Last year proved tougher for UK dealmakers than 2021, when records were set as markets bounced back from the pandemic. Rising inflation and soaring interest rates saw overall UK deal value decline by more than 30% in 2022, while increasingly risk-averse M&A investors paused to assess the fall-out from macroeconomic volatility.
Despite the headwinds buffeting dealmaking, however, M&A has remained a strategic imperative for certain companies, which have continued to execute deals against a challenging backdrop.
In this annual review of the most acquisitive companies in the UK in 2022, Corporate Financier ranks the busiest players in M&A markets using Experian data, and explores the drivers behind their M&A strategies.
Private equity-backed businesses are prominent this year – seven out of the top 10 have PE backers – as they execute buy-and-build strategies in industries identified as ripe for consolidation.
Veterinary sector consolidation plays have continued apace, with EQT- and Silverlake-backed Independent Vetcare and CVC Capital Partners-backed Medivet both ranking in this year’s list.
In financial services, TA Associates has supported wealth manager Fairstone’s acquisition strategy, while childcare group Kids Planet Day Nurseries and testing and inspections business Phenna Group have previously counted on the backing of the Business Growth Fund and Oakley Capital respectively. Independent power producer Conrad Energy (backed by I Squared Capital), insurance broker PIB Group (backed by Carlyle and Apax), and Oaktree Capital portfolio company RedCat Pubs, also have private equity behind them.
Other businesses in the 2022 ranking – including environmental consultancy RSK Group and another insurance broker, Aston Lark – have both previously taken on private equity investment.
Listed software-as-a-service compliance and assurance business Marlowe also makes the Top 10, as does B2B communication and cloud services provider Babble Group.
1
Independent Vetcare
95 deals in 2022
Bristol-based pet care group Independent Vetcare (IVC) made 95 acquisitions in 2022, some subject to CMA approval, as it continued to expand by consolidating small, independent vet clinics under its umbrella.
The business has been backed by a number of private equity investors over the years; August Equity started up the platform in 2011, with the acquisition of three clinics in Bath, Bristol and Hertfordshire, growing the group to more than 100 sites before selling on to Summit Partners in 2014, which then exited to Swedish-based firm EQT in 2016.
Under EQT’s ownership, IVC merged with Swedish counterpart Evidensia in 2017, and in 2021 Silver Lake and Nestlé led a €3.5bn investment in the company, valuing the veterinary platform at €12.3bn. EQT remained invested and retained its position as the company’s largest shareholder. IVC currently operates a portfolio of around 2,500 practices in 20 countries.
In October 2022, acting CEO Simon Smith took over the role on a fulltime basis from predecessor Steve Clarke, with acquisitions staying at the centre of its expansion plans.
The fragmented veterinary sector has offered investors a compelling consolidation play, with smaller vets attracted to a parent company that has the scale to provide marketing and back-office support, plus more purchasing power when buying medicines and equipment.
IVC has used BDO for buy-side advice on almost all of its acquisitions, and Hazlewoods has also been called in to advise on some deals.
2
RSK Group
22 deals in 2022
Environmental consultancy RSK Group was the second-most acquisitive UK company in 2022, expanding its reach with a total of 22 deals.
M&A has been a key lever for RSK’s development. “RSK’s future growth strategy is rooted in global acquisitions, which add to a group of like-minded businesses, expanding our client base, introducing new skills, or taking us into a new geography,” RSK head of M&A Rob Winkler says. “This is crucial because, when we introduce a business to the group, we connect them to clients and resources found across existing businesses. It is this that drives organic growth.”
In the Australian market, the Cheshire-based company acquired four companies within the space of 12 months last year. In France, RSK acquired multidisciplinary consultancy ADEV Environmental.
In the UK, the business’s acquisition of Welsh counterpart Spencer Group deepened RSK’s expertise in environmental management services, landscaping, groundworks, site clearance, recycling and forestry work, while the acquisition of Singleton Clamp & Partners broadened capability in transport planning and infrastructure design.
Led by CEO Alan Ryder, RSK has invested in more than 175 companies and expanded its staff count to 10,000. The business said it was on track to post turnover in excess of £800m in 2022, more than double the previous year.
Cortus Advisory and Dow Schofield Watts have been buy-side advisers on the majority of its deals.
3
Kids Planet Day Nurseries
19 deals in 2022
Since launching in 2008, Kids Planet Day Nurseries has expanded its portfolio to include more than 140 nursery settings across the UK. Led by CEO Clare Roberts, the Cheshire-based award-winning nursery group received backing from the Business Growth Fund in 2016 and has emerged as one of the leading players in the consolidation of the nursery sector.
Rising costs and wage inflation have made scale essential in this sector, as operators move to keep a lid on operational costs and leverage back-office resource to the maximum.
This has seen Kids Planet Day Nurseries land 19 deals in 2022, more than any other year going back to 2019. The number of sites in the portfolio has almost trebled from 2021 levels, with EBITDA for the year to the end of March 2022 almost trebling from the previous year to £12.5m.
