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KEY M&A TRENDS

RISE AGAINBarry O’Callaghan’s return to the education market

THE MID-MARKET CORPORATE FINANCE MAGAZINE FROM CLEARWATER INTERNATIONAL

2016

Landmark year

2

RAINMAKER | 2016

Rainmaker is published by Clearwater International Editors: Jim Pendrill and Sarah FernandezDesign: creative-bridge.comSubscription: [email protected]

No part of this publication may be reproduced or used in any form without prior permission of Clearwater International

Welcome to our latest issue of Rainmaker which takes a close look at key M&A trends in the market, as well as profiling a selection of our deal highlights over the past year.Since our merger, we have extended our business to now cover 13 offices with a headcount of 140 and closed over 60 deals worth more than €3bn during 2015. We have also invested heavily in our relationship with affiliated firms, particularly in the US and Asia. We will continue to develop Europe as the hub of our business by growing our integrated team of people across all key territories. We have placed a high level of priority on expanding the business into France and Germany within the next 12 months.

We continue to see high levels of M&A activity across all of our territories and sectors, with the past 12 months marked by notable transactions including the buyouts of Partner in Pet Food, EnviDan and Cutting’s.

We have also seen the continued appetite of overseas buyers for strong European businesses, typified by the €128m sale of HL Plastics to the US Quanex Building Products Corporation, the sale of Playnation to the Novomatic Group, and the sale of TC Group to MUSIC Group - some of our particular cross-border highlights over the past year.

As we move into this New Year with a strong flow of M&A opportunities, we look forward to plenty more exceptional outcomes for our clients.

Michael Reeves, CEO, Clearwater International

clearwaterinternational.com /rainmaker-2016

@CWICF

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CONTENTS | RAINMAKER

4

6

9

10

12

16

18

19

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

14

Q1

20

15

Q2

20

15

Benelux 11.4 6.9 8.1 10.7 9.6 11.5

CEE 12.1 6.3 – 7.3 – 8.4

DACH 9.3 8.7 9.9 9.5 7.7 10.3

France 9.2 9.8 8.7 9.5 9.9 9.4

Nordic 8.9 9.4 8.0 11.0 7.9 9.9

Southern 7.8 7.1 9.8 7.0 7.6 10.8

UK/Eire 9.1 10.4 9.9 11.3 12.0 10.4

MULTIPLE OPPORTUNITIES

INTEREST OF ALTERNATIVE FUNDERS IN QUALITY ASSETS

POWER OF NEW TECHNOLOGIES

APPETITE OF OVERSEAS BUYERS FOR STRONG

EUROPEAN BUSINESSES

PRIVATE EQUITY BUOYED BY STRONG DEBT MARKETS

TRENDS

ENTREPRENEUR INTERVIEW

THOUGHT LEADERS

RAINMAKER | 2016

4

Thought Leaders

Sector specialists at Clearwater International are regularly profiled across a range of leading global business titles.For our views on market trends and opportunities, follow us on Twitter (@CWICF) or LinkedIn (Clearwater International Corporate Finance).

From retail & leisure through to financial services and manufacturing, our team of sector experts have written columns and contributed articles across a wide range of business publications over the past year. Titles they have featured in include Retail & Leisure International, Manufacturing Today Europe, Unquote”, The Grocer, Børsen and Credit Today – to name just a few.

.

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Real estate and infrastructure help build upSpanish activity/southern-europe/analysis/2402061/real-estate-and-infrastructure-help-build-up-spanish-activity

31 Mar 2015, Kenny Wastell, Southern Europe unquote

In March alone, CVC recouped a reported €1.1bn from the sell-down of a 7.5% stake in Abertis Infraestructuras, while GED Capital also agreed to buy five infrastructure funds worth €370m from Ahorro Corporación. Meanwhile, over the past couple of years, real estate values have predictably risen as investor demand increases.

Additionally, the European Central Bank's quantitative easing (QE) process has led to a devaluation of the euro. In March the currency hit a 12-year low against the dollar and a seven-year low against the sterling, resulting in a highly favourable deal-making environment for investors from countries outside the eurozone.

"The market for trophy assets, such as high-profile hotels in international cities such as Barcelona, is growing," says Jose Caireta, co-founder and managing partner at Squircle Capital. "We bought a triple-A real estate asset back in 2012 from a distressed situation. Two years later, based on recent market transactions – made by sophisticated overseas investors – these types of assets are being acquired for more than twice the value."

Third waveThis return of investment into real estate and infrastructure is already having an effect on other sectors, as Francisco Gómez, Spain partner at Clearwater International Corporate Finance, explains: "Real estate saw the first wave of new foreign investment following the crisis; because it is a relatively straightforward market. The second wave was in infrastructure. That has been

boltthe

Clearwater International’s annual industrials sector commentary 2015

View on successRoger Hartshorn at HL Plastics talks growth

Update from ChinaAfter the market turmoil, M&A remains active

PE focusInsights from Palatine Private Equity

Global gas playerKosan Crisplant’s transformation

FULL THROTTLE US buyers lead the way

RECENT M&A ACTIVITY

spendthe

AT YOUR LEISUREKeys to success in the online travel market

Clearwater International’s half-year consumer sector commentary Summer 2015

ZalandoOnline retailer talks strategy

Private Equity viewKey trends across Europe

Chinese movesTapping into the market

NH Hotel GroupExclusive interview with CEO Federico González

M&A FOCUSMarket drivers in 2015

The Spend V2.indd 1 03/08/2015 10:16

wirethe

Clearwater International's TMT sector commentary 2015

BIM marketSpecial report

View from ChinaM&A prospects

2015 trendsThe year ahead

Top dealsIn-depth analysis

2014 DEALSREVIEW

AMERICANADVENTURESUS leads global M&A charge

The Wire Winter 2015 V2 03/03/2015 15:50 Page 1

recipethe

GLOBAL MOVESHow emerging markets are driving consolidation

Clearwater International’s food and beverage sector commentary 2015

Dairy giantsExclusive interviews with Arla and R&R

Pride of SpainOsborne discusses its Far East strategy

Chinese trendsWhat is driving China’s M&A market?

Deal focusClearwater Internationaldeal highlightsalchemist

the

Clearwater International’s annual chemicals sector commentary 2015

ViewpointRicardo López Soria

Pentagon ChemicalsCross-border sale to US

What now for shale?A special report

Investor focusInterview with Aurelius

NEW WORLD ORDER Consolidation grips the industry

US DRIVES GLOBAL M&A

Clear thinking It has been a busy year for our in-house publications, with our thought-leading sector magazines continuing to provide interviews and in-depth analysis.

