What was the deal?
Palatine’s investment, from its Impact Fund, into Sheffield-based Cura Terrae, a group formed to unite three businesses: ECUS, Environmental Monitoring Solutions (EMS) and Envirocare.
ECUS is an environmental consultancy that offers ecology, habitats, air and water, and heritage and archaeology services to support infrastructure development. EMS provides a holistic service to help clients meet and maintain environmental compliance, and Envirocare offers stack emissions testing and occupational hygiene consultancy. Cura Terrae employs almost 240 people and has revenue of £18m.
We completed the deal in March 2022. The value of the investment wasn’t disclosed.
What were the timescales?
I was introduced to entrepreneur Professor Pete Skipworth in autumn 2020. He was a significant shareholder in EMS and chair of ECUS. It was clear after our first discussion that if those businesses were put together, the combined group would be appealing to private equity. In March 2021, Pete as CEO and Sara Blannin as CFO brought the senior team together with the plan to form a group of complementary environmental services businesses and grow it through acquisition.
We prepared the businesses and tested the PE market in June 2021, to assess what interest there would be to support both shareholder aspirations and the buy-and-build strategy. We met just six PE houses, all with different USPs, received offers from four, narrowed it down to two and then signed heads of terms with Palatine in October. There was a lot of due diligence to do on three different businesses and we had to structure the deal to meet everyone’s needs.
Who were the advisers?
We were engaged as lead advisers by all three companies. Freeths provided legal advice, Brown Butler gave tax advice and PKF Francis Clark carried out vendor due diligence. Sally Taylor at First Accounting created a financial model for the business.
Hill Dickinson gave Palatine legal advice. Cortus Advisory carried out financial due diligence, Armstrong commercial due diligence and RSM provided tax advice.
Why was Palatine chosen?Every PE house we spoke to said it wanted to do something in the environmental space. We had to make sure the houses put in front of the senior team had something that would add value to what shareholders wanted to achieve.
Palatine was cooperative and sympathetic to the shareholding structure challenges and the complexities of the transaction. It has great environmental, social and governance experience and investments in the sector, such as Anthesis and Lucion. Its Impact Fund has all the value creation elements that Skipworth and Blannin wanted, with a focus on their desired buy-and-build strategy. During the process, ECUS acquired Northern Archaeological Services, demonstrating further its ability to acquire and integrate.
What was the biggest challenge?
We introduced the team to a select number of private equity houses, focusing on each firm’s USPs. The businesses had quite complicated structures, with lots of different shareholder dynamics. There was a lot to manage and we needed an investor who was collaborative in working with the senior team, to achieve many objectives, and who would be a big part of the development of the group.
Were there any lessons learned?In hindsight, I’d have brought the fantastic operational MDs into the discussions earlier. It might have streamlined the process.
The CVClaire Davis is a partner at M&A consultancy LAVA Advisory Partners, which she co-founded with Simon Woodcock and Hamish Martin in 2020. She completed ACA training at BDO in 2000 and joined its corporate finance team. In 2003, she became senior manager at Goodband Viner Taylor. She moved to Grant Thornton’s Sheffield corporate finance team in 2006 and spent 14 years there, latterly as a director, advising service-led and industrial businesses on M&A. LAVA is a Corporate Finance Faculty member.
Recent dealsECUS’s October 2021 acquisition of Northern Archaeological Associates.
Refinancing of Lebus Upholstery to support its sale to an Employee Ownership Trust (EOT) in August 2021.
Park Cameras sale to an EOT in March 2021.