Renatus’ Weekly M&A Newsletter – 16/10/2022
October 16, 2022Renatus’ Weekly M&A Newsletter – 30/10/2022
October 30, 2022
Renatus Weekly M&A & Company Performance Private Equity Newsletter 23/10/2022
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT OF THE WEEK
We are clearly facing growing uncertainty across all major economies.
Our own colleague Alan Manning this week quoted some wisdom from Jeff Bezos to give some focus to our thinking
“I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time “
We may be facing some troubling economic headwinds over the coming months, but there is likely to be as much opportunity as there is struggle.
For businesses weighing up how best to position themselves in a turbulent environment, this is a timely reminder that those businesses which double down on serving the customers’ critical needs will thrive at this stage of the business cycle. As Bezos puts it, in ten years’ time, customers will still want low prices and fast delivery times, so these are the areas where Amazon puts its energy. Now may not necessarily be the time to reinvent the wheel but to focus on making the existing better in all of our businesses.
M&A ACTIVITY
Uform acquired by Cardinal Capital
Deal Details: Cardinal Capital has acquired a stake in Antrim-based Uform. The deal consideration was not disclosed. Uform previously received investment from BGF in 2019, who will remain as shareholders alongside the Donnelly brothers and Cardinal Capital.
Uform is a manufacturer of kitchen doors and furniture which employs c. 415 staff with manufacturing facilities in Antrim and Donegal. It was established in 1993 by the late Eddie Donnelly and is now run by his sons, Eamon and Paul Donnelly. In FY21, the business reported a turnover of c. £44.0m which converted to an EBITDA of c. £4.9m.
Cardinal Capital is an Irish private equity firm led by Nick Corcoran and Nigel McDermott currently investing out of a €250 million fund. Their deal team was led by Mike Maloney and Paul Doody.
Advisers:
Uform:
Legal: A Tughans team of Paul O’Brien, Ben Sims, Aimee Craig, John McGuckian, Douglas Anderson, Sarah Sharkey, Patricia Rooney, Paul Eastwood, and James Mulligan.
Deal advisory: Deloitte led by Brian Simpson, Jan Fitzell and Barry John Kelly.
Cardinal Capital:
Corporate Finance: KPMG team of Jeremy Hoare, David O’Kelly, Rachel Carr and Megan Smythe.
Legal: Maples group led by Jordan O’Brien and Conor Cawley.
Legal: MMW led by Damian McParland and Louise Cavanagh, assisted by Simon Fleming, Patricia Arrell, Abbie Long and David Mitchell.
Renatus Comment: Uform revenues have grown at a rate of c. 80% annually over the past few years, increasing from under £14.0m in 2019 to over £44.0m in 2021. This investment will be used to increase capacity at its manufacturing facilities and the company will likely try to expand its presence in the fragmented UK market which is estimated to be worth c. £6.5bn according to the large kitchen supplier Howdens plc.
This is a great example of how a business can partner with private equity to achieve strategic goals at different stages of its journey. Investment from BGF helped Uform achieve a market leading position in Ireland and now Cardinal will hope to facilitate the next chapter as Uform further expands operations and targets the UK market.
Source: Uform Press Release
Fitzgerald Life & Pensions acquired by Lockton Ireland
Deal Details: Lockton Ireland has acquired Fitzgerald Life & Pension. Deal details have not been disclosed.
Fitzgerald Life & Pension is a financial advisory firm that provides advice on life & illness protection, pension planning, regular savings, deposits and investments. The business was founded in 1970 and is owned by Tomas Deegan, Orla Fitzgerald, Richard Butler, Martin Quinn, Brendan Cooke, Eoin Dalton and Roy McGrath. It is headquartered in Waterford. In FY21, the business recorded a turnover of c. €1.4m, which converted to an EBITDA of c. €150k.
Lockton is the world’s largest privately-held insurance brokerage firm. It provides insurance, risk management, employee benefits and retirement services and operates in over 100 locations in 125 countries. Lockton Ireland is led by CEO Gary Ennis and reported an FY21 turnover of c. €2.3m. This acquisition will reportedly bring the Irish employee base to over 40 staff.