As cost-of-living pressures have intensified, consolidation has become even more pressing and the group’s acquisition pace has shown little sign of slowing down, with the business recently announcing the acquisition of Sunbeams – a group running four nurseries – in January 2023, and Willow Brooke – two nurseries – in February.
Altius has been a regular presence on the sell side in a number of Kids Planet deals, with Redwoods Dowling Kerr, Christie & Co and Robson Laidler also featuring.
4
PIB Group
14 deals in 2022
Private equity backing has seen specialist insurance broker PIB Group successfully expand through 14 acquisitions in 2022, and its most recent set of accounts shows adjusted EBITDA growing by 78%.
Led by CEO Brendan McManus, PIB secured backing from the Carlyle Group when launching in 2015; Apax Partners acquired a majority stake at the beginning of 2021, while Carlyle reinvested as a minority shareholder.
With private equity capital behind it, the company has grown rapidly and developed into a diversified insurance consolidator covering specialist commercial lines and non-standard personal lines, with expertise across both direct and B2B distribution through its broking, underwriting and network divisions. Since its launch, the London-headquartered insurance group has expanded into Ireland, Germany, Poland, India and Germany.
Mazars and Stifel have advised PIB on acquisitions.
5
Aston Lark
12 deals in 2022
After expanding rapidly under the ownership of UK buy-out house Bowmark Capital and then Goldman Sachs Asset Management, specialist insurance broker Aston Lark completed a successful sale to international insurance broking group Howden in 2021.
Acquisition has been a key lever for Aston Lark’s growth trajectory. From 2015 to 2021, during the hold periods of Bowmark Capital and Goldman Sachs, the company made 50 bolt-on acquisitions, grew staff count eight-fold to 1,600, and went from placing £100m of premiums to £1bn. M&A has remained central to its strategy, with the company landing 12 deals in 2022.
“Most high-quality insurance brokers enjoy client retention rates in excess of 90%. As such, in order to grow rapidly, acquisition of insurance brokers is often a much quicker route to growth than purely relying on organic client by client wins,” Aston Lark CEO Peter Blanc says. “The brokers that we buy benefit from our increased scale and global placement capability and we, in turn, benefit from bringing new talent into the group and typically we target brokers with a specialism or a niche which we are keen to develop.”
Despite macroeconomic headwinds, the business has sustained its deal activity over the past 12 months, working through a strong pipeline of opportunities built up in the lockdown periods as well as a steady follow of interest from prospective targets.
“At the start of the COVID-19 outbreak, we had various deals on the go and we then had several other brokers contact us wanting to join forces,” Blanc says. “We decided, therefore, to double down despite the volatility of the market and we took on a whole team of corporate finance experts to help with the deal execution and, most importantly, we also expanded our integration team so that after acquiring businesses we were able to maximise the advantages to make sure that all of the integrations went smoothly.”
Hazlewoods has been the go-to adviser for Aston Lark on the majority of its deals.
6
Babble Cloud
10 deals in 2022
Backed by LDC in 2017 and then Graphite Capital at the end of 2020, SME-focused communications and cyber security company Babble Cloud, led by chief executive Matthew Parker, has been an active acquirer in its market.
During LDC’s hold Babble Cloud – which provides small and medium-sized businesses with hosted telephony, communications, cloud contact centres, mobile and enterprise connectivity – grew turnover by 230%, with acquisitions a key strand of the company’s growth strategy.
Under Graphite Capital’s ownership, the company has continued to pursue deals, landing 10 acquisitions in 2022. Recent deals include the company’s purchase of mobile services reseller Vivio – its largest acquisition to date, which significantly increases the Babble mobile offering – and activereach, a deal that expands Babble’s cyber security capability.
Babble turns to K3 Capital Group or James Cowper Kreston for buy-side advice on its acquisitions.
6
Phenna Group
10 deals in 2022
Phenna Group, the testing, inspection and certification (TIC) business, executed 10 deals in 2022 and has established itself as one of the main consolidation platforms in the TICC space – a market that is growing rapidly and has also fragmented, with a long tail of companies with less than 100 employees. This has seen the industry emerge as a popular play for private equity investors who see the opportunity to use their financial resources to finance buy-and-build strategies in the market.
Formed in 2018, Phenna Group is based in Nottingham and has harnessed private equity backing to expand rapidly through acquisition, building a diversified TIC platform that covers the industrial manufacturing, built environment, construction and property markets.
Inflexion Private Equity backed the company in 2021 with a minority investment and supported 23 acquisitions in six countries as Phenna Group doubled EBITDA and tripled headcount. At the end of 2022 Inflexion realised its investment with a sale to Oakley Capital that valued Phenna at more than £1bn.
Led by CEO Paul Barry, Phenna’s acquisition strategy has focused on finding targets that augment its service offering and expand its geographical reach. At the end of December, for example, Phenna secured the acquisition of Maurice Johnson & Partners, an Irish fire safety TICC business that adds to the service offering of the Phenna platform and strengthens its position in the Irish market.
