A UK private equity firm has drafted in advisors to find a buyer for a fast-growing school software provider it owns – and a sale could fetch upwards of £150 million, EducationInvestor Global can reveal.
This publication has learnt that ECI Partners has instructed GCA Altium to find a new owner for CPOMS, which it acquired in 2018.
It is understood, however, that a formal auction will not be launched until the second half of the year as CPOMS’s annual accounts are not due until May, at which point GCA Altium will likely need at least several months to prepare the business for market.
CPOMS sells software-as-a-service (SaaS) subscriptions to schools in the UK and internationally, which allow institutions to monitor safeguarding, wellbeing and pastoral issues. Last year, the organisation, which is led by managing director John Wild, won a Queen’s Award for Enterprise in the ‘innovation’ category.
CPOMS has experienced consistent annual growth since it launched in 2011 and now counts as clients more than 13,400 schools, which pay around £900 a year for its suite of safeguarding software solutions. When ECI Partners took control of CPOMS, the firm had around 10,000 clients.
“It’s performing really well in an industry that is increasingly regulated and it’s sold at a price point that schools can’t say no to,” a source familiar with the business said. “For schools, it ticks compliance boxes, and from a business model perspective, its renewal rates are very high due to the stickiness of SaaS subscriptions.”
An investment banker told this publication, on the condition of anonymity, that CPOMS will be marketed based on run-rate earnings before interest, tax, depreciation and amortisation (EBITDA) of £9-10 million. The insider added that CPOMS could trade at a “high-teens” multiple of this figure – indicating an enterprise value of £150-£190 million.
While the price paid by ECI Partners for CPOMS in 2018 is unclear, “I expect that it will certainly be more than £150 million on exit”, the banker added.
KBS Corporate Finance, which oversaw the sale of CPOMS to ECI Partners, described the transaction in a press release as “a multi-million-pound deal”.
ECI Partners and GCA Altium declined to comment when contacted by EducationInvestor Global.
ECI Partners, a growth-focused mid-market private equity firm, invests £25-£100 million in deals valued at up to £200 million.
Last year, ECI Partners was in the running to acquire a minority stake in an enlarged school services provider formed by a merger between Arbor Education and The Key, but was ultimately beaten by CBPE Capital.
ECI Partners used to own a controlling stake in Citation, a UK-based outsourcing firm that last year acquired e-learning provider iHASCO, which it sold to HgCapital in 2016, generating a 5.4-times return. Private equity giant KKR acquired Citation last August from HgCapital.
Last month, EducationInvestor Global’s Rumour Has It newsletter revealed that GCA Altium had been mandated to find a buyer for Sofa Tutor, a Germany-based online tutoring provider.
Date published: 24 March 2021