Advisers:
Lockton Ireland:
Deal advisory: Montanum Advisory led by Jim Mulqueen.
Financial Due Diligence: Stuart Fitzgerald and Johnny O’Sullivan of Fitzgerald Power.
Tax: Emer Joyce of Laura Lynch & Co.
Legal: Ken Casey and Paddy Scott of Hayes Solicitors.
Fitzgerald Life & Pensions:
None mentioned.
Renatus Comment: After hiring senior executives Ray McKenna and Niall O’Callaghan last year, Lockton Ireland has made four acquisitions this year in its Employee Benefits division, which coupled with its existing business makes it one of the larger players in the Irish market. The Irish pension market is forgoing a shift due to the obligation to comply with EU pension regulation (IORP II) from the beginning of 2023, with many one-member pension arrangements impacted. This will ultimately increase compliance costs, which should boost demand in the pension advisory space but also means that smaller operators may be best served by coming under the umbrella of larger players, where these compliance costs can be spread over a larger revenue base.
Source: Irish Times
BP Multipage acquires Regional Electric Maintenance
Deal Details: BP Multipage has acquired Regional Electric Maintenance. Deal consideration has not been disclosed.
BP Multipage supplies, installs and maintains wireless communication systems and integrates with critical site alarm systems. It is a portfolio company of Irish private equity, Erisbeg, which owns a majority stake in the business. The Dublin-based business was founded in 1985 and is led by Brian Lepple. The business does not report turnover or EBITDA information and employed c. 14 staff throughout FY21.
Regional Electrical Maintenance (REM) provides access control, automation, and security systems to private and public sector clients. It is based in Meath and was founded in 2001. The business was owned by Chris Murray, James Tunnah, Siobheal Cummins and Gemma Lawless. The business does not publish turnover or EBITDA information and employed c. 15 staff throughout FY22.
Advisers:
BP Multipage:
Legal: LK Shields Solicitors LLP including Emmet Scully and Lester Sosa-Villatoro.
REM:
Deal advisory: Focus Capital Partners led by Robert Adams, Patrick Dooley and Cormac Shankey.
Legal: Wallace Corporate Counsel LLP led by Patrick O’Shea, Alban O’Callaghan and Kathryn Mitchell.
Audit: FAH Chartered Accountants.
Tax: Cahill Taxation Services led by Fergal Cahill and Gerard Finucane.
Erisbeg: None mentioned.
Renatus Comment: This is a complementary bolt-on for BP Multipage, adding a security and controlled access business to its suite of communications and critical alarm solutions. As BP Multipage’s product offering centres around critical communication and alarm systems that are crucial for its customers’ respective day-to-day operations, it should continue to enjoy steady demand, even in an economic downturn.
Source: Business Plus
Acacia acquired by Apleona
Deal Details: Acacia was acquired by Apleona in a deal reported to be worth over €20 million. The transaction is expected to close by the end of 2022.
Acacia is an independent facilities management business based in Dublin with c. 230 employees. It was co-founded by David O’Brien, Fergus MacMahon, Tony Downes and Clive Brazier. The business had FY20 turnover of €31.3m, which converted to an EBITDA of c. €1.6m.
Apleona is an integrated facilities management provider based in Germany with c. 1,300 employees in Ireland. The business was founded in 2016 and is led by CEO, Jochen Keysberg. The business does not report turnover or EBITDA information.
Advisers:
Apleona:
Legal: Philip Lee team led by Inez Cullen and Jonathan Kelly, supported by Ronan Dunne.
FDD: EY including Marcus Purcell, Maurice Kennedy and Sean O’Brien.
TDD: EY including Dave Barry and Niall O’Lideadha.
Acacia:
Corporate Finance: Grant Thornton led by Patrick Dillion and Ann-Marie Costello, supported by David Cole.
Tax: Grant Thornton, led by Bernard Doherty, and Una Ryan, supported by David Moran.
Legal: Simmons & Simmons led by Conor Brangam and including Christine Quigley, Jennifer Watters, Aoife McDonough, Geoff Curran, Jessica Lang and Markus Schmid.
