Access

Business

Access is a software developer that sells its own range of business application tools and provides associated consultancy to UK headquartered mid-market companies.
The company is well known for market leading applications in finance, HR and payroll, business intelligence, supply chain and warehousing which are deployed in the cloud, in a hosted environment and on-premise.

Established in 1991, Access employs over 450 people and serves a 10,000 -strong customer base including Marks & Spencer, the Bank of England, Topps Tiles, the National Museum of Science and Industry, Birmingham Airport, Eddie Stobart, Leicester Tigers and the BVCA.

The business has grown rapidly in recent years and enjoys revenues of nearly £40 million and EBITDA margins of over 20%. In recent years, Access has won various industry awards including Accountancy Age’s Software package of year and the Sift Media Software Satisfaction award, and has been included in The Sunday Times Buyout Track 100, The Sunday Times Profit Track 100t, and The Sunday Times 100 Best Companies to Work For.

Market

The UK software sector enjoys favorable long-term growth prospects with the supply of business application software and services to the UK mid-market still highly fragmented. Lyceum Capital’s market mapping exercise identified Access UK as a well-positioned and high quality business with good long-term growth prospects.

Strategy

Lyceum Capital invested alongside Access’ existing management and introduced two highly experienced software managers to supplement the MBO team — joining as Executive Chairman and NXD. The business is executing a growth strategy which includes:

• Continuing to develop Access’ market leading product portfolio through in-house development and targeted acquisitions of further software solutions
• Penetrating key vertical industries through organic growth and acquisition
• Investing in the roll-out of Access’ hosted, cloud and SaaS capabilities

Developments

Below are links to interesting news items on Access:


• Lyceum invests £50million in software company (Financial Times)
• Fast growing profits recognised (Sunday Times Buyout Track 100)
• Access acquires thankQ to join up finance and fundraising software (Civil Society)

Adapt

Business

Established in 2001, Adapt is a leading UK Managed Hosting Provider, delivering enterprise-class cloud, infrastructure management, network and data centre services to a wide range of mid-market clients that operate mission critical applications including Steinhoff Retail, PKR, Cubic Transportation, LOVEFiLM and the National Trust.

Adapt’s services increase business agility, enabling change and innovation with an integrated offering that spans the entire infrastructure. The company’s flagship award-winning enterprise cloud platform (eVDC) underpins the delivery of affordable, scalable virtual and cloud-based services that can be simply defined by number of users.

The business employs 60 people at its central London headquarters, 120 at its operational centre of excellence in Cardiff and 20 in Leeds. At acquisition, Adapt’s EBITDA was £4 million on a turnover of £35 million.

Market

The UK IT services market as a whole is forecast to grow at a compound annual rate of four per cent over the next five years whilst Adapt’s core addressable market for managed hosting will expand at approximately 15 per cent per annum during the same period. The rapid growth of the managed hosting and cloud services segment is being driven by demand from mid-market businesses looking to drive infrastructure transformation to deliver higher business value, reduce infrastructure costs and remove complexity by outsourcing management of critical data, infrastructure and applications.

Strategy

Lyceum Capital led the institutional buyout of Adapt and is implementing an organic and acquisitive growth strategy which includes:

• Further penetration of Adapt’s existing client base
• Developing services which provide customers with additional efficiencies
• Further enhancing channel partner relationships
• Acquiring complementary businesses which extend Adapt’s service portfolio and geographical reach

Developments

Below are links to interesting news items on Adapt:


• Acquisition of Sleek (Reuters)
• Acquisition of Elinia (The Register)
• Lyceum’s investment (datacentres.com)
• Lyceum’s investment (datacentres.com)

Carewatch

Business

Founded in 1993, Carewatch is the second largest national provider of home-based care and support. It provides services to both local authority-funded recipients and private clients, enabling the elderly and people with learning disabilities or health requirements to remain independent in their own homes.

At acquisition, its branches and franchisees provided over 170,000 hours of care per week. The business now employs over 3,000 people across 146 branches, delivering 200,000 hours of care and support to some 24,000 clients across the UK.

Market

Using our experience in the home health and social care sectors from our successful prior investment, we worked to identify new opportunities in a sector which is highly fragmented and has strong underlying growth prospects driven by demographics and a growing private-pay segment.

