Mon, 31 Jan 2022 | BUSINESS SALE
Outsourcing and professional services firm Capita PLC has announced that it has agreed a deal to sell IT services business Trustmarque to US private equity house One Equity Partners for £111 million. The sale, which forms part of Capita’s plan to dispose of non-core divisions, means that the firm has hit its target of £700 million in disposal proceeds, which it initially set for June 2022.
Under its disposal plan, Capita is seeking to divest non-core units in order to strengthen its balance sheet and focus its business around its core division: Capita Experience and Capita Public Service. Its recent sales include Secure Solutions and Services in October 2021 and AMT Sybex in December 2021.
Capita Chief Executive Jon Lewis said: “We are pleased to have agreed the sale of Trustmarque to One Equity Partners following a competitive sale process. I am delighted that, once this sale is completed, we will have exceeded our disposals target - and achieved this much earlier than originally planned.”
However, despite exceeding its target for disposals, Lewis added that Capita was “now focused on selling the remaining businesses in our portfolio division, with the goal of disposing of the majority by the end of 2022."
Trustmarque is partnered with numerous global technology vendors, but also works on public-focused projects, including contracts with the UK government. The sale price represents close to a 7x multiple of Trustmarque’s £16 million post-tax profit for 2021, generated on revenue of £122 million. The sum also means that Capita has generated close to a 2x return on the £57 million it paid to acquire Trustmarque from Liberata Group in 2016.
The deal comes amid a busy period of M&A within the professional services sector. Dealmaking is being driven by several factors relevant to this sale, including the rapid digitalisation companies have been undertaking since the start of the COVID-19 pandemic, growing private equity interest in the professional services sector and the need for many companies within the sector to make disposals.
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This established IFA is assigned to one major platform ensuring a very smooth transition of client assets.
This is a highly profitable business with EBIT percentage of 33%, meaning money can be recouped quickly after a purchase.
With advisers and back-office staff in place, this business can be purchased and will keep running efficiently.
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