Renatus Comment: The facilities management industry is no stranger to private equity. In 2020, private equity player PAI Partners acquired Apleona from Swedish investor EQT. As companies continue to seek to outsource property services for activities across the globe, facilities management companies use M&A as a way to serve existing clients in new regions which is an attractive growth opportunity for private equity. Another facilities management company, Bidvest Noonan, is a common contributor to our newsletter and have been very active in the market over the past 14 years since being backed by Alchemy Partners in 2008 and subsequently Bidvest in 2017 in a deal reportedly worth €175m.
Source: Apleona Press Release
Roomex acquired by Fleetcor Technologies
Deal Details: Roomex is to be acquired by Fleetcor Technologies for an undisclosed sum. The deal is expected to close in November.
Roomex is a travel management platform for business travel. Roomex helps customers book, manage, pay and analyse all travel accommodation and expenses in one place. The business was founded by Jack Donaghy and Karl Glennon. The business was founded in Dublin and has offices in Boston, London and Munich. In FY20 the business had a turnover of c. €2.1m.
Fleetcor Technologies is a US-based tech business that provides fuel cards and workforce payment products and services. The business is headquartered in Georgia, US and is led by CEO, Ronald F Clarke. It was founded in 2000 and was listed on the NYSE in 2010. In FY21 the business had a turnover of c. €2.4bn, which converted to an EBITDA of c. €1.2bn.
Advisers:
Roomex:
Legal: A Maples team led by Morgan Pierse, Colm Rafferty, Lianne Canty, Andrew Colton and William Fogarty.
Fleetcor Technologies:
Legal: An Eversheds Sutherland team led by Gavin O’Flaherty, Corporate, Dublin, working with David Phillips, Corporate, Atlanta and the wider teams in Dublin, the UK, US and Germany.
Renatus Comment: InterContinental Hotels Group reported demand for business travel in the US has reached pre-pandemic levels recently. Europe is expected to follow the same trend with American Express research suggesting two-thirds of UK companies plan to increase spending on business travel by at least 50 per cent over the next year. This positions Roomex for continued growth and Fleetcor seems to have acquired the business at an ideal time as businesses begin to appreciate the value of face-to-face interactions post-pandemic.
Source: Fleetcor Press Release
Utmost Technologies acquired by Beeline
Deal Details: Utmost Technologies has been acquired by Beeline. Deal details have not been disclosed.
Utmost Technologies is a next-generation extended workforce solutions company that manages the entire extended workforce lifecycle for high-growth, dynamic companies. Utmost was founded in 2018 by Annrai O’Toole, Dan Beck and Paddy Benson. The business is headquartered in San Francisco and has its EMEA headquarters in Dublin. It does not report turnover or EBITDA.
Beeline is a technology solution provider for managing the global extended workforce. Its intelligence-driven, cloud-based platform manages more than 30 million contingent, shift-based, project-based, and independent workers and enables total talent visibility into the entire workforce. The business is led by Chief Executive Doug Leeby and is headquartered in Florida. It does not publish turnover or EBITDA information.
Advisers:
Utmost:
Legal: Arthur Cox and Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP. The Arthur Cox Team was led by Connor Manning and included Lesley-Ann Perera and Alina Kuksenko (Corporate and M&A), Ruth O’Sullivan (Tax), Louise O’Byrne and Sarah Faulkner (Employment).
Beeline:
None mentioned.
Renatus Comment: A report published by Technavio indicates that the Workforce Management Software industry is expected to grow at a CAGR of 11.29% between 2020 and 2025. The rapid growth seems to be occurring due to the requirement of digital transformation in all industries throughout the pandemic as well as the increased efficiency and productivity this software provides. The healthcare, retail and hospitality industries are driving this growth. Utmost Technologies services these industries and also offers talent sourcing through its Front Door platform. Beeline has targeted similar businesses to accelerate its strategic roadmap and previously acquired JoinedUp, a shift-work management software. The acquisition of Utmost will further accelerate this roadmap and expand Beeline’s offering for small and mid-sized customers.
Source: Beeline Press Release
Friar’s Lodge Nursing Home acquired by Care Property Invest
Deal Details: Care Property Invest has acquired Mayo-based Friar’s Lodge Nursing Home for a reported €8.4m. As part of the deal, Brookhaven Healthcare will take over the home’s operations under a 25-year minimum lease.