Strategy

The strong market position of Carewatch and our knowledge of the sector made Carewatch a clear acquisition target. We approached the owners, Nestor Healthcare, directly, completing the acquisition in October 2008.

In partnership with new management, our strategy is to grow Carewatch into a leading care provider in the UK by:

• Investing in company infrastructure and operations to drive up care standards and prime it for accelerated growth
• Increasing investment in technology, to improve margins and increase support to franchisees
• Extending services provided into mental health, live in care and the private pay market
• Extending the geographical presence by increasing the size of the network
• Accelerating growth through add-on acquisitions — since 2008 Carewatch has made 20 acquisitions
• Increasing control over the network and density of coverage through acquisition

Developments

Below are links to interesting news items on Carewatch:


• Appointment of Andy Stevens as Chief Finance Officer (Carehome Management Magazine)
• Three franchise businesses acquired (“unquote)
• Acquisition of Always There Homecare and Four Seasons Home Care (Healthcare Investor)

Clearswift

Business

Clearswift provides market-leading security software products to companies that view the security of their IP and communications as a strategic priority. Clearswift’s integrated products manage inbound threats, data loss prevention, web access policies and compliance across both web and email communications.

Headquartered in Theale, near Reading, with satellite operations in Germany, Spain, Japan, the US, Australia and Holland, the business employs around 160 people with almost two thirds based in the UK.

The company boasts a diverse and international base of high profile customers in around 50 countries and has a strong footprint in the defence, government and financial sectors. Disclosed customers include BAE Systems, Hitachi Solutions, Anpost, Warwick District Council, T-Mobile and Australia Postal Service.

Market

Clearswift operates in the £2.6 billion e-mail and web gateway subsector of the larger security software market, which is expected to continue growing strongly with demand for its software driven by recent high profile security breaches, the increasing popularity of social media and the growing demands of compliance with new legislation and regulation.

Strategy

The business is well placed to capitalise on opportunities arising from this growing but still fragmented market. Its strategy includes:

• Driving organic sales through focused sales and marketing
• Bolstering technical functionality through further product development and targeted acquisitions
• Strengthening sector and geographic penetration both organically and through targetted acquisitions in chosen verticals

Developments

Below are links to interesting news items on Clearswift:


• Lyceum’s acquisition (Microscope)
• Clearswift’s plans for growth (Info Security magazine)
• The benefits of Lyceum’s acquisition (ARN)

Compact Media

Business

Compact is an independent rights administrator and distributor of royalties for TV, film and music, providing a broad range of services which maximise income for intellectual property rights owners.

The firm represents over 300 companies including BBC Worldwide, ITV Global Entertainment, Channel 4 and Discovery Communications and by November 2010 had successfully claimed and distributed over €125 million in royalties on behalf of its worldwide clients.

Market

Demand for Compact’s services is growing as the ability to recoup royalties is vital to the financial wellbeing of media content owners, while evolving technology is making the process of identifying and collecting increasingly complex.

Lyceum Capital’s detailed research into the media sector identified Compact Media Group as an innovative, growing firm operating in a complex and increasingly important area of the industry.

Strategy

To continue building Compact into a market-leading service provider to media owners rights administrator our strategy is focused on:

• Developing new methodologies and service innovations which maximise and protect revenues whilst reducing the administrative burden on Compact’s clients
• Further enhancing a highly experienced management team.
• Deepening and securing new client relationships by targeting opportunities to prove multi-jurisdiction services across a growing number of international markets
• Expanding through the acquisition of businesses which increase Compact’s reach and further broaden its service portfolio

Developments

Below are links to interesting news items on Compact:


• Acquisition of Rights.tv (Realscreen.com)

Curocare

Business

CuroCare provides residential care for adults with learning disabilities, mental health needs and challenging behaviours in London and the South East of England.

Its proposition focuses on supplying specialist high acuity services in close proximity to supported individuals’ families and friends. The company’s aim is to help individuals to fully participate in and be part of their local communities.

CuroCare has developed 10 purpose-built care units with a total of 68 beds across seven company-owned sites since its inception in 2007. The business serves a number of local authorities and the NHS.

Market

The overall pool of potential service users in London and the Home Counties for CuroCare’s offering is anticipated to be a continued growth in demand for these high acuity services, providing funding continues to be allocated to care for patients with profound, severe and moderate needs respectively.

