M&A Partners FY14 Newsletter
Monday, 28th July 2014
With the Financial year just finished we wanted to update you on our activities during FY14 and our outlook for the year ahead.
Transaction Update
We completed a number of transactions during the year, including:
At Home care acquisition
M&A Partners identified and advised on the successful acquisition of a privately owned At Home care business on behalf of one of Australia’s leading health insurance funds. The At Home sector in Australia is undergoing significant change with the recent changes to government legislation and the introduction of Consumer Directed Care (CDC). In a sector dominated by Not For Profit enterprises, the interest in private sector operators is high among private equity and Family offices.
M&A Partners are now engaged by a private, Melbourne based, Family office to identify acquisition opportunities in the privately owned care sector.
Investment in SalesLink Group by MH Carnegie Opportunities Fund (including Gerry Harvey)
M&A Partners were retained by SalesLink to identify a strategic partner for their business, which could assist the group to expand its investment activities in the FMCG sector. We ran a formal process that resulted in SalesLink selecting MH Carnegie as its preferred investment partner that subsequently acquired a 40% equity stake from management.
Sales Link Australasia (www.saleslinkgroup.com.au) is the leader in Retail Sales Management and conducts national account management, field merchandising and order management for supermarkets, pharmacy, hardware, auto and department stores. They also provide consumer research and Insights that add value to their Sales Partners.
MH Carnegie and SalesLink have subsequently announced their intention to launch a $100m fund to invest specifically in small-medium sized FMCG businesses that can leverage their growth through the SalesLink service offering.
Mark Hardgrave from M&A Partners commented:
Saleslinks expertise is evident in the success of their brand portfolio and their growth. The partnership with MH Carnegie is an exciting development for Saleslink and should lead to greater opportunities for both parties in the Australian FMCG sector.
Modern Baking attracts SalesLink as a strategic investor
M&A Partners was selected by the shareholders of Modern Baking to identify a strategic investor for the business that could assist in the turnaround of the business and accelerate sales growth and NPD in the competitive Australian biscuit market.
Saleslink and current owner Asia Pac, will share the opportunity to expand the business in domestic and export markets and the vision to grow Modern Baking into an even more significant business servicing consumers in Australia and around the world.
Antony Lynch of M&A Partners commented:
“We identified SalesLink as a strategic investor and partner for Modern Baking Group due to their proven ability to help FMCG businesses drive sales volumes and target new product development directly to the consumer. The investment by MH Carnegie in SalesLink Group can only bring further benefits to the overall strategic relationship with Modern Baking.
The SalesLink investment in Modern Baking is the first such venture undertaken since a consortium of investors including Gerry Harvey, John Singleton and MH Carnegie, a Sydney based private equity firm founded by Mark Carnegie, became 40% strategic shareholders in the SalesLink Group.
Advisory role in Pental Ltd – Piggy Back Option Issue
M&A Partners was pleased to advise Pental Ltd (ASX: PTL) in issuing a further loyalty option to those investors that chose to exercise their options early in Pental Ltd. The exercise of the loyalty options raised $5.8m. The capital raised will now be used progressively for the purposes set
out in the prospectus issued in respect of the Piggy Back Options.
Debt arranging role for Large Service Station owner
M&A Partners acted in an advisory and debt-arranging role for a major owner of a portfolio of service stations.
Advisory role for Neta Industries
M&A Partners acted for Neta Industries in the successful sale of its PolyDrain and Low Pol pipe business to Vinidex, one of Australia’s largest pipe manufacturers.
M&A Partners Team Update
Our key focus continues to be the provision of high quality advisory services, centered around debt, equity and strategic M&A advice, for SME businesses in the range of $10m – $200m.
M&A Partners service offering continues to be different from many of the large accounting firms and corporate services divisions of the investment banks, in that we:
- Are transaction orientated and back ourselves to achieve results.
- Have expertise in structuring financial solutions for businesses (debt & equity).
- Have experience in understanding the priorities and challenges faced by SME business owners.
- Have close relationships with capital providers to SME’s from HNW to Family Offices.
- Have relationships with senior bankers for arranging competitive debt funding packages.
- Have relationships with a large number of private equity firms and an understanding of their investment criteria.
- Have the analytical and financial skills to assist businesses and investors in financial and operational due diligence and transaction structuring and negotiations.
Our team this year has been expanded to a total of 5, making us among the largest boutique M&A businesses in Australia.
We are pleased to have Aaron Rezek and Paul Nemets join us over the last six months.
Aaron has joined as an Associate Director.
Aaron was previously at PwC as an Associate Director in its M&A team. Aaron has close to 10 years experience in providing advice to a variety of private companies and private equity on acquisitions and divestments. Major transactions included advice to MBI candidate for Fusion Retail Brands, Quadrant Private Equity on its acquisition of Burson Automotive, News Corporation on the divestment of a media asset located in South Pacific, NCP Printing on its divestment to Bright Print Group, Mirvac on its divestment of Cambridge Management Services to Bright & Duggan, Crescent Capital on its divestment of Simply Squeezed to Frucor Beverages.
Paul has joined as an Analyst.
Paul was previously at Tauro Capital Partners as an Analyst specializing in venture capital, capital raising for high growth companies, crowd funding and strategic advice. Paul recently completed a Bachelor of Engineering (Chemical Engineering) and Commerce (Finance) – Monash University, Melbourne.
FY15 Outlook
As we commence FY15, M&A Partners is currently involved in the following transactions:
- The sale of a major Australian brand in the gardening and water sector
- The raising of capital for a FMCG food and drinks brand seeking to expand its range in the major supermarkets.
- The identification of a strategic investor for a business in the IT recruitment sector.
- Acquisition search for a leading FMCG food business.
- Identification of strategic investor for an Energy deal comparison business.
- Acquisition search for a leading consumer brand in the cleaning products segment.
- Acquisition search in the healthcare sector for a large family office.The FY15 period should be very busy for M&A Partners. We have intentionally scaled up our advisory team to take advantage of the increase in activity around mergers & acquisitions, equity raising and business sales.
The low inflation and interest rate environment has meant that the acquisition of high growth SME businesses at multiples of 4-6x EBITDA, in the range of $5m – $50m, are earnings accretive for many listed companies and attractive for private investors. Major banks are willing to lend up to 2.0 2.5x EBITDA for these types of acquisitions which makes the return on equity capital invested very attractive.
We expect to see an increase in our acquisition search engagements. We have been particularly successful in this type of work and have a proven methodology to be able to identify, approach, and assess up to 50 different target businesses in a few months for a client. This saves clients significant time and cost.
We also expect to see continued activity from private equity both as an investor in the SME sector and seller of legacy fund businesses. Our network of private equity firms and close relationships means we can get an accurate view on value for a client without having to spend considerable time and money going through a formal process.
We would like to extend an invitation for our friends and business associates to visit us at our new offices located at Level 4, 164 Flinders Lane, Melbourne if they’re around the city.
Antony Lynch
Director
0419 919 722
Mark Hardgrave
Director
0477 881 173