Friar’s Lodge Nursing Home is a 61-bed nursing home located in Ballinrobe Co. Mayo. Prior to this transaction, it was owned by Francis & Tanya Gallen. The business did not report turnover or EBITDA information and employed c. 82 employees throughout FY20.
Care Property Invest is a Belgian-based public care home REIT with a market capitalisation of c. €423m. It has a portfolio of 142 healthcare projects spread across Belgium, The Netherlands, Spain and Ireland. In FY21, the business reported revenue of c. €43.7m, which converted to EBITDA of c. €38.0m.
Advisers: None mentioned.
Renatus Comment: This is Care Property Invest’s third acquisition in Ireland this year and seventh in total. This acquisition is the first time Care Property has partnered with family-owned operator Brookhaven.
Tadhg Daly, CEO of Nursing Homes Ireland recently told RTÉ’s This Week programme that 16 nursing homes have already closed this year due to the cost inflation and rising bills facing operators. Under the terms of a triple net lease agreement, which is being used in this case, the operator pays all expenses, including taxes, insurance and maintenance costs. It remains to be seen if the rapid consolidation of the sector by institutional investors will continue as these macroeconomic headwinds persist.
Source: Care Property Invest Press Release
Medical Insurance Company acquired by Compre
Deal Details: Irish subsidiary of Covéa, Medical Insurance Company (MIC) has been acquired. Deal consideration was not disclosed, and the transaction remains subject to regulatory approval.
MIC is based in Dublin and provides general liability insurance covering professional medical malpractice risks. The business did not report EBITDA or turnover information.
Compre is based in Bermuda and engages in the acquisition and management of insurance companies. The business does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: This deal marks Compre’s third acquisition of European medical malpractice legacy liabilities this year as it expands its global reinsurance book. The deal is part of Compre’s plan to build a ‘centre of excellence’ for medical malpractice in Europe.
Source: Compre Press Release
Moonsyst International acquired by Agri IoT
Deal Details: Agri IoT Limited has acquired Moonsyst International Limited. Deal consideration was not disclosed.
Moonsyst International Ltd is a Cork-based smart rumen monitoring systems provider for dairy and beef cattle. The business does not report turnover or EBITDA information and was majority owned by Desmond Savage.
Agri IoT is a holding company established earlier this year with plans to support farmers in Ireland and abroad. The business is owned by Desmond Savage, Michael Hogan and Eoin O’Connor.
Advisers: None mentioned.
Renatus Comment: More and more farmers are using advanced information to make decisions on a daily basis on their farms. Moonsyst compiles data on the health of individual animals through devices that are installed in their stomachs. By leveraging this real-time information, farmers will be better equipped to care for their livestock. Healthier animals are more productive, more fertile and require less expense to look after. This should filter through to the bottom line for dairy producers.
Source: Moonsyst Press Release
DEAL UPDATES & OTHER NEWS
AIB partners with NTR
Deal Details: AIB has announced its partnership with NTR into a multimillion-euro deal to deliver 80% of the bank’s electricity.
AIB has signed a 15-year agreement to purchase energy from NTR’s two planned solar farms in Wexford. The solar farms, which have full planning permission, will be built next year. AIB provides banking products and services in the Republic of Ireland and internationally. The business reported c. €10.4bn in new lending and c. €629m profit before tax in FY 2021.
NTR is a Dublin-based renewable energy company founded in 1978. The business reported c. €6.6m of turnover in FY 2021.
Source: The Irish Times
COMPANY PERFORMANCE
McCarthy Commercials Limited is an Irish Volvo Truck & Bus dealership based in Watergrasshill, County Cork. It is owned by Michael, Colman, Clodagh and Pauline McCarthy.
In its financial year to December 2021, McCarthy Commercials had turnover of c. €32.3m, which converted to an EBITDA of c. €1.2m. This represents a rise of 17.3% and 50.1% year-on-year, respectively. The increase in EBITDA was driven by a mix of gross margin expansion and realising some operating leverage.
Significant post-EBITDA cash flows included working capital investment of c. €1.1m and the purchase of fixed assets for c. €63k. The business finished the year with a cash balance of c. €7.1m.