Wider market growth is driven by GPs more readily recognising people with learning disabilities and a political imperative for local authorities to use the independent sector for high needs residential support to deliver the best long-term outcomes for service users.

Strategy

Having invested in May 2013, Lyceum Capital and CuroCare’s management team are leading an organic and acquisitive growth strategy which includes:

• Creating a care pathway that addresses the changing needs of individuals over time, from requiring acute hospital care, to residential support and through to assisted living
• Acquiring and developing a number of new locations where demand for high acuity services is particularly strong in London and the Home Counties
• Extending existing sites to create additional beds and facilities to support local communities
• Exploring potential add-on acquisitions which will diversify services and build scale in the business

EAT.

Business

Founded in 1996 by Niall and Faith MacArthur, EAT. is a leading business in the £3 billion specialist food and coffee ‘to go’ market. At acquisition it had 105 stores across the UK selling a wide range of soups, salads, sushi, panini, sandwiches, baked goods and coffee, all freshly prepared by EAT. each day.

Market

The sub-£10 meal category of the food and drink sector has proven resilient throughout the downturn and EAT. has performed robustly, with sales in the last 12 months of £94 million, up from £68 million in 2008

Strategy

The market overall is seeing a gradual recovery in consumer confidence and a continuing shift to healthy, branded, eating out and food-to-go. To capitalise on this trend, Lyceum invested alongside the founders and management to implement a growth strategy that includes:

• Accelerating a significant store roll-out programme which could support over 300 branches and a brand development programme
• Further developing the business and brand in the UK and internationally by investing in its leading product ranges, shops and people
• Continuing to provide consumers with high quality products, exceptional service and great value to further build on its loyal customer base.

Developments

Below are links to interesting news items on EAT. :


• Panini tax debate (The Independent)
• Sales success (thisismoney.co.uk)
• Lyceum’s investment (Financial Times)

Isotrak

Business

Isotrak provides vehicle tracking and fleet management software to enable businesses that operate large fleets of heavy goods vehicles (HGVs) and light commercial vehicles (LCVs) to reduce costs, improve operational efficiency, lessen their environmental impact and improve customer service.

The company tailors its modular, cloud-based software platform to meet the complex fleet management requirements of its customers, which include UK blue chip retailers, leading third party logistics providers and other corporates.

Its products, which are hardware agnostic, are delivered on a managed service basis and provide customers with real time visibility of the performance, location, security and safety of their own fleets and those of their third party suppliers.

Market

Vehicle tracking and fleet management software is now viewed as business-critical by major UK fleet operators in addressing regulatory pressures, driving efficiency savings and reducing their impact on the environment.

The UK vehicle tracking and fleet management software market is one of the most advanced in the world and its leading products are increasingly in demand overseas, particularly in North America where routes are longer, sites are more disparate and the growth of home delivery is creating a greater need for fleet monitoring and compliance. The North American complex fleet management software market is estimated to be worth £12.3bn.

Strategy

Having invested in August 2013, Lyceum Capital will work with Isotrak’s experienced management team to deliver an organic growth strategy which comprises:

• Advancing the business’s UK position by targeting growth in its existing market segments, as well as new vertical sectors and delivery categories
• Further accelerating the development of the company’s advanced product suite to ensure it remains ahead of its global competitors
• Targeting rapid organic growth in the North American complex fleet management segment, following recent contract wins with major retailers in the region

Bellrock

Business

Bellrock supplies a range of procurement and supply chain solutions under long-term contracts to a blue chip client base across the healthcare, education, corporate and retail sectors.

Bellrock uses its own technology platform to plan, report and analyse trends to help its customers operate and manage their estates more efficiently.

The delivery of this offering is coordinated by Bellrock and outsourced to the accredited suppliers, both local and national, enabling the business to provide and manage an independent, high quality and fully tailored service which represents the best value to individual clients with large, complex portfolios.

Market

The UK facilities management sector is expected to grow by some four per cent annually over the coming years.

Faster growth is targeted by Bellrock from customers operating complex and multi-site portfolios which are seeking to consolidate their outsourced facilities management services through a single managing agent.

Growth will be fuelled by regulatory pressure on customers in areas such as energy efficiency and reporting, together with the better use of technology to extend asset life, improve reporting and benchmarking, and reduce costs across estates.