Among our highlights were exclusive interviews with R&R Ice Cream, Arla Foods and Osborne for our food & beverage title Recipe; and interviews with Zalando, On the Beach, NH Hotel Group, Brompton Cycles and Tangle Teezer for our consumer title Spend. We also interviewed the chief executive of Siemens UK for Rainmaker who shared his thoughts on the rise of industrial automation and Industry 4.0.

We have produced a wide range of Clearthought publications focusing on particular sub-sectors including special reports on: Automation, Building Products, Snacks, Hotels and Hospitality, Debt Funds, Insurance, Gyms & Fitness, and Business Process Outsourcing. We also published a special Clearthought issue highlighting the winners from our Cloudex 20:20 awards.

5

IN THE PRESS | RAINMAKER

LEISURE

00 RETAIL & LEISURE INTERNATIONAL APRIL 2015

Is Leisure in Good Shape?

Gareth Iley, partner at mId-market advIsory fIrm Clearwater InternatIonal, takes a look at the rIse of merGers and aCquIsItIons In the leIsure seCtor, wIth bIG Corporates and prIvate equIty GraspInG hold of thIs aCtIve market.

Last year proved to be a busy one for global M&A in the consumer space. Corporates showed increasing signs of confidence and activity, buoyed by

greater availability of bank funding as well as high levels of cash reserves, and private equity continues to invest. Meanwhile, IPOs re-opened as a potential exit route for private equity, although the flotation market was more volatile during the summer and early autumn.

Particularly in the spotlight was the sporting and lifestyle categories in both retail and product areas. Consumer spending in these sectors remains strong, on the back of greater awareness of health and wellbeing issues. As a result, investors are becoming increasingly attracted to the sector, which is now highly active in terms of M&A.

One example was the announcement by US multi-brand owner Sequential Brands Group that it was adding three brands to its existing portfolio of nine in June 2014. It acquired Galaxy Brand Holdings for €185M – the owner of fitness brand Avia, basketball brand AND1, and outdoor brand Nevados.

With consumer awareness now at an all-time high, a number of trends are evident in the sector. One of these trends that has caught on is cycling, which has benefited from increased participation rates in recent years. Following the success of the GB Olympic cycle team and Team Sky delivering Tour de France wins for two British cyclists, cycling is now the third most popular participation sport in England – moving ahead of football and golf – with two million adults in the UK riding bikes at least once a week.

This enormous growth potential has inevitably translated into an increase in M&A. We have seen this happen recently with Boardman Bikes, the high performance bikes company founded by Olympic champion, Chris Boardman, being acquired

by UK cycle and automotive parts retailer Halfords last year.

The bicycles-to-car accessories retailer paid between £10M and £15M for Olympic champion Chris Boardman’s bike company, Boardman Bikes. The London-based business, which opened its door in 2007, is a specialist bike retailer offering a series of road, mountain and hybrid bikes with prices up to £9,000. The company has had the likes of Olympic champions Alistair and Jonathan Brownlee ride its bikes, and is one of the fastest growing cycling brands in the UK.

Halfords had been the UK sole distributor for Boardman Bikes and chose to acquire the business to bring the brand fully in-house and improve its offering to the more premium end of the market.

We have also seen this increase in M&A on an international scale, with leading Dutch cycle group Accell demonstrating its belief in the growth potential of the Spanish cycle market. Its acquisition of Comet, a Spanish cycle parts and accessories supplier, which is also active in Portugal and France, is a good example of a business expanding across Europe.

Outside of cycling, other sporting brand owners have also expanded into new product areas through acquisition. One

example is Columbia Sportswear, which agreed to acquire yoga brand prAna for €153M in April 2014. The purchaser, best known for its ski and outdoor apparel, attributed the acquisition to a desire to move into complementary categories and reduce its dependence on cold weather sports. Meanwhile, highly acquisitive luggage group Samsonite recently highlighted its interest in the outdoor and lifestyle spaces with the acquisition of Gregory Mountain Products.

Interestingly, less mainstream segments have also proven attractive to private equity with acquisitive strategic buyers keen to move into new geographies or product areas. For instance, a US-based private equity investor acquired a world-leading figure skate blade manufacturer, UK-based HD Sports, for an undisclosed sum, in October 2014. While this is not a mass-market sport, we are seeing an increased interest in niche offerings, as these can also provide great potential to grow a company’s offering of sporting goods.

The leisure sector has been particularly active over the last year with no signs of it slowing down. With acquisitions being at the forefront of both commercial and private equity mindsets and sporting brands looking to expand globally, the leisure sector is one to keep an eye on in 2015. Watch this space.

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Rolls-Royce

General Electric

Jul 11th 2015 | From the print edition

Rolls-Royce

Hitting turbulence

A rethink is needed at the world’s second-largest jet-engine maker

FOR a firm best-known for building engines

to make things go forward fast, Rolls-Royce

appears to have stopped dead in its tracks.

On July 6th, the day after a new boss,

Warren East, started work, it was forced to

issue another profit warning—the fourth in 18

months. Having made £1.6 billion ($2.5

billion) of pre-tax profits last year, it now

expects £1.4 billion, give or take £75m, this

year. Unsurprisingly, investors’ and analysts’

grumbles about the firm’s strategy are

getting louder.

Under Mr East’s predecessor, John Rishton,

Rolls had been trying to diversify away from making aircraft engines. Building other

equipment for use on land or sea, it was hoped, would help maintain profits, even in lean

years for aviation. It was also hoped that shifting investment into these areas—which have

produced greater returns on capital than jet engines—would boost the firm’s profitability.

But analysts fear that this strategy is no longer working. The

various profit warnings have revealed that all areas of the

business are underperforming. At first the firm blamed

defence cuts for a fall in demand for its military-jet engines.

Then, Rolls said the weak oil price, and deteriorating

economic conditions, were hurting demand for its power-

generation turbines and marine engines. Now the civil-aviation

division is also in trouble, according to the latest profit

warning. Although demand for new planes is buoyant, Airbus’s

delays in producing a new version of its A330 long-range jet

are having a knock-on effect on Rolls, whose Trent 7000

engine was designed specially for it.

Some analysts are arguing that Rolls’s constituent

businesses would do better if they were split apart. Selling or

spinning off the smaller land-and-sea division might boost the value of the rest by up to

20%, according to Rami Myerson of Investec, a bank. This is because investors say they

would prefer to risk their money on a firm focused on aerospace than on one that hasFacebookTwitterLinked

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To keep up to date with our thoughts and read more of our industry insights, see our sector comments.

