Alcumus - secondary buy-out

Deal summary

Catalyst advised the shareholders of Alcumus on the £92 million secondary buy-out backed by Inflexion Private Equity.

Alcumus is the UK market-leading provider of technology-enabled compliance risk management and certification services. Alcumus is based in Aylesbury and was created through the integration of five separate businesses. The business specialises in health and safety compliance and its business model centres on subscription or repeat revenues by providing excellent customer service through skilled consultants and embedded technology. At the time of the deal it had just delivered 15 quarters of unbroken organic growth. The business has grown its client base from 600 to over 8,000 customers and works with 35% of FTSE 100 companies.

Catalyst had sat alongside Sovereign Capital, which had backed the business since 2009, and the management team for Alcumus’s final bolt-on acquisition (SM&MS) in late 2014, and was appointed in the summer of 2015 to work with the team towards an exit for the shareholders. Alcumus was a highly visible asset and had received many expressions of interest from both trade and private equity buyers. Sovereign wanted to realise its investment, whereas the management team, headed by CEO Martin Smith, was keen to remain with the business and had a plan to at least double profits over the next five years. A sales process had been planned for the following year yet Inflexion Private Equity made a strong pre-emptive offer based on its knowledge of the governance, risk and compliance (GRC) sector and relationship with management.

What difference did we make?

Catalyst undertook an accelerated preparing for sale exercise; supporting management in updating the business plan, preparing a data room and making sure that the business was ready to go through a due diligence process. In parallel we negotiated detailed heads of terms with Inflexion, incorporating all of the key commercial terms relating to value. Inflexion were granted a five week period of exclusivity to complete the deal and undertook a focused confirmatory due diligence exercise as well as raising more debt finance from the existing debt provider Alcentra. Catalyst project managed all aspects of the deal, negotiated the key terms of the management deal, and the transaction completed, to terms, on the final day of exclusivity.

Catalyst’s preparation of the business combined with tight control of the process meant that the completion of the transaction proceeded as planned. Sovereign realised a return of 4.4 times its original investment and the management team were delighted with the incentive package they received as well as the choice of Inflexion as their new investment partner.

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What our client said
“Catalyst were a true partner to our business leading up to and through our recent transaction. They got to know our business and people quickly, understood our key strategic and market drivers, and played a critical project management role at the same time as providing pragmatic advice and support when required. Catalyst added enormous value to our process and helped us secure a great result for all of our shareholders, the wider Management Team and our new investor.” Martin Smith, Chief Executive