Multiple: European private equity watch, 2014 - Issue 2

Inside the deal

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The Q1 2014 results from Centre for Management Buyout Research (CMBOR) bring some positive news to the PE market, with the level of European buyouts volumes increasing since the previous quarter.

Contributing to this uptick is BC Partners’ successful acquisition of Mergermarket, the UK-based provider of global news, intelligence, analysis and data. This deal is one of the largest completed buyouts in Western Europe this quarter.

Multiple speaks to Hamilton Matthews, CEO of Mergermarket, about this transaction and its approach to partnering with PE.

Q. After eight years of corporate ownership under Pearson, Mergermarket has found a new owner in PE firm BC Partners. Can you tell us about the deal and how it fits into your current strategy?

Broadly, our sale was a typical corporate carve-out. Pearson had decided that their strategy was focused on more pure educational plays. Accordingly, the FT Group, which is owned by Pearson and which we were part of, has been broken up over the past few years. When Pearson appointed a new CEO last year, he encouraged us to find a sensible home. Pearson embarked on the sale process last June, and went to market in September. The whole process moved very swiftly and was completed between Pearson and BC Partners by November 2013.

The buyers in the final round were big buyout firms, along with some bulge-bracket corporates. It’s an interesting point to underline that when the deal is right, the big buyout firms will dip into the mid-market.

Q. What were the main challenges to finding an appropriate buyer?

During the sale, Pearson was understandably and ultimately looking for the best price – that’s the key motivation for virtually all selling parties. Despite this, Pearson was very open and collaborative, and was eager to reach a decision with which Mergermarket’s management team was comfortable.

Both Pearson and Mergermarket agreed that BC Partners was the standout contender in the auction process, primarily because they offered the highest price, but also because of the firm’s complete understanding of our business and the market in which we operate. Early on, BC Partners researched and took an analytical approach to our business. The firm had done its homework, and was not asking the routine questions other bidders were.

Q. During the transaction process, what was the most important factor in ensuring successful completion?

The most important aspect of the sale was putting together a credible and accurate representation of what our business is and does. The idea of selling Mergermarket as a data company was floated, but that is not at the heart of what we do. We are an editorial and media business – so it was essential to represent the business the right way.

For us, having the right support network was crucial. We had a very supportive seller, and a very credible investment bank, JP Morgan Cazenove, which was great at connecting us with potential buyers.

Q. Post-acquisition, what is your focus over the next 12 months?

In the short-term, there are a number of things on our plate. We have put together a value creation road map that will help us focus on five key streams. 

Part of this plan includes operations. We have placed a huge amount of emphasis on financial analysis. We have figured out that our reporting function is so different from what Pearson required.  

Another aspect of what we’re after is EBITDA growth. But we are not necessarily looking for cost-savings. Rather, the emphasis is on figuring out what is core to our business. For instance, Xport Reporter was deemed not to be core, so we closed that business stream down.

At the same time, we are also looking at a handful of bolt-on acquisitions, and we have some really interesting leads. We are seeking out purchases in markets in which we do not currently operate. We are also exploring organic growth options to expand our offerings to segments where we are currently active. These extensions should complement existing products, and help us tighten up our business plan.