Strategy

Having invested in August 2013, Lyceum Capital and Bellrock’s new management team are leading an organic and acquisitive growth strategy which includes:


• Optimising existing resources and investing in Bellrock’s marketing and sales activities
• Targeting growth segments including the education and energy services market
• Enhancing further the company’s proprietary technology platform
• Add-on acquisitions to diversify services and build scale

Synexus

Business

Synexus is the largest trials management and patient recruitment organisation in Europe. It carries out clinical trials for pharmaceutical companies, managing patients throughout later stage clinical trials in primary and secondary care, and in disease prevention. Drugs at this stage of development have already completed several trials on humans. At acquisition it operated from 14 sites across six countries and today it has 24 sites in 8 countries including South Africa, India, Poland, Hungary and Bulgaria.

Market

Lyceum Capital’s market-mapping highlighted the attractiveness of the pharmaceutical research support services sector for investment. Regulatory drivers and a focus on efficiency throughout the drug development process has created demand for cost-effective trials, capable of quickly reaching out to many patients and delivering consistent, high-quality clinical outcomes.

Whilst Synexus had a strong operational reputation, the business lacked scale and needed capital to grow faster.

Strategy

In order to build a global business that is the clear market leader, our strategy has focused on:

• Investing in management resources, infrastructure and IT to increase scaleability and improve operational performance
• Expand geographically
• Accelerate sales growth by entering new therapy areas
• Leveraging its increased scale, expertise and geographical reach to deepen relationships with customers on global and local levels
• Completing a number of add-on acquisitions and developing a detailed programme for further, focused consolidation

Developments

Below are links to interesting news items on Synexus:


• Expanding in the US (outsourcing-pharma.com)
• Acquisition of ClinPharm (inpharm.com)

UKDN Waterflow

Business

UKDN Waterflow is a leading provider of water and wastewater infrastructure services to UK utilities, rail, insurers and commercial organisations. The company was formed in 2003 through the merger of five regional drainage businesses to create one of the first national players in the space. In 2010 the management team partnered with Lyceum to provide capital and strategic expertise to help grow the business in a fast changing market. Since Lyceums investment the group has made and integrated two acquisitions, extending the geographic reach and creating an extensive portfolio of services.

Market

The UK drainage industry is a highly fragmented market which is increasingly consolidating as businesses seek to outsource their drainage requirements to a single provider capable of delivering a broad range of services to the highest standard.

This is stimulating significant merger and acquisition activity in the sector as smaller firms are targeted by larger companies looking to gain the scale and breadth of services needed to create sustainable success.

Strategy

To continue to develop and grow the business our strategy has focused on:

• Capitalising on UKDN Waterflow’s client relationships, service levels and systems to grow market share
• Extending the technical services activities from the South to the Midlands and North
• Expanding the group’s emergency response capability
• Investing in business development that is focused on three major verticals, WASC, Commercial an Industrial and Transport

Developments

Below are links to interesting news items on UKDN Waterflow:


• Drainage firm sees turnover double to £50m
• UKDN Waterflow invests in ongoing expansion
• Get in, Make good, get out

Asquith Nurseries

Business

Asquith Nurseries (part of the Asquith Court Group) was a leading owner and operator of children’s nurseries and pre-schools. The company was one of the best in this space with a wide graphical spread of 65 sites offering 3,000 nursery places and high quality operations underpinned by a strong freehold asset base.

Market

Lyceum Capital was one of the first investors to identify the long-term growth potential of the UK private education sector. Our review of the market showed that the private day nursery sector was an attractive subsector with long-term underlying growth prospects driven by changing demographics and trends.

Strategy

Our strategy was to build the best and most profitable private day nursery group in the UK and secure management’s succession planning through:

• Investing in company infrastructure to create a scalable business
• Investing in nursery sites to develop best-in-class facilities
• Developing new sales channels (e.g. PFI partnerships)
• Accelerating growth through add-on acquisitions and new sites

Outcomes

We separated Asquith Nurseries and Asquith Schools, establishing independent management for both. Asquith Nurseries invested more than £8 million in its sites and infrastructure, completed five add-on acquisitions, increased the number of nursery sites to 115 and doubled the number of children in its care. Profits increased from £3.8 million in 2001 to £8.1 million at the time we sold the business to Dawnay, Day and Swordfish Investments in June 2007.