Gareth IleyPartner+44 (0)845 052 [email protected]

Marc GillespiePartner+44 (0)845 052 [email protected]

Sarah CharmanConsumer Analyst+44 (0)845 052 [email protected]

Jackie NaghtenConsumer Consultant+44 (0)845 052 [email protected]

Alex PateyManager+44 (0)845 052 [email protected]

Perri BlakeyDeal Originaton+44 (0)845 052 [email protected]

clearthoughtBusiness Services Insights from Clearwater International

2015

The global M&A market has shown a significant increase in recent years, with year-on-year deal count up 26% since 2010 as markets continue to recover from the economic downturn. Stronger earnings performance globally, combined with easier access to lending agreements on more favourable terms, is driving increased levels of M&A activity. Transport & Logistics (T&L) is a truly international sector, the growth of which has been fuelled by increased globalisation over the last 30 years. As such, the sector remains very dependent on global economic development and international trade flows. It was hard-hit during the global economic downturn and its recovery has been slow, but the industry is predicting positive GDP growth in years to come which will result in increased trade volumes and M&A activity.

With its high exposure to international markets, the T&L sector has only recently started to see an increase in the number of M&A transactions following the global downturn. The number of transactions stabilised at around 300 deals annually from 2008 to 2013, but a small increase was experienced in 2014 which indicates that the sector is starting to take more comfort from the economic environment.Europe continues to lead as the region with the highest number of transactions, although we are starting to see more M&A activity in emerging markets - particularly in countries such as China, South Korea, Brazil and South

Africa, which are experiencing the highest trade growth among emerging nations.Recent notable deals include China Ocean Shipping’s acquisition of China COSCO Logistics for more than ¤800m; the acquisition of Brazil-based All America Latina Logistica by Rumo Logistica; and the acquisition of South Africa-based Supaswift by FedEx.

Looking ahead, we expect total dealflow to increase further across all regions due to a significant decline in fuel costs and the continued global economic recovery - both of which are likely to improve earnings and free up corporate cash for M&A growth.

Introduction

www.clearwaterinternational.com

AARHUS • BARCELONA • BEIJING • BIRMINGHAM • COPENHAGEN • LISBONLONDON • MADRID • MANCHESTER • NOTTINGHAM • PORTO • SHANGHAI

M&A Outlook

0

50

100

150

200

250

300

350

400

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

T&L sector global M&A transactions (target region)

Source: Zephyr

Transport & LogisticsAn improved economic environment and increased specialisation will drive M&A in the sector

nEurope

nNorth America

nAsia Pacific

nRest of the World

Clearthought T&L 6pp.indd 3

17/04/2015 16:47

Gareth IleyPartner

+44 (0)845 052 [email protected]

Marc GillespiePartner


Sarah CharmanConsumer Analyst


Jackie NaghtenConsumer Consultant


Alex PateyManager


Perri BlakeyDeal Originaton


clearthoughtIndustrials Team Insights from Clearwater International Autumn 2015


AARHUS • BARCELONA • BEIJING • BIRMINGHAM • COPENHAGEN • LISBON

LONDON • MADRID • MANCHESTER • NOTTINGHAM • PORTO • SHANGHAI

Building ProductsThe European construction industry is returning to growth after years of stagnation.

As the European economy hauls itself back to growth, so the building

products sector is expected to benefi t as the revenues and earnings of

industry players which were depressed during the recession rebound

strongly.

With this growth comes signifi cant challenges. A need to address the sustainability agenda

is driving higher quality products from suppliers, while building products companies also

face the challenge of maintaining margins in an environment of persisting cost infl ation,

pricing pressure, and increased regulation and supply chain complexity.

However, on the plus side, countries with continued housing shortages – most notably the

UK – are seeing a raft of government initiatives which are boosting growth.

Against this backdrop, we expect to see considerable M&A activity across the market in

the short to medium term as trade players, private equity investors, and public markets

target the sector due to its anticipated organic growth. Many segments of the building

products sector also remain highly fragmented and regional in nature which augurs further

consolidation as market leaders expand geographically.

Augurs well

Market driversThe building products market is defi ned by

the manufacture of construction products

and materials including:

• bricks, tiles, cement, concrete products

and plaster;

• metal structures, doors and windows,

carpentry and joinery;

• wiring devices and electric lighting

equipment.

The market is split between pure

manufacturers and distributors, although

some companies do adopt both roles.

A number of drivers are having a strong

impact on the market at present:

Sustainability

Issues around climate change - as well as

sustainable resource use, waste reduction

and recycling - are very prominent for

companies in the sector. It has become

imperative for building products companies

to have a current and clear position on

sustainable development and to be able to

articulate this to customers, investors and

other stakeholders in order to ensure these

areas build value within the business.

Rising costs

Companies are facing particular challenges

in terms of maintaining margins in an

environment of cost infl ation and pricing

pressure. Realising the benefi ts of low-

cost sourcing will become a key tool in

maintaining competitiveness.

Costs have risen due to signifi cant

manufacturing capacity being taken out

of the market in recent years.

Regulations

New regulations covering customer and

industry standards are becoming a major

driver in the market.

Supply chain

Manufacturers are often removed from

their end-users by distributors, specifi ers

and other purchase decision-makers

throughout the supply chain. Those who

are able to develop a clear understanding

of each player’s purchase requirements –

despite the disintermediation – and manage

these various relationships are able to build

advantage over their competitors.

200

180

160

140

120

100

80

60

40

20

02007 2008 2009

2011 2012 2013 2014

2010

MezzanineHY Bonds

Leveraged Loans

€bn

220

Q1 2015

Gareth IleyPartner

+44 (0)845 052 0367

[email protected]

Marc GillespiePartner

+44 (0)845 052 0302

[email protected]

Sarah CharmanConsumer Analyst

+44 (0)845 052 0393

[email protected]

Jackie NaghtenConsumer Consultant

+44 (0)845 052 0300

[email protected]

Alex PateyManager

+44 (0)845 052 0398

[email protected]

Perri BlakeyDeal Originaton

+44 (0)845 052 0390

[email protected]

clearthoughtDebt Advisory Insights from Clearwater International

Autumn 2015


Debt MarketsThe debt markets have recovered from the global fi nancial crisis, with improved liquidity,

less stringent terms and lower pricing.

Key points:

• Although there is uncertainty in the global economy, the abundance of liquidity

means now is a great time for businesses to borrow

• The high level of liquidity in the market and competition between a wider range of

lenders means loan terms and conditions are more fl exible

• The number of transactions supported by non-bank lenders as an alternative to

conventional banks is clearly on the increase

An abundance of liquidity

Seven years after the fi nancial crisis fi rst

struck, the debt markets are open and

there is a large amount of liquidity looking

to fi nd a home. Investors and the markets

do, however, continue to be buffeted with

events such as the Greek bailout, concerns

over the Chinese slowdown and uncertainty

over the timing of future interest rate rises.

Macroeconomic events have led to challenges

for those focussing on the more susceptible

debt capital markets, with a reduction in the

level of bond issuance in recent months. The

protracted Greek bailout caused particular

instability and downward pressure on stock

markets around the world and the full extent

of its impact on the rest of southern Europe

– which is just beginning to recover from the

global crash – has yet to be played out.