The business employed an average 78 people during the year at an annual cost of c. €5.1m.
Radley Engineering was established in 1972 by brothers, John and Thomas Radley in Waterford. The business specialises in the design, manufacture, fabrication, and site installation of stainless steel, carbon steel, and exotic materials.
In its financial year to July 2021, the business generated a turnover of c. €88.5m, an increase of 51.7% year-on-year. This converted to c. €9.9m of EBITDA, an increase of 83.8% year-on-year. EBITDA improvements are due to improved operational performance.
Significant post-EBITDA cash movements includes the purchase of tangible fixed assets of c. €1.1m. The business finished the year with a cash balance of c. €13.2m, a c. €4.5m increase on FY20.
The business employed an average of 494 people during FY21 at a total cost of c. €31.6m. The business is owned by John, Thomas, and Mark Radley.
RECENT FUNDRAISINGS
Who: Outmin, an outsourced accounting, bookkeeping and CFO services provider to small businesses, that uses artificial intelligence to provide clients with real-time financial data.
What: The business raised €1.5 million in a funding round led by Middlegame Ventures with participation by Fuel Ventures, KellySan Enterprises Ltd and several strategic angel investors.
Why: The funding will be used to enhance and develop its platform that aims to tackle the destruction and burden of financial admin for SMEs. It also plans to open a UK office and double its headcount in the next 12 months.
Source: The Irish Times
Who: ATXA Therapeutics, a clinical-stage pharmaceutical company committed to the advancement of innovative, life-changing treatments for cardiopulmonary diseases, Peregrine Technologies, trading as FPD Recycling, a provider of recycling with a safe, efficient and profitable solution to deal with the growing problem of hard to recycle e-waste and Ostoform, a University of Limerick spin-out that designs, manufactures and supplies ostomy products.
What: The three companies have been selected by the European Innovation Council’s (EIC) accelerator programme for a total of €24.3m in funding. The programme offers a blended finance offer with grant funding of up to €2.5m and an accompanying equity investment.
Why: The three successful Enterprise Ireland applicants, working with the EIC, will be able to enhance their entrepreneurial capability and get the critical support required at this juncture in their development and scaling journey.
Source: The Irish Times
Who: Erisbeg I LP, the flagship fund of Erisbeg, an Irish-based private equity business.
What: The business has received €10m in funding from AIB, bringing the total amount injected into the fund to €110m.
Advisers: Acanthus Partners, Maples Group, EY and Deloitte.
Why: This will allow Erisbeg to support and develop its portfolio companies.
Source: The Irish Times
Who: Atlantic Therapeutics, a medtech company that develops wearable devices for incontinence and other associated disorders.
What: The business raised €29.4m from existing backers which include LSP, Andera Partners, Atlantic Bridge Ventures, Earlybird and Seroba Life Sciences.
Why: The funding will help the company develop a secondary product following its first neuromuscular electrical solution called Innovo, which targets women with incontinenece issues. The secondary product will also be focused on similar conditions. It is also considering introducing solutions for men.
Source: The Business Post
Who: Evercam, a provider of construction camera software, based in Dublin. The business is led by founder and CEO, Marco Herbst.
What: The business raised €8.9m in a round led by Knocknagore Capital.
Why: The funding will be used to increase global operations, expand into new market segments and facilitate an exit for some existing investors from 2014.
Source: The Irish Independent
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
12.4%
The inflation in grocery prices compared to this time last year, causing an almost €900 rise in shoppers’ annual grocery bills. This has caused a 23.5% increase in sales of value own label ranges. According to @Kantar_UKI
59%
The increase in Irish exports to Britain in the eight months to August, when compared to the same period last year. This suggests Ireland is benefitting from Brexit and the Northern Ireland Protocol deal. According to @CSO_Ireland
4.0
The increase in consumer sentiment in October, compared to September’s record low of 42.1. Overall sentiment remains low with half of Irish consumers expecting their household finances to worsen and half expecting them to remain steady in the next 12 months. @IrishTimes
10.5%
The increase in domestic producer prices for manufactured goods in August 2022 compared with a year earlier, while producer prices for exported goods increased by 4.4%. According to @CSO_Ireland
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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.
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