Renatus’ Weekly M&A Newsletter – 19/03/2023
March 19, 2023Renatus’ Weekly M&A Newsletter – 23/04/2023
April 23, 2023
Renatus Weekly M&A & Company Performance Private Equity Newsletter 26/03/2023
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
RENATUS PODCAST – MICKEY O’ROURKE
Renatus’ newest podcast features Mickey O’Rourke, the joint CEO & Founder of Setanta Sports. In this episode, Mickey reveals the story behind the birth of Setanta Sports, which originated as a mere excuse for a party with his friend Leonard Ryan during Italia ’90. Listen in as Mickey, a seasoned entrepreneur with a track record of founding and exiting multiple businesses, shares his valuable insights into the ups and downs of his illustrious career. From great successes to eventual failures, Mickey discusses his journey in detail, providing a rare and exclusive peek into his experiences that are not commonly known.
THOUGHT FOR THE WEEK
We took the view this week if we cannot beat them we should join them and deferred to ChatGPT for our thought for the week. In Renatus we and our portfolio companies are all about scaling so we asked the machine:
‘What is the hardest thing about scaling a business?’
Below is the answer:
‘Scaling a business can be a complex and challenging process. There are several difficult aspects to scaling a business, but some of the hardest things include:
- Managing Cash Flow: When a business is scaling, it can be difficult to manage cash flow. As the business grows, it may require more capital to invest in new equipment, hire more employees, or increase marketing efforts. It’s essential to have a solid financial plan in place to ensure that there is enough cash flow to cover these expenses.
- Building a Strong Team: As a business scales, it becomes increasingly important to have a talented and dedicated team in place. Hiring the right people, managing and motivating them, and keeping them engaged and committed to the company’s goals can be a significant challenge.
- Developing and Refining Processes: Scaling a business often involves developing and refining processes to increase efficiency and productivity. This can be a difficult and time-consuming process, as it requires identifying areas for improvement, testing and implementing new procedures, and training employees on the new processes.
- Maintaining Quality: As a business grows, it can be challenging to maintain the same level of quality that customers have come to expect. Ensuring that quality remains a top priority and implementing quality control measures can be critical to maintaining customer satisfaction and loyalty.
- Managing Change: Scaling a business often involves significant changes to the organisation, processes, and culture. Managing these changes can be difficult, especially if employees are resistant to change or if there is a lack of clarity and communication around the changes.
Overall, scaling a business requires a lot of hard work, strategic planning, and a willingness to adapt and change as the business grows.’
In fairness, this is a great summary but without strong management teams navigating the above with human and emotional intelligence, it would be impossible to implement. It will still be a while before ChatGPT has a crack at doing an MBI or MBO!
M&A Activity
JB Barry & Partners acquired by Egis
Deal Details: JB Barry & Partners has been acquired by Egis. Deal consideration was not disclosed.
JB Barry & Partners is a Dublin-based civil engineering business, focused on the water services, transportation and energy sectors. It was established in 1960 and is owned by Maurice O’Donoghue, Liam Prendiville, Martin Hogan, Eamon Daly, Anne Marie Conibear and Garry Flood. In FY Mar 22 it reported revenue of €18.7m which converted to EBITDA of c. €0.9m.
Egis is a French engineering and consulting company. It has over 16,000 employees and operations in over 100 countries. Tikehau Capital is the largest shareholder in the company with a 40% stake. In FY Dec 21 it reported turnover of c. €1.2bn.
Advisers:
JB Barry & Partners:
Corporate Finance: Azets Ireland led by Greg Hogan with support from Conor Gleeson.
Tax: Azets Ireland led by Kate Prendiville with support from Johnny Lalor.
Legal: Philip Lee led by Bernard McEvoy, Rebecca McEvoy, Olivia Creaven and Ronan Dunne.
Egis:
Corporate Finance: Vigie Capital led by Thomas Bayle & Egis Corporate Development Team.
Financial & Tax: Grant Thornton led by Michael Neary, Stuart Mellon and Conor Phelan.
Legal: LK Shields led by Seanna Mulryan, Cian O’Lionaird, Jennifer Dineen and Marco Hickey.
Renatus Comment: The Irish government’s National Development Plan allocated over €165 billion for investment in the country’s infrastructure from 2021-2030. This is forecast to be a significantly higher % of GNI than the EU average. International engineering firms such as Egis may continue to view Ireland as a strong place to do business and try to ride the wave over the rest of the decade. They will already be familiar with JB Barry & Partners, having previously partnered with them on the delivery of several Irish projects such as the Luas Green Line extension to Finglas.
Source: Irish Independent
Tigers Childcare completes multiple acquisitions
Deal Details: Tigers Childcare has acquired four childcare facilities in recent months with the most recent being last week’s acquisition of the Doodlebugs Creche & Montessori in Passage West, Cork. The consideration for each deal was not disclosed.