Asquith Schools

Business

Asquith Schools (part of the Asquith Court Group) was one of the UK’s largest single private day schools group consisting of nine schools, educating around 2,500 pupils aged between three and 16 years. The business’ strength lay in its spread of schools, the quality of operations and in its asset base and one of the best management teams in the sector.

Market

We were one of the first investors to perceive the long-term growth potential of the UK private education sector. Our review of the market showed that the private day school sector was attractive as there were clear opportunities to enhance operational efficiencies, further improve facility standards and acquire quality add-on assets to build scale and reach.

Strategy

Lyceum Capital set out to build the largest and most profitable private education group in the UK and secure management’s succession planning through:

• Consolidating and professionalising operations
• Investing in schools to deliver better service and improved educational standards to drive better exam results and higher profitability
• Building scale through targeted add-on acquisitions

Outcomes

We separated Asquith Schools and Asquith Nurseries, establishing independent management for both. We identified and completed two add-on acquisitions for the schools division and invested more than £2.5 million in the sites and the business’s infrastructure. The company increased the number of school sites from nine to 19, grew pupil numbers to 4,300 and staff to over 600. EBITDA grew from £2.7m in 2001 to £5.3m at the time of sale in November 2004 to Cognita Schools, a schools group led by Chris Woodhead, former Chief Inspector of Schools in the UK.

Clinovia

Business

Clinovia was one of the leading independent companies providing home care for patients with long-term medical conditions. It supported Strategic Health Authorities, Primary Care Trusts and NHS Foundation Hospitals in a broad range of therapy areas, including the delivery of pharmaceuticals to patients at home.

Market

From our research in the healthcare sector we identified home healthcare services as a growing and under-served market in the UK and within the NHS. The market for such services was expected to grow as the NHS outsourced more healthcare and increased investment in community and home-based services.

Strategy

We approached the owners, LVL Medical, directly, and completed the acquisition for £33.4 million in September 2003. Our strategy was to rejuvenate the business with new management and capital to be a market leader and strategic target through:

• Investing in company infrastructure and governance
• Improving performance operationally and through extending the service offering
• Entering complementary new markets organically and through acquisition
• Extending services to higher value, more complex care and to social care

Outcomes

Lyceum Capital transformed the operations of the group, improving supplier contracts, banking facilities, procurement practices and governance. We built an experienced and ambitious management team with an industry heavyweight Chairman and established a clinical governance board. By investing significantly in infrastructure, resources were focused on service delivery and building new growth businesses in areas such as social care.

Over three years Clinovia doubled the number of employees, identified and completed five add-on acquisitions. EBITDA grew from £4.2 million in 2003 to £8.1 million at the time of sale in December 2006 to BUPA.

Coperion

Business

Coperion was formed in 2000 by the merger of three complementary businesses (Werner & Pfleiderer GmbH, Waeschle GmbH and Buss AG) which provided compounding and extrusion systems and services to the plastics and chemicals industries. All three businesses had a history of underperformance, a lack of strategic direction and weak financial management.

Market

Our research predicted long-term growth in advanced materials and plastics compounds, with rising demand from existing and new customers for sophisticated systems, aftersales and services.

Strategy

Following the merger our strategy was to create the global market leader with long term, high quality earnings through:

• Investing in operational improvements and consolidation to drive performance, company investment and net cash flow
• Developing an aftersales and service division to enhance income and earnings growth by dominating the higher-margin spares and other aftermarket services where traditionally Coperion had low market shares
• Entering new markets organically and through acquisition in central Europe, Brazil, Russia, India and China

Outcomes

Coperion invested more than €20 million in streamlining its infrastructure and operations. The group completed three further add-on acquisitions, built its international network of aftersales and service operations by opening 30 new service sites worldwide and the service division grew to be the largest contributor to group profits. The business entered several complementary new product and service markets, sales had grown to more than €500 million and EBITDA had more than doubled to over €50 million. Coperion was acquired by Deutsche Beteiligungs AG in July 2007. The business remains the clear global market leader in compounding and extrusion systems and services.

Fox IT

Business

Fox IT was a globally respected IT service management and governance company, providing consultancy and education in IT mainly to large corporates. Its products focused on helping companies match their IT operations to their business strategy and ensure good IT governance and performance.

Market

Our review of the IT Services market in 1999 showed it to be fragmented and expanding with specific subsectors performing particularly strongly.

