The private equity parent of a cluster of premium preparatory schools in London has hired advisors to explore an auction of the business, for which it will ask upwards of £90 million, EducationInvestor Global can reveal.

This publication has learnt that Sovereign Capital Partners has instructed LAVA Advisory Partners, a recently launched M&A boutique, to find a buyer for