The latest data backs up the uncertainty:

leveraged lending across Europe fell

signifi cantly in Q2 2015 with European

leveraged loans totalling ¤15.9bn, a decline

of ¤4.5bn, compared to Q1.* The fall should

be seen in the context of some very large

deals in the fi rst quarter. High yield debt

volumes were also down, with ¤18.7bn

issued by borrowers in Q2 compared to

¤27.1bn in Q1.

Greece hasn’t been the only concern across

Europe. Uncertainty around a potential UK

‘Brexit’ from the European Union ahead of

next year’s proposed referendum continues

to cause uncertainty, with an impact on

business investment. Meanwhile, the timing

of interest rate rises in both the UK and the

US is being closely watched.

Such rises will have a knock-on impact on

businesses as those without fi xed borrowing

rates are likely to see a rise in interest costs,

while it also means the cost of fi xing interest

rates will start to increase in anticipation.

Further afi eld, eyes are also on China as its

central bank (The People’s Bank of China) has

allowed its currency to devalue in the face of

slowing GDP growth. This has impacted on

share prices in China and across the world,

with investors moving their money into safer

asset classes such as government bonds and

gold.

These global concerns have mainly been

affecting the larger end of the market, with

banks facing shrinking balance sheets as

large company M&A levels remain relatively

depressed. This strategic change by banks to

curtail balance sheet reduction, combined with

the high levels of alternative funding raised

during 2010-2014 as banks held back their

lending activities, has meant there is now a lot

of liquidity chasing few good deals.

The greater liquidity in the market has meant

pricing/interest margins are still falling, and

there is a trend towards fewer covenants in

a deal. Businesses are also increasingly using

debt to invest in their businesses, rather than

simply extracting value for shareholders as

has been the trend of recent years. And,

perhaps most signifi cantly of all, a sense of

momentum has returned to the debt markets

again after the global crash.

* Standard & Poor’s LCD

European Leveraged Finance Volume (2007-15)

The high yield bond market has seen large issuance levels, as investors seek higher yields during a period of

depressed returns on traditional government bonds.

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RAINMAKER | 2016

6

ON THE RISEBarry O’Callaghan built up one of the largest education publishers in the world before the economic crash. He talks exclusively about the aftermath of the crisis,

and how he went on to launch another global business - Rise Global.

A treasured sign takes pride of place in Barry O’Callaghan’s office in the heart of Dublin: ‘Authentic Irishman for hire. Storytelling and singing and dancing and carrying on. Available all hours. Experienced drinking companion.’ Well, my word, does he have a story to tell.

The rise, fall, and rise again of O’Callaghan will go down in Irish corporate legend. At its peak, before the crash in 2008, his publishing empire HMH – built from the roots of educational provider Riverdeep – was worth more than €12bn on paper. Just months later, he was dealing with the largest restructuring

in Irish corporate history, pitched against – in his own words – the ‘titans of Wall Street’.

“I spent two years of my life taking every twist and turn to successfully restructure the company. The backdrop to a restructuring is that no one is going to be happy, you just have to let logic prevail.”

Since those traumatic days, O’Callaghan has kept a low profile - no easy thing in the tight-knit Irish business community. “I just wanted to keep myself out of the limelight. Nothing prepares you for the downside of having a high profile in Ireland.”

RiverdeepO’Callaghan first got involved in educational publishing in the late 1990s, after eschewing a successful investment banking career. “I wanted to run my own business and education appealed to me because the for-profit market was underexploited, particularly in the primary and secondary sector. I could see the global opportunity and was very focused on the US market from the start.”

Indeed, Riverdeep’s very first product was a maths programme for middle school in the US. “The model was always to build the

INTERVIEW | RAINMAKER

7“As I constantly remind my own children, if you are a native English speaker then you are part of the lucky club. Academically, you have something that 80% of the world seeks.”

“I spent two years of my life taking every twist and turn to successfully restructure the company.”

“People have now lived through an economic cycle, lost a lot of money, and it has been very painful. It changes your whole appreciation of risk. What we learnt in 2008 was that there is no such thing as zero risk.”

software here in Ireland and then sell it to the key US states of California, New York, Florida and Texas.”

Riverdeep’s IPO in 2000 would prove a key juncture, giving O’Callaghan the currency to pursue an aggressive buy-and-build strategy. A landmark deal came in 2006 when the company merged with US group Houghton Mifflin, with the new entity going on to acquire Florida-based Harcourt to form HMH.

Nearly a decade on, O’Callaghan passionately defends the business model despite HMH’s estimated €7bn of debt at the time of the crash. “The financial metrics made sense and

I wanted to run my own business and education appealed to me

we surpassed all synergies, while we were borrowing reasonably efficiently. We were the dominant player in the market, in every school building in the US. The reality was that we had a perfectly good LBO structure for the market and for the company, and all our micrometrics were working. Our market share was going up, our costs were coming down, and our margins were going higher than people anticipated. But then the world fell apart as our customers’ municipal funding evaporated.”

Once the restructuring was complete, he admits he just wanted to leave the business. “It was my company, which I had built up, and suddenly I wasn’t running it anymore. I stayed on for a year as CEO and then left as part of a financial separation process that suited both me and the new owners.”

Arise RiseCrucially, as part of that deal, O’Callaghan negotiated the rights to use HMH’s IP in markets outside the US and Europe, gaining full control of the assets that today represent his latest educational venture, Rise Global. “I just got on with my life and set out to create a significant new business.

HMH have thousands of products so what we did was cherry-pick what we wanted, particularly around digital assets and specific pieces of software that allowed us to build a very good English programme.”

He says it was always the intention to take Rise Global to the Far East. “For all sorts of reasons, Asians spend more of their disposable income on education and we could see that China was particularly attractive and a terrific market for us to focus on initially. Our product really resonated there because we were able to beat our chests and say: ‘This product is used in classrooms across America, so if your child comes and learns English using this product they are learning American English which is the first step on the road to Harvard’.”

Rise Global grew rapidly across China, educating 50,000 students at 140 centres within just a few years. However, despite the “incredibly attractive” attributes of the Chinese market, O’Callaghan says the fact that foreign individuals or companies are not allowed to own domestic education assets in the country proved a major hurdle. “There was cash trapped inside Rise China which I wanted to extract so I ran a process to sell the business.”

Comment and find out more:



@CWICFClearwater International Corporate Finance

#CWICFEdtech

RAINMAKER | 2016

8

New venturesIf there is one single thing that O’Callaghan learnt from the demise of HMH, it was not to put all his eggs in one basket. So much so that today he spends around two-thirds of his working time on Rise Global, with the rest split between his various private investments.