Strategy

We created Fox IT through a series of mergers beginning in 2000 with two complementary service providers: Ultracomp and SMP. After the IT services recession in 2001-2002, we separated out the company’s managed services division and merged it with a competitor, Digica to form a larger business with a number of blue chip clients.

Our strategy was to build a business with a leading presence in specialist IT service management by:

• Leveraging the blue chip customer base
• Refining the business model, with partners taking peripheral business for commission
• Making customer relationships more enduring through software products and proprietary IPR

Outcomes

The managed services division was merged with a larger competitor, Digica, and subsequentally sold to Computacenter plc.
The remaining consulting and training division established itself as a company capable of assisting organisations implement IT Service Management quickly, effectively and at a lower cost. In 2010 Fox IT was sold to 365 iT plc, a business which designs and delivers information and communications technology (ICT) services. The acquisition created a significant new service management company with Fox IT’s specialism in ITSM and ITIL services complementing 365 iT’s existing portfolio of managed services and IT security solutions.

Leasedrive VELO

Business

Velo was a leading provider of fleet management services to UK mid-market customers. In 2003 the business had a turnover of £24 million and a fleet of around 11,500 cars.

Market

We identified outsourced fleet management as a long-term growth market driven by business’ demand to reduce risk, improve efficiencies and drive productivity in all areas of operations, particularly their vehicle fleet.

Strategy

We were approached by the managers of VELO to invest in a management buy-out of the business, providing both capital and expertise. Our strategy was to build a larger provider of service-led fleet management services through:

• Investing in company infrastructure for scaleability and best-in-class customer reporting
• Extending the product and service offerings
• Consolidating the market through targeted add-on acquisitions

Outcomes

After Lyceum Capital invested in the business, its operations, service and product offerings, Velo was able to attract more blue chip customers. Velo merged with Leasedrive in late 2006. Profits more than tripled from £1.2 million in 2003 to £5.3 million in 2007 and the number of vehicles under management grew to more than 17,500. Leasedrive Velo was sold to Lloyds Development Capital in September 2008.

M&C; Energy

Business

M&C; Energy Group advises over 3,500 business users on energy usage and environmental impact, providing a comprehensive range of services through an international network of offices which spans 18 countries in Europe and the Far East.

The business is an established global player in cost analysis, carbon management, energy procurement, bill auditing, energy price risk management and carbon optimisation.

M&C; manages in excess of £6.25 billion of energy consumption each year for 3,500 of the world’s largest energy users across 20 offices in 18 countries.

Market

This sector has excellent long-term growth prospects as the increasing complexity and volatility of regulated and deregulated global energy markets is driving demand for consultancy services which ensure efficiencies and compliance across different territories.

Our Market Mapping exercise for the Energy, Environmental and Cleantech sectors identified McKinnon & Clarke (M&C;) as an attractive and scalable platform investment opportunity in the fragmented and rapidly expanding area of energy analysis, procurement, compliance and management.

Strategy

M&C; is an ideal platform for Lyceum Capital’s proven investment model as it boasts an unparalleled reputation, broad service offering, international reach, established management team and strong, visible revenue streams.

Following our acquisition of M&C; in December 2009 we have implemented a strategy to develop the business into a robust, international market leader capable of dominating the energy consultancy market by:

• Further strengthening M&C;’s infrastructure with a rigorous programme of operational enhancement
• Introducing new operational and strategic expertise to the business’ board
• Capturing significant new organic growth opportunities within existing services and territories as well as developing new products and expanding its global presence
• Implementing a focused consolidation programme which targets a pool of strategically aligned acquisition targets which complement M&C;’s service offering and geographical coverage, since December 2009, five acquisitions have been completed.

Developments

Below are links to interesting news items on M&C;:


• Acquisition of Coleman Hines (BBC.co.uk)
• Fast growing profits recognised (Sunday Times Fast Track 2012 Buyout Track 100)
• Lyceum invests in M&C; (Financial Times)

National Britannia

Business

National Britannia Group (NBG) was a software-enabled risk management consultancy and compliance services firm supporting corporate and public sector customers in safety, health and environment. The business offered services in three divisions: inspection & testing; information services; compliance & consulting.

Market

With the Safety, Health & Environmental sector growing at 14 per cent a year, driven by legislation and regulation, Lyceum Capital targeted compliance and risk management providers operating in this highly fragmented market.

