NorthEdge drives 3x return on cross-border DHG sale - NorthEdge Capital has completed the sale of Direct Healthcare Group (DHG) in a secondary buyout by European healthcare specialist investor ArchiMed.
The deal sees NorthEdge secure a 3x return on its initial investment, with an IRR of 39 per cent. NorthEdge led a management buyout of Direct Healthcare Services in April 2016, renamed it Direct Healthcare Group and broadened the firm’s product range through a series of bolt-on acquisitions.
DHG is a fully integrated developer and manufacturer of a range of innovative pressure care products designed to prevent medical issues such as pressure sores, which can lead to serious, sometimes life threatening diseases. Founded in 2009, the business works with care providers in over 20 countries throughout Europe and internationally. As a recognised world leader in the development of pressure care technologies, DHG is a winner of the prestigious Queen’s Award for Enterprise in Innovation.
Under NorthEdge’s ownership, revenue at the business has more than doubled, with EBITDA more than tripling over the same period. Headcount has also increased from 52 to 185 across its sites in the UK, including the head office in Caerphilly, South Wales. Bolt-on acquisitions in companies including Nightingale, Kirton and Qbitus significantly expanded the firm’s product and service portfolio during NorthEdge’s ownership.
ArchiMed is a leading European investor in medical industries and care services with a portfolio covering European and North American companies. Over the last 20 years, ArchiMed’s leadership team has invested in over 40 small, medium and large-size healthcare companies with a combined value of more than €5bn.
Under ArchiMed’s ownership, DHG will continue to target strategic acquisitions, with a particular focus on expanding its European presence. As requested by the company’s Management team, ArchiMed has committed a significant amount to fund future acquisitions. ArchiMed’s total funding commitment for acquisitions represents more than twice DHG’s upfront value.
Andrew Skinner, investment director at NorthEdge, said: “In the three and a half years since our investment, DHG’s buy-and-build strategy has turned the business into a multi-specialist organisation, innovating the way that patients are cared for across the UK. Graham and the team have done an exceptional job to strategically integrate each of these bolt-ons and maximise their value to drive growth in the business.
“With significant growth prospects in the European healthcare market, finding a buyer with close ties on the continent represents an enormous opportunity for DHG. ArchiMed’s specialisation in healthcare, as well as its wide-ranging international footprint, means it is the ideal partner to support the business in the next stage of its development.”
Graham Ewart, CEO at Direct Healthcare Group, said: “NorthEdge has been the catalyst behind the rapid growth of DHG over the past three years, providing both the funding to facilitate expansion and acquisitions, as well as ‘on-the-ground’ knowledge to add significant value.
“Having established ourselves as a market leader in the UK, Europe now represents an enormous opportunity to expand our horizons. ArchiMed will provide a gateway to this market. We look forward to replicating our recent success and developing a strong partnership with the team in the coming months.”
Antoine Faguer, Partner at ArchiMed, said: "We're partnering with an exceptional management team with a proven track record when it comes to clever product innovation and driving successful mergers and acquisitions. Our common focus with management for the next phase of development will be on internationalising DHG's footprint and expanding its product range, especially through further acquisitions."
PwC (Dan Gallagher and Ian Birch) provided financial advice to NorthEdge, while Paul Meddlicot at Addleshaw Goddard handled legal advice. Financial due diligence was provided by Simon Wormald at KPMG, with commercial due diligence provided by Giles Johnson at CIL.
For ArchiMed, KPMG provided financial advice as well as financial and tax due diligence; Candesic advised on commercial due diligence; and Dechert LLP handled legal advice.
Press contacts for ArchiMed:
International: David Lanchner, email@example.com, +33 6 33 43 5076
France: Stéphanie du Ché, firstname.lastname@example.org, +33 6 16 36 11 06
Press contacts for NorthEdge:
Amy Cantrill, MC2, email@example.com, +44 161 236 1352
Liam Buckley, MC2, firstname.lastname@example.org +447841 843 161
About ArchiMed (www.archimed-group.eu) - ArchiMed is an independent investment firm specialized in the Healthcare industries. It is a strategic and financial partner to European and North American companies operating in the Biopharma, Medtech, Diagnostics, Life Sciences, Healthcare IT, Consumer Health, Public Safety and Care Services sectors. ArchiMed’s international team combines investment, medical, technological and operational experience. It works alongside management teams to accelerate their business growth through internationalization, product and service range expansion as well as capacity extension, both organically and through acquisitions. Over the last 20 years, ArchiMed’s leadership team directly managed and invested in over 40 small, medium and large-size healthcare companies throughout the world, with a combined value above five billion euros. ArchiMed’s investment capacity currently exceeds one billion euros and is potentially twice this amount when including its strategic investment partners.
About NorthEdge Capital (https://northedgecapital.com/) - NorthEdge Capital manages over £650m of private equity funds aimed at the North of England and Midlands regions targeting buy-out and development capital transactions. The private equity firm closed its maiden Fund at £225m March 2013, Fund II at £315m in March 2016 and SME Fund I at £120m in July 2018. NorthEdge Capital focuses on companies seeking equity investment to support MBOs, development capital and equity release transactions. NorthEdge invests between £2-£45m, focusing on established businesses, typically with a turnover greater than £5m and profits greater than £0.5m and is currently investing from both Fund II and SME Fund I. The senior team at NorthEdge has over 150 years’ experience in structuring and financing private equity transactions. The firm takes a management-orientated approach with a culture of delivery where smart, opportunistic thinking supported by meaningful due diligence and sound perspectives are valued. It focuses on value creation and capital return to the benefit of all stakeholders.
About Direct Health Care Group (www.directhealthcaregroup.com) - No-one better understands the importance of movement and its relationship to both physical and mental health than Direct Healthcare Group, especially when the need to move directly affects the quality of daily living. DHG develops, manufactures and continuously refines a complete range of medical devices focused on early mobilisation of patients in order to prevent health challenges associated with non-movement. The use of Direct Healthcare Group’s products and services means serious medical issues associated with reduced patient movement are anticipated, managed, and resolved. DHG is committed to better health outcomes, accelerated recovery and easier daily living.