One of these is US consulting business Beanstalk Innovation which works with large urban school systems on online strategies. As he explains: “I want to keep myself close to the US market, not just because of its size but also because of the whole area of technology and innovation. If I am trying to sell an American dream around the world, it is important I have one foot in the US.” Closer to home,

O’Callaghan is well known for his Cliff hotels - owning the Cliff House Hotel in Waterford and the Cliff Townhouse in the centre of Dublin - and he has plans for further hotels across the country. He is also looking to open Dublin’s first international school in 2017 and is currently in talks with an academic partner. “There are 300,000 expats in Ireland, largely from US multinationals, and it’s a market that is hardly served.”

O’Callaghan is also a controlling shareholder of the US spirituality- based website Patheos, which attracts almost 15 million visitors a month.

Global marketsSince selling the Chinese business to Bain Capital in 2013 for $145m (€134m), 14x EBITDA, Rise Global has been targeting other Far East markets where there is insatiable demand for English language services, such as South Korea, Japan, Vietnam, Thailand, Singapore, Indonesia and the Philippines.

In each market, Rise has customised and further enhanced its suite of products. As O’Callaghan adds: “Each market has slight nuances but fundamentally it is the same thing: an English kindergarten programme and an after-school elementary programme, teaching English through curriculum in a very immersive and rigorous environment, and using software to capture data and monitor progress.”

The Far East business is run from Singapore where Rise works with partners across different markets, in some cases on a JV basis. As he adds: “What I learnt from China is that it is very hard to manage a business remotely. From a risk alignment perspective, what we do is find local operators with whom we can co-invest as the IP and education experts.”

Rise Global does not invest in property itself - the schools are typically located in shopping malls - while it mainly hires and trains local teachers to deliver the programmes which, on average, cost $10 an hour and run up to 250 hours over an academic year.

However, with an estimated billion people outside of the US learning English, the company isn’t just focusing on the Far East. It also has operations in the Middle East and is about to launch JVs in Mexico and Brazil too.

English demandJust why is the market so strong? “The global population is rising and English has won out as the global language, so that demand will carry on growing,” says O’Callaghan. “As I constantly remind my own children, if you are a native English speaker then you are part of the lucky club. Academically, you have something that 80% of the world seeks.

“The key difference is that our products are much more immersive than those of our competitors. They are not just about getting children ready for tests, they are far more holistic. This is not just about teaching grammatical language, it is about learning the nuances of English so that you can then speak academic English, not some abstract version. What we often find in Asia is that levels of aural and written English are way better than spoken English.”

The global population is rising and English has won out as the global language

Technology plays a key role too. “We are big users of technology and software that engages kids. However, the challenge remains - particularly in Asia - that if you put all your IP online, you will simply watch your business model disappear. Pure online learning doesn’t work, there has to be some kind of blended offering. I think the big challenge for the large publishers is that they will have to cannibalise some of their existing revenue streams to enter this business. At some point, they have got to say: ‘You can have our books for free’.”

FutureLooking ahead, O’Callaghan says he has no immediate plans to sell any other parts of the Rise empire. “The only thing I am mindful of is structuring the business in a way that it has the flexibility to be either sold in pieces or as a whole. From a M&A perspective, IT companies undoubtedly have an eye on this market as for-profit education remains a largely untapped frontier when it comes to technology.”

For the older, wiser O’Callaghan, the success of Rise Global marks an extraordinary reversal of fortune. Did he ever think of just opting for the quiet life after all he’s been through? “Absolutely not. I’m 46 and I keep working because I enjoy it, and because I still have a relatively young family and I want to set an example for them.”

His own revival has been matched by Ireland’s. Looking back, does he think the global crisis changed the country? “Definitely. It was the first time people had significant money to lose. People have now lived through an economic cycle, lost a lot of money, and it has been very painful. It changes your whole appreciation of risk. What we learnt in 2008 was that there is no such thing as zero risk.”

9

TRENDS | RAINMAKER

TrendsWhat are the defining business trends of our times?

Well, the answers can be found over the coming pages as we profile some of the M&A highlights for Clearwater International over the past 12 months, putting the deals in the context of the fast-moving and changing trends which are shaping our business climate.

The appetite of overseas buyers - especially for strong European companies - continues to be a major driver of corporate activity. Much of this interest continues to come from North American corporates, keen to invest again in the aftermath of the economic crisis. Particular highlights include the sale of British businesses HL Plastics and Pentagon Chemicals to US companies Quanex and Vertellus Specialities respectively.

There is no shortage of fast-growing businesses aggressively targeting the US market too, such as Ideal Shopping which went through a secondary buyout backed by Blackstone. The deal shows the strength of private equity buoyed by strong debt markets, another key market trend.

The company is also an example of the power of new technologies being used to drive growth, scale, innovation and efficiencies. The trend is epitomised by the sales of education provider Clio Online to Bonnier, and that of Kirona, a leading provider of Field Force Automation solutions, to PE investor Livingbridge.

Meanwhile, cross-border activity continues to be an ever bigger driver of our business, while the growing interest of alternative funders in quality assets has also completely reshaped the lending market.

2

3

1. Private Equity buoyed by strong debt markets

2. Appetite of overseas buyers for strong European businesses

3. Power of new technologies

4. Interest of Alternative Funders in quality assets

4




#CWICFTrends

1

RAINMAKER | 2016

10 PRIVATE EQUITY BUOYED BY STRONG DEBT MARKETS

The Spanish fresh food distributor was acquired by Miura to create the largest food services fresh product supplier in the country. Cutting’s supplies large restaurant chains, hotels and catering groups, and will now be integrated with Guzmán Gastronomía, another Miura portfolio company, to create a new group with estimated revenues over €70m. Miura is a private investment firm headquartered in Barcelona which specialises in investing in small and medium-sized Spanish companies with attractive expansion and consolidation potential, and international growth prospects. Both Guzmán Gastronomía and Cutting’s will continue to operate under their own brands, focusing on their respective niche markets.

Significance: Allows Cutting’s to benefit from Miura’s operational, strategic and financial experience as the wider group continues to expand in Spain and internationally.

CUTTING’S

The company operates live and pre-recorded channels across all the major UK TV platforms - such as Sky, Freeview, Virgin Media and Freesat - as well as across multiple internet sites. One of its principal divisions is Create & Craft, which sells speciality craft products to dedicated crafting hobbyists, while the business also has a fast-growing US operation. The company has been sold to private equity funds managed by Blackstone, which has owned giant US crafts retail chain Michaels Stores for many years.

Significance: New investment will enable Ideal Shopping to particularly scale its operations in the US and support further global expansion as it explores new market opportunities in Germany, Australia and Canada.

IDEAL SHOPPING

The company is one of the UK’s leading independent mid-sized contract caterers, operating through the Caterplus and Taylor Shaw brands. Caterplus services residential and care homes, as well as welfare charities and shelters, and is regarded as the largest operator in the sector. Taylor Shaw operates in the education sector and also has a presence in business and industry. The business has been sold to private equity group LDC. The contract catering industry is growing strong with demand for quality, cost-effective service and product, particularly as the health and education sectors respond to budget challenges.