Strategy

Through in-depth industry research we identified NBG as a key industry player well positioned to capitalise on positive market dynamics and generate significant further growth through bolt-on acquisitions to extend services and reach. Our understanding of the market helped us build a good relationship with NBG’s owner and management and, after opening a dialogue with the firm, we developed an appropriate deal structure which enabled founders and managers to make a significant re-investment.

Lyceum Capital acquired the firm for £25 million in 2005 and implemented a strategy to build a leading and highly profitable group through:

• Investing in company infrastructure, marketing and IT systems to support customer service and retention levels
• Building on NBG’s service delivery and reputation to acquire more blue-chip customers
• Accelerating sales growth through effective cross-selling
• Extending the service offering through add-on acquisitions

Outcomes

In less than three years, NBG invested significantly in the infrastructure, management and systems of its business. The divisional structure was streamlined to drive cross-selling, employee numbers grew from 270 to 770 and eight add-on acquisitions were completed to broaden the service offering. Sales grew 81 per cent to £49 million and EBITDA rose from £3.1 million to £8.6 million. Connaught plc acquired NBG in October 2007.

Southern Cross

Business

Southern Cross (SX) was a leading privately-owned participant in the UK residential care market. The company provided services in senior living and elderly rehabilitation.

Market

From our research in Healthcare, we identified the UK elderly care market as a consolidating sector underpinned by demographic trends. The sector was populated with smaller companies unable to access capital for growth.

Strategy

We built a rapport with the owners and management of the company, completing the acquisition in 2002.

Our strategy focused on building a well capitalised broader based residential care group with significant sustainable growth opportunities through:

• Investing in company infrastructure for scaleability and depth of management, including substantial investment in IT and staff resourcing
• Improving training, customer service levels and medical and care standards
• Further meeting customer needs by entering complementary new markets, including mental health and higher acuity elderly care
• Accelerating growth through selective new site openings and add-on acquisitions whilst maintaining conservative levels of financial and lease debts

Outcomes

Between 2002 and 2004 we invested in the group’s infrastructure, including IT, Board and second tier management, best-in-class medical and care standards and staff training. To further meet customer needs, SX entered the higher value PLD sector, caring for patients with acute psychiatric problems, brain injuries and learning disabilities, acquiring two companies in the space and subsequently growing to be the UK’s fourth largest PLD operator. We increased the number of employees to 8,500, expanded the number of facilities from 141 to 160, developed a pipeline of a further 1000 beds and initiated selective discussions with further add-on acquisition targets.

Throughout the period of our ownership it was our policy that SX maintain lower levels of financial and lease debts than other large care home groups. As such, a significant number of valuable freehold properties were retained on the balance sheet and contributed almost half of group profitabilty with high levels of rental cover maintained on leasehold sites. SX was acquired by Blackstone in September 2004 with substantial freehold property backing and low levels of debt. It was subsequently listed on the London Stock Exchange in July 2006, valued at £425 million.

SPI

Business

SPI was an independent operator that installed and maintained heating and electrical systems for social housing. A market leader in the West Midlands, one of the UK’s larger social housing markets, SPI had over 450 employees and revenue of over £60 million.

Market

In partnership with a highly experienced industry CEO, Lyceum Capital researched the social housing services sector which was seeing long-term growth supported by significant state investment under the UK Government’s “Decent Homes” initiative which ran through to 2010.

Strategy

Having identified SPI as a high-quality platform in the sector, we approached the family owners directly and developed a relationship built on trust, on our knowledge of the sector and on our proposals for the strategic development of the group.

This strategy focused on:

• Securing the family owners’ succession plan
• Investing in company infrastructure and operational improvement
• Deepening relations with existing customers and securing longer-term service contracts
• Extending the range of services and the group’s geographical reach organically and through acquisition
• Building a long-term secure multi-year order book

Outcomes

Following the acquisition in late 2006, we invested more than £2.5 million in infrastructure and operational improvements, transforming SPI’s IT, procurement and contract management systems. SPI extended its geographical reach from the West Midlands into Wales and SE England and completed the acquisition of Octopus Electrical Limited in November 2007. At the time of sale to npower plc (UK subsidiary of RWE AG) in January 2009, the contracted order book had grown from £65 million at acquisition to £116 million with contracts extending out to 2014, and EBITDA had grown in two years from £5.3 million to £7.2 million.