Tigers Childcare is a childcare facility operator, established by Karen Clince in 2003. In FY Dec 21 it reported turnover of c. €6.7m which converted to EBITDA of c. €1.2m. It received an investment from BGF in 2021.
The other facilities acquired were ABC Childcare in Douglas (completed in January) and two facilities formerly operated by Happy Steps in Kilcock, Kildare (completed last year).
Advisers: None mentioned.
Renatus Comment: Similar to nursing homes, childcare providers have become the target of private equity-backed buy-and-build strategies in recent times. The market remains highly fragmented and consolidation allows these companies to pool central overheads, resulting in strong synergies. Also, the growing level of regulation in the sector makes it difficult for small independent operators to survive. These acquisitions bring the total number of centres operated by Tigers Childcare to 19 and the company has said it hopes to pursue more bolt-on opportunities in the coming months.
Source: Irish Times
Blacknight acquires MyHost
Deal Details: Blacknight has acquired MyHost for an undisclosed sum.
Blacknight is a Laois-based accredited domain registrar and hosting company. The business is part of Avalon Internet Holdings. It is owned by Paul Kelly and Michele Neylon. The business does not report turnover or EBITDA information.
MyHost was established by Martin Saunders in 2002. The business is based in Clare and offers a range of services including web hosting, email hosting, spam filtering, virtual private servers, dedicated servers, SSL certificates and domain registration. It does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: As part of this deal, MyHost will continue to be run as an independent subsidiary but customers will benefit from infrastructure upgrades. According to the .IE Domain Profile Report, there were 329,265 .ie domains at the end of 2022, a 0.3% decrease on 2021. There was a year-on-year slowdown in new domain registrations which was not surprising as many businesses rushed to grow an online presence during Covid-related lockdowns.
Source: Business Plus
Thermodial managment team complete MBO
Deal Details: The management team of Thermodial have completed an MBO of the business. The deal was funded with debt from Permanent TSB.
Thermodial is a HVAC and building energy management systems (BEMS) company established in 1986. The business is reported to have turnover of c. €10m. The deal sees the management team of Turlough Kinane (Managing Director), Alan Keegan (Operations Director) and Mark Carrick (Projects Director) acquiring the remaining 45% of the outstanding shares, giving them full ownership of the company.
Advisers:
Thermodial Management Team:
Legal: ByrneWallace LLP led by Eamonn Carey, Paraic O’Kennedy, Ciara Ruane, Liam Connellan, James Moreland, John O’Connor and Rosaleen Dillon Espinosa.
Renatus Comment: Building energy management systems (BEMS) applications in large industrial settings are growing in importance as buildings consume a significant amount of energy and are responsible for a large portion of carbon emissions. The UK is bringing in strict minimum energy efficiency standards for commercial buildings making BEMS a core element of new building design and old building retrofit. These systems allow building operators to track, analyse, and control their energy consumption allowing for the implementation of strategies to reduce energy use and costs.
Source: Business Plus
WhenThen acquired by Mangopay
Deal Details: WhenThen has been acquired by Mangopay. Deal consideration was not disclosed.
WhenThen is a Dublin-based payments technology company that was set up in 2020. The business is led by Kirk Donohoe, Eamon Doyle, and Dave Brown, veteran FinTech and payments product and engineering execs from Mastercard Labs. Previous investors included Stride.VC, and Cavalry Ventures. The business does not report turnover or EBITDA information.
Mangopay is a Luxembourg-based payment solutions provider specialising in payment infrastructure for marketplaces. The business does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: This deal follows Mangopay’s acquisition of fraud specialist Nethone in 2022. WhenThen’s global connectivity will help Mangopay scale its payments offering and improve the ‘payment experience’ side of its solutions. The payments industry has grown rapidly in recent years and is forecast to reach $3 trillion by 2026, according to The 2022 McKinsey Global Payments Report. However, in recent times a slowdown in the level of funding available to start-ups combined with increasing legislative requirements has resulted in a much tougher operating environment. The industry is dominated by large players such as Stripe, Visa and Mastercard but there is also a diverse range of boutique players that can sometimes offer more bespoke solutions.
Source: Cap IQ
O’Donovan Insurances acquired by AssuredPartners
Deal Details: O’Donovan Insurances (“ODI”) has been acquired by AssuredPartners. Deal consideration was not disclosed.
ODI is a Killaloe-based insurance broker that specialises in personal and commercial insurance. It is owned by Sharon and Sheamus O’Donovan. It does not report turnover or EBITDA information.
AssuredPartners is a Florida-based insurance firm established in 2011. Since inception it has acquired over 400 brokers. The business is owned by Chicago-based PE firm GTCR.