Johnston Carmichael has been the key corporate finance adviser for Phenna Group.
8
Conrad Energy
9 deals in 2022
Full-service independent power producer (IPP) Conrad Energy supports the National Grid and commercial customers with the installation of flexible energy generation, battery storage and renewables.
The company has grown rapidly and owns and operates more than 60 sites across the UK that host 700MW of flexible power generation and more than 150MW of battery storage. The company, backed by I Squared Capital, continues to expand its footprint with around 22 new sites in construction.
M&A has been an important contributor to the company’s growth, with the business landing nine deals. In October, the company increased its flexible generation platform with the acquisition of a portfolio of flexible energy generation assets from Triple Point Investment Management.
The deal expanded Conrad’s presence in the North West, South East and Midlands and increased its operational capacity as well as its pipeline of early-stage battery energy storage and solar projects.
PKF Francis Clark is the primary advisory relationship Conrad relies on for deal advice.
9
Fairstone Holdings
8 deals in 2022
Financial planning and wealth manager Fairstone Group has been a regular in the rankings, executing a consolidation strategy that has seen the business grow consistently at around 20% a year and build annualised income to more than £100m.
The business landed eight deals in 2022, leveraging the expertise of an in-house M&A team that has developed specific experience in helping IFA businesses and individual advisers to join and integrate with the Fairstone platform. The company’s ‘downstream buyout’ acquisition model has been a key differentiator, Fairstone working closely with targets to facilitate integration ahead of a deal being closed.
Fairstone was launched in 2008 and partnered with private equity firm Synova Capital in 2016. In 2021 Synova sold a majority stake in the company to TA Associates in a secondary buyout.
PKF and Grant Thornton are among the advisers who have supported Fairstone on its deals.
9
Marlowe
8 deals in 2022
Marlowe PLC is the only listed company to rank in the Top 10 this year and is another player that has successfully pursued a consolidation strategy in the testing, inspection, compliance and certification (TIC) space.
Formed in 2015 and led by Alex Dacre, Marlowe was set up to acquire and develop companies in the TIC market and consistently delivered a steady flow of acquisitions in each year since launch. The strategy has seen the company grow its market cap to close to £500m in less than 10 years, with half-year revenue and EBITDA for 2023 growing at 66% and 80% respectively.
“Marlowe provides compliance advisory and software solutions across a broad range of areas and M&A is a tool we use to build deeper and broader compliance solutions for our customers,” Marlowe’s Director of Strategy Caspar Bullock says. “For example, Marlowe has historically been very strong in fire safety compliance, and M&A helped us expand into new compliance areas like environmental, health and safety compliance and compliance e-learning.”
As the company continues to grow earnings, M&A shows little sign of slowing down, with Marlowe landing eight deals in 2022. “In volatile markets, we maintain the pace of M&A by allocating time to relationships with prospective businesses,” Bullock says.
“We have a team of eight professionals who ensure potential businesses understand our vision and know that by being acquired by Marlowe, they are not ending up in some PE machine, but in a really complementary business with a focus on compliance where they can be connected to new customers and new in-house capabilities.”
Cenkos Securities has provided advice to Marlowe on all of its deals, with the business also
calling on Grant Thornton, Johannes Berenberg Gossler and Stifel.
9
Medivet Group
8 deals in 2022
Medivet Group is another private equity-backed petcare consolidator, landing eight deals in 2022.
As with other acquisitive veterinary businesses, Medivet has benefitted from the rapid growth of the £2bn UK vet market, which has been buoyed by rising pet insurance take-up, as well as industry deregulation which has facilitated consolidation.
Inflexion Private Equity backed Medivet in 2016 and supported a doubling of sites in the company’s portfolio, as well as a doubling of headcount. The business also expanded into continental Europe with the purchase of 40 practices in Germany and Spain.
Inflexion secured an exit in September 2021 when CVC took a majority stake in the business, which was led by CEO Deirdre Burns until March last year. Growth via acquisition has remained a key driver of Medivet’s expansion plans following the investment from CVC.
9
Redcat Pub Co
8 deals in 2022
Founded in 2021 by former Greene King CEO Rooney Anand, the RedCat Pub Company has emerged as one of the most acquisitive companies in the pub and pub hotel sector and grown EBITDA to more than £7m from a standing start, according to its 2022 accounts.
Backed by Oaktree Capital, RedCat was set up to build a portfolio of quality inns and managed and tenanted pubs and the company delivered eight deals in 2022, including the acquisitions of the Pheasant Hotel and Blakeney Manor, the Meynell Ingram Arms and Cock Inn at Mugginton.
“RedCat continues to go from strength to strength ... the team is continuing to source high-calibre sites in excellent locations as we build out our estate of leading pubs and pub hotels,” Anand told the The Caterer following the purchases of The Meynell Ingram Arms and the Cock Inn, both from Berkeley Inns.
Advisers who have worked with RedCat and vendors on deals include 9ine Chartered Accountants and Larking Gowen.
