legal: Flynn O’Driscoll led by Mark Roberts and Matthew Bouah.
Bizet Media:
Legal: Reynolds Porter Chamberlain led by Jeremy Cunningham and Ella Shanks with support from Ben Roberts.
Renatus Comment: The Irish film and television industry has perhaps never been as strong as it is currently. The last Oscars ceremony saw 14 Irish nominations for films such as The Banshees of Inisherin and An Cailín Ciúin. Also, this week Cork man Cillian Murphy appeared as the lead in the highly anticipated film Oppenheimer, which will likely end up as one of the year’s biggest successes globally. What garners less attention is the ecosystem of indigenous media and production companies that work to deliver the polished final product that makes it to the screen.
This acquisition by Bizet Media is a testament to the attractiveness of Irish firms in the industry and marks its first step into post-production. The studio already boasts a number of Oscar and BAFTA wins. It also follows the announcement earlier this year that its subsidiary Milk VFX is launching a new studio in Dublin. The acquisition of High Wire enables the group to round out its suite of offerings giving it the ability to create a full range of effects and post-production solutions.
Source: Irish Legal News
Ballygarvey Holdings Limited is the holding company for Ballygarvey Eggs, an egg producer and distributor based in Ballymena Co. Antrim. The group began in the 1960s and operates the ‘Big and Healthy’ brand. The business is owned by Mark and Deborah Davison.
In its financial year to September 2022 the business generated turnover of c. £47.9m, an increase of 27.2% year-on-year. This converted to c. £7.1m EBITDA, an increase of 46.1% year-on-year. The increase in EBITDA was driven by revenue growth and gross margin improvement from 9.4% to 12.5%.
The business finished the year with a cash balance of c. £7.4m, a c. (£0.1)m decrease on FY21. Working capital investment, the acquisition of tangible fixed assets and the purchase of investments were the most significant cash movements during the period.
The business employed an average of 71 people during the period.
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.
€1.65
The average price of a litre of petrol in July (unchanged vs. June), according to @AAIreland
€5.5bn
The fall in the value of pharma and medical exports for the first five months of this year vs. the same period last year, according to @CSO
19%
The increase in exports from Ireland to Britain in May compared with the same month last year, according to @CSO
28%%
The increase in the level of spending in pubs between May and June this year, according to the Spend Report published by @AIB
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.
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