Advisers: None mentioned.
Renatus Comment: AssuredPartners is continuing its roll-up strategy in the Irish market with this deal following its acquisition of both Kerry-based Gallivan Murphy and Dundalk-based O’Callaghan Insurances last year. This deal will bring the company’s total gross written premiums in Ireland to over €100m. AssuredPartners continues to compete with consolidators such as PIB Group, Arachas, Aston Lark, Arthur J. Gallagher and others, for attractive independent firms. Although the competition is increasing there is still a significant amount of industry fragmentation. Brokers Ireland, the representative industry body, has approximately 1,200 members with roughly a quarter of these members being insurance brokers.
Source: Business Plus
AlbaCore Capital acquired by First Sentier Investors
Deal Details: First Sentier Investors (“FSI”) has agreed to buy 75% of AlbaCore Capital with an option to acquire the remaining 25% at a future date. The deal reportedly valued the business at c. $760m.
AlbaCore Capital is a London-based investment firm with a presence in Dublin. It has capabilities spanning various parts of the corporate credit spectrum including private credit, CLOs, liquid credit and structured credit in Europe. Since inception in 2016, it has grown to $9.5bn in assets under management.
FSI is an Australian subsidiary of Tokyo-headquartered Mitsubishi UFJ Financial Group (“MUFG”), one of the world’s largest financial institutions.
Advisers:
AlbaCore Capital:
Legal: Macfarlanes.
MUFG/ FSI:
Legal: Simmons & Simmons led by Ania Rontalier and David Hicks in London and David Brangam, James McKnight, Derek Lawlor, Jeffrey Horahan, Martin Phelan, Jennifer Watters and Geoff Curran in Dublin.
Financial: Berkshire Global Advisors.
Renatus Comment: FSI will use this deal to grow its presence in the European credit market. It will be interesting to see how credit markets perform in the coming months given the recent volatility and doubt cast over the strength of the financial system. The invisible industry of ultimate bank financing has been in the limelight as a result of the problems faced by Credit Suisse and others. As the ripple effects of the recent disruption continue to spread, these firms will continue to draw scrutiny in 2023.
Source: Reuters
MAP Patient Access acquired by Kester Capital
Deal Details: The management of MAP Patient Access have completed an MBO, backed by Kester Capital.
MAP Patient Access is a Cambridge-based provider of market access consulting services to the pharmaceutical and biotech sectors. It was founded by Christian and Dawn Hill in 2012. It does not report turnover or EBITDA information.
Kester Capital is a UK-based mid-market private equity firm focused on the Healthcare, Information & Data, and Technology sectors.
Advisers:
Kester Capital:
Legal: LK Shields (Irish counsel) led by Jennifer McGuire.
MAP Patient Access: None mentioned.
Renatus Comment: MAP expanded into Ireland in 2019 with its acquisition of Santé Strategy. In this newsletter we regularly discuss the strength and attractiveness of the Irish pharmaceutical and biotech sectors and MAP’s focus on Ireland is another example of international players seeking to capitalise on this. This deal will provide fresh capital and allow MAP to continue to grow its market access consulting business in both Ireland and the rest of Europe.
Source: LK Shields Press Release
COMPANY PERFORMANCE
Richard Nolan Civil Engineering Limited is a Dublin-based civil engineering business that carries out works on behalf of Dublin City Council, Irish Rail, ESB, local authorities and public bodies throughout Ireland.
In its financial year to February 2022, the business generated a turnover of c. €32.1m, an increase of c. 24.1% year-on-year. This converted to c. €2.9m EBITDA, an increase of c. 193% year-on-year. The increase in EBITDA was driven by an improved gross margin and the realisation of operating leverage in the business.
The business finished the year with a cash balance of c. €0.2m. Significant post-EBITDA cash movements included working capital investment and payment of finance lease obligations.
The business employed an average of 242 people during the period at a total cost of c. €11.7m.
RECENT FUNDRAISINGS
Who: HT Materials Science, a Dublin company established in 2018, that specialises in heat transfer fluid for commercial and industrial HVAC markets.
What: The company has raised $15 million from Aramco Ventures, Barclays Sustainable Impact Capital, CDP Venture Capital and Progress Tech Transfer.
Why: The company will use the funding for R&D, to expand its sales team and to grow its customer base in international markets.
Source: Irish 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
15%
The proportion of new car sales represented by electric vehicles so far this year, according to @cso
10.4%
The rate of inflation in the UK in February, according to @bankofengland
9.2%
The annual fall in the level of wholesale electricty prices to February 2023, according to @cso
3,378
The number of mortgages approved in Ireland in February, a fall of 8.6% month-on-month, according to @BPFI
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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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