Significance: The business has a proven record of historic growth and the investment will enable the company to continue to grow organically as well as explore a number of buy-and-build opportunities.

WATERFALL SERVICES

Driven by a resurgence in lending from banks, the Private Equity (PE) market goes into 2016 in a continued acquisitive mood. We expect levels of borrowing to increase and remain strong as the high level of liquidity in the market, and strong competition between lenders, results in greater flexibility and enhanced terms for supporting deal activity and business investment.

The appetite for refinancing is also growing as companies take advantage of cheaper pricing and set aside a portion of the debt raised for M&A. This should further drive the PE market and especially boost secondary buyout activity as investors weigh up their options as part of the wider refinancing process.

“Having worked with Clearwater on the original MBO of PPF four years ago, Phil and his team were a natural choice to support management once again. Whilst we were familiar with the likely key points of negotiation with PE investors, I knew Clearwater would add a valuable perspective and be at our side at all key moments of the transaction. They are attentive, have deep market knowledge and deliver their advice with real clarity. And all that adds up to making them a pleasure to work with!”

Attila Balogh, CEO at Partner in Pet Food

11

One of Europe’s leading pet food producers was acquired by private equity group Pamplona Capital Management in a deal worth €315m. PPF is one of Europe’s largest producers of private label wet and dry pet food, supplying the continent’s top retailers across 37 countries. In recent years, PPF has grown through new products and innovation, making significant investments in its R&D and production capabilities alongside strategic acquisitions. Clearwater International supported the original MBO of PPF in 2011.

Significance: The business will accelerate product innovation across both its private label and branded offerings, and will also look to grow through further innovations and acquisitions in both Western and Central Europe.

PARTNER IN PET FOOD (PPF)

The UK holiday park owner and operator was established in 2008 and now has four parks which are renowned for delivering value for money holidays, and for the quality of entertainment and leisure facilities. The business has been acquired by private equity house LDC, providing an exit for original investor CBPE.

Significance: The UK holiday park market is highly fragmented with opportunity for further market consolidation. The deal provides a great opportunity to deliver future growth through organic expansion and selective park acquisitions.

AWAY RESORTS




#PEDeals


Spending on experiences increases

More than half of last minute breaks were UK stay-cations driving UK spendgrowth by 16.9%

72% say that value for money will remain the key factor when making purchases

12.1% Entertainment

12.5% Restaurants

11.9% Public houses

8.9% Cinema/Theatre

7.2% Travel

4.1% Airline

5.2% Hotels

RAINMAKER | 2016

12

PLAYnATIOn

The UK supplier of amusement and entertainment machines was sold to Novomatic Group, one of the largest conglomerates in the international gaming industry. Playnation owns and operates 20,000 amusement and entertainment machines at holiday parks, motorway services, bowling centres and airports. The Austrian-based Novomatic Group exports high-tech gaming equipment to more than 80 countries and had revenues of more than €3.8bn in 2014. It has production facilities and research & development centres across Europe.

Significance: Novomatic can enter new markets and expand its offering further across the EU. Playnation can access Novomatic’s client base and capitalise on growth opportunities both in the UK and overseas.

APPeTITe Of OverseAs buYers fOr sTrOng eurOPeAn busInesses

HL PLAsTICs (HLP) The manufacturer of world-class PVCu extrusions was acquired for €128m by Quanex Building Products Corporation, a US manufacturer of engineered materials and components for building products which specialises in designing and producing energy-efficient window and door products, systems and solutions. During its 40-year history, HLP has continued to grow and innovate both organically and via acquisition.

Significance: Adds new technologies, products and enhanced scale for Quanex, contributing to top and bottom line growth. It also gives the company an added presence in the strong UK market, and access to new and complementary product lines.

The past year has seen significant interest from Chinese buyers in Europe, with players such as Fosun, Wanda, Sino Ocean and Sanpower all targeting European markets as they look to invest further in markets outside of China. For instance: Fosun has acquired leisure assets Club Med and Cirque du Soleil, as well as German bank Hauck & Aufhaeser and Portuguese insurance company Fidelidade. The UK is the largest recipient of Chinese direct investment, followed by Germany and France, and in late 2015 China agreed to take a one-third stake in a new nuclear power plant at Hinkley Point. It is forecast that China will become one of the world’s biggest cross-border investors by the end of this decade. But China is not the only player, as evidenced below:

“It was great to work with Clearwater International on the sale. The team supported us throughout the process, providing excellent and balanced advice during complex negotiations. They showed real commitment to getting the deal done, achieving a great result for us by delivering strategic buyers and an excellent valuation. We were thoroughly impressed with their expertise and work ethic, and wouldn’t hesitate to recommend Clearwater International to anyone seeking corporate finance advice.”Peter Stockley, Director at Countrywide Supplies

TRENDS | RAINMAKER

13

COunTrYWIde suPPLIes

The distributor of prescription medical products in the UK was sold to Atos Medical, the Sweden-based leader within the head and neck medical products area. Countrywide Supplies is a licensed dispensing appliance contractor for the UK - providing head, neck and ostomy products directly to patients - while Atos’ products are sold in 80 countries, providing annual revenues in excess of €100m. In 1996, Atos Medical started its UK operations under the name Platon Medical.

Significance: The deal further supports Atos’ commitment to the UK market and consumers. Countrywide can take advantage of an even greater product range and significant strategic opportunities.

fLOOr CLeAnIng MACHInesThe business serves contract cleaners and retail customers throughout the UK, providing an all-inclusive breakdown assurance service to its customers and servicing all brands in order to maximise asset usage and minimise downtime. It was sold to the Denmark-headquartered Nilfisk group, a supplier of professional cleaning equipment in industrial, commercial and consumer markets with operations in more than 70 countries. The deal shows how global manufacturers recognise the benefits of building strong service and solutions elements within their business models.

Significance: Strengthens Nilfisk’s service business in the UK, while it can now offer customers the ability to increase asset life as well as provide replacement new assets.




#OverseasBuyers

The UK is the largest recipient of Chinese direct investment, followed by Germany and France

MArIbO MedICO

Denmark’s market leader in sleep and respiratory care has been sold to listed US-based ResMed (NYSE:RMD). Maribo Medico is Denmark’s leading value-added distributor, specialising in providing quality products, compliance and education related to the diagnosis, treatment and management of sleep disordered breathing and respiratory diseases.

Significance: The acquisition will accelerate growth, with Maribo able to leverage ResMed’s global strength to build its position in the market.


14

RAINMAKER | 2016

LArgO fOOds Largo founder Ray Coyle sold his remaining 25% stake to Intersnack, giving the German snack food company full control of the business. Largo’s brands include King, Hunky Dorys and Perri, as well as Ireland’s famous Tayto crisp brand. In total, the four brands have just under half of the Irish crisps and popcorn market. Coyle has since made a number of investments in food start-ups such as Natasha’s Living Food, SynerChi, and Irish Cone and Wafer.

Significance: The deal gives Coyle access to new capital and the scope to grow his interests further in Ireland, the UK and the Far East.

KOsAn CrIsPLAnT Headquartered in Denmark, the company supplies equipment, plants and systems for the filling and maintenance of Liquid Petroleum (LP) gas cylinders as well as offering after-sales and engineering services, facility management, and components supplies to the gas industry. It was acquired by Al-Ayuni, a major road and civil works construction company based in Saudi Arabia, which has moved into the field of energy infrastructure projects. In 2013, Al-Ayuni acquired Siraga, a leading French company within the LPG market, and this business will now be merged with Kosan to form Makeen Energy.

Significance: The deal strengthens Kosan’s position as a leader within the global energy sector. Kosan Crisplant and Siraga have strong synergies which will give both companies a solid platform for further growth.

APPeTITe Of OverseAs buYers fOr sTrOng eurOPeAn busInesses:

CrOss bOrder ACTIvITYWhether it’s technology, industrials, leisure, chemicals, healthcare, food or financial services, we are seeing increased cross-border activity across all sectors as leading players in virtually every industry seek to consolidate their positions and access new geographies, technologies and customers. The trends are perfectly illustrated in the range of cross-border deals which Clearwater International has advised on over the past year as we continue to connect clients with the partners they need to exploit global opportunities. Such trends are further fuelled by cheap and accessible debt which has spurred investors, especially from North America, to hit the acquisition trail, while Far East investors are also increasingly looking to invest outside of their home territories.

fArMALIder The privately-owned Spanish pharmaceutical group sold 49% of its shares to Ascendis Health International. Farmalíder is a group of Spanish companies involved in the development, registration, licensing and production of generic pharmaceutical products, specialising in pain management - as evidenced by its market-leading position in the ibuprofen and paracetamol markets in Spain and with a growing presence in other European markets. Ascendis operates in plant, animal and human health and its strategy is to create a group of health brands that covers the value chain from imports of raw materials, manufacturing and distribution through to consumers via retail and direct selling channels.

Significance: Provides Ascendis with an entry into the attractive €23bn Spanish pharmaceutical market. Farmalíder will also serve as a strategic platform for Ascendis to expand into Europe due to its presence in Germany, the UK, Italy, France, Portugal, Belgium and Sweden.

15

TRENDS | RAINMAKER

CLIO OnLIne The Danish Software-as-a-Service (SaaS) company develops and publishes interactive digital educational materials and has experienced very strong growth rates achieved by its first mover position and positive market conditions. The company has played a significant part in placing Denmark at the forefront of digital educational resources in schools, on a global scale. It has been sold to Bonnier, the leading Swedish media group which has operations in 16 countries including Denmark.

Significance: Bonnier’s market position and Clio’s strong first mover advantage means the combined group will consolidate its position within the digital educational market as school expenditures continue to favour ed-tech rather than basic instructional materials.

“Clearwater International was assigned to run a full global sales process on TC Group, including financial as well as industrial sponsors. TC is a global business in the audio industry, operating within 4 verticals, using a number of different respected brands. Clearwater quickly managed to understand the complexity of the business and the industry, which was critical to us. The team facilitated an efficient and well managed process, and the outcome surely exceeded our expectations. I would not hesitate recommending Clearwater International. They are on one hand easy to work with, but can also be very firm – when needed – in order to reach the right result.”Anders Fauerskov – CEO at TC Group




#OverseasBuyers


RAINMAKER | 2016

16

NAVAERO The Swedish developer of electronic flight bag (EFB) systems has been acquired by the US Global Eagle Entertainment group. NavAero’s systems provide pilots with navigation solutions based on tablet-based personal electronic devices that enable paperless cockpit operations. The company has also developed a number of other related technologies which extend the functionality of its EFB systems, including cockpit door and cargo compartment surveillance systems, universal aircraft interface devices (UAIDs) which combine with other aircraft systems, and wireless connectivity. Global Eagle Entertainment is a leading worldwide provider of connectivity, media content and technology solutions for the travel industry.

Significance: Allows Global Eagle Entertainment to position itself as a world leader in the ‘connected aircraft’ market by delivering EFB solutions that connect with in-flight systems and which provide aircraft-to-ground data transmission solutions.

KIRONA The leading provider of Field Force Automation solutions, which supports more than 25,000 mobile workers across the globe, has been acquired by private equity group Livingbridge. The software and services enable Kirona’s clients to automatically schedule jobs, improve productivity and streamline workflows by connecting clients, the office and mobile workforces more effectively. The technology is offered through leading resellers and distributors including BT, Vodafone, Northgate Information Solutions, Capita and Civica. In 2012, Kirona acquired Xmbrace, the market-leading provider of dynamic scheduling software to the UK housing market.

Significance: The investment will support the business as it continues to enhance and develop its product suite for clients within both the private and public sectors, and further expand its services internationally.

P WER OF NEW TECHNOLOGIES Emerging and innovative technologies are fundamentally changing the landscape for all businesses, whatever their sector or size. For instance: the rise of Cloud-based services is just one example of a technology that is driving unheralded efficiencies for all companies. Ever-growing connectivity is another, with the ‘internet of things’ – the concept of using sensors to link just about anything to the internet – becoming a powerful force for business transformation. Indeed, its disruptive impact via automated practices is already being felt across all industries - not only in the consumer sector but also in manufacturing as both machines and the products they make are fitted with sensors.

17

TRENDS | RAINMAKER

BYGGEWEB The Danish developer of SaaS-based collaboration software solutions has been sold to RIB Software of Germany. Byggeweb has grown to become a leading provider of software within project and facility management, covering all stages of a building’s life cycle. The company has a dedicated vertical focus on the Architecture, Engineering & Construction industry. RIB Software’s product suite includes “iTWO” – the world’s first Big Data BIM 5D enterprise solution for the construction industry.

Significance: The combination of the companies’ software systems will enable the new entity to offer a complete 6D enterprise solution for the construction industry as well as providing geographical expansion for RIB.

ESPION TECHNOLOGY DISTRIBUTION Espion TD is a leading technology distributor in Ireland and the UK for the most disruptive and exciting technologies in the market. It sources and distributes best in class security, storage, networking and wireless technologies to resellers and partners, and has a strong client portfolio. The company is a Super-VAD (Value Added Distributor), helping partners generate more opportunities and develop recurring revenue streams through a wider range of marketing, sales and technical support services. It has been sold to the DCC group.

Significance: DCC is an international sales, marketing, distribution and business support services group with revenues of €10.6bn and operations in 14 countries. The deal further extends its market reach and technical solutions.

“Clearwater International added significant value to the process by arranging a bespoke financing package, in a tight timeframe, to support the deal. The team helped us considerably with negotiation, project management and debt raising to identify the right level of funds to be raised, the best providers and the most appropriate deal.”David Murray, CEO at Kirona




#CWICFtech


RAINMAKER | 2016

18

In the wake of the financial crisis, a huge market has developed for alternative finance. In recent years, a significant number of debt funds and other non-bank lenders have raised funding to target the gap left by banks as they restructured their balance sheets. Non-bank lenders have continued to raise ever larger investment funds and there is now a strong level of liquidity available to mid-market corporates which are also increasingly aware of the range of funding options available to them. Debt funds have been particularly attracted to industrial and manufacturing businesses as they have asset-heavy balance sheets which can provide protection in a stressed situation. PE backed businesses and US buyers have been particularly big users of debt funds.

DEE VALLEY The UK water utility company has refinanced its existing bank funding in a deal with HSBC. The refinancing was negotiated alongside the existing bond facility, providing €114m debt to be used to fund a capital investment programme over the next five years. The programme will cover upgrading water treatment works, rebuilding treated water storage reservoirs, cleaning mains and renewing distribution and trunk mains.

Significance: The newly negotiated debt structure will allow the company to reduce its debt cost, thereby improving margins. The funding enables it to deliver its largest ever investment programme which will improve and build greater resilience into its network.

NEXXPRO The company focuses on the development and manufacture of plastic and fibre helmets coated with different materials. Its Nexx Helmets brand is becoming increasingly recognised worldwide and its products have won both national and international awards for quality and design. To meet fast-growing demand, the company plans to expand its production

capacity and has sold a minority stake to BESI.

Significance: With the backing of BESI, the company will be able to increase its

production and become a market leader.

GOLDMAN SACHS/CARVAL INVESTORS

Clearwater International assisted Goldman Sachs and CarVal Investors

on the valuation of Irish trading businesses contained in a commercial loan portfolio.

Goldman Sachs is a leading global investment banking, securities and investment management

firm that provides a wide range of financial services to a diversified client base that includes corporations, financial

institutions, governments and high-net-worth individuals. CarVal Investors is an alternative investment manager focused on distressed and credit-intensive assets and market inefficiencies, with almost €10bn in assets under management in both credit and real estate strategies.

Significance: Irish banks have been deleveraging their balance sheets through the disposal of distressed loan portfolios over the past number of years. These portfolio sales have provided international financial institutions with an opportunity to invest in the Irish economic recovery.

INTEREST OF ALTERNATIVE

FUNDERS IN QUALITY

ASSETS

YORK MAILING GROUP (YMG) Management have bought out the UK market leader in the specialist production of retail flyers, media inserts and quality catalogues. The business has seen revenues grow to more than €136m through acquisitive and organic growth as well as significant investment in new machinery which has added advanced printing capabilities and helped the company win substantial new contracts. The buyout has been backed by Pricoa Capital Group, the international private debt investment business of US-based Pramerica Financial. Bespoke debt capital facilities and follow on funding capabilities will support the ongoing growth of the business.

Significance: The financing solution allows the management team to acquire a significant stake in the business whilst maintaining an appropriate funding structure, and the business is extremely well placed for continued growth.

The UK water utility company has refinanced its existing bank funding in a deal with HSBC

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

14

Q1

20

15

Q2

20

15

Benelux 11.4 6.9 8.1 10.7 9.6 11.5

CEE 12.1 6.3 – 7.3 – 8.4

DACH 9.3 8.7 9.9 9.5 7.7 10.3

France 9.2 9.8 8.7 9.5 9.9 9.4

Nordic 8.9 9.4 8.0 11.0 7.9 9.9

Southern 7.8 7.1 9.8 7.0 7.6 10.8

UK/Eire 9.1 10.4 9.9 11.3 12.0 10.4

Multiples data breakdown:

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

14

Q1

20

15

Q2

20

15

Benelux 11.4 6.9 8.1 10.7 9.6 11.5

CEE 12.1 6.3 – 7.3 – 8.4

DACH 9.3 8.7 9.9 9.5 7.7 10.3

France 9.2 9.8 8.7 9.5 9.9 9.4

Nordic 8.9 9.4 8.0 11.0 7.9 9.9

Southern 7.8 7.1 9.8 7.0 7.6 10.8

UK/Eire 9.1 10.4 9.9 11.3 12.0 10.4

MULTIPLES HEATMAP Q4 2014:

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

14

Q1

20

15

Q2

20

15

Benelux 11.4 6.9 8.1 10.7 9.6 11.5

CEE 12.1 6.3 – 7.3 – 8.4

DACH 9.3 8.7 9.9 9.5 7.7 10.3

France 9.2 9.8 8.7 9.5 9.9 9.4

Nordic 8.9 9.4 8.0 11.0 7.9 9.9

Southern 7.8 7.1 9.8 7.0 7.6 10.8

UK/Eire 9.1 10.4 9.9 11.3 12.0 10.4


After analysing data on some 329 deals across Europe between January 2014 and June 2015, we’ve identified where the highest multiples have been paid across regions and sectors, the direction of those multiples over time, and what trends can be uncovered.As our chart shows, the UK/Eire and Benelux have consistently seen the highest multiples - peaking in Q1 2015 - although the Benelux figure in this quarter was distorted by a significant healthcare transaction. Southern Europe has consistently been trading at low multiples but there was a significant pick up in pricing in Q2 2015 as the market recovered. Nordic region multiples have tracked just behind the UK/Eire market, while France and DACH multiples have remained similar over the period and tracked the Nordic region. Across Europe generally, multiples have steadily picked up - showing an 11% increase during the period with the most dramatic increase in Southern Europe of 38%.

Elsewhere, our analysis showed that certain sectors in certain countries remain particularly competitive on pricing. But the general trend – buoyed by a return to growth across the wider European economy – is undoubtedly upwards, with assets across most sectors becoming more expensive in recent months.

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

14

Q1

20

15

Q2

20

15

Benelux 11.4 6.9 8.1 10.7 9.6 11.5

CEE 12.1 6.3 – 7.3 – 8.4

DACH 9.3 8.7 9.9 9.5 7.7 10.3

France 9.2 9.8 8.7 9.5 9.9 9.4

Nordic 8.9 9.4 8.0 11.0 7.9 9.9

Southern 7.8 7.1 9.8 7.0 7.6 10.8

UK/Eire 9.1 10.4 9.9 11.3 12.0 10.4


Our research with Unquote has unearthed the best value investment opportunities for PE funds across Europe

Multiple opportunities

MULTIPLE OPPORTUNITIES | RAINMAKER




#MultiplesHeatmap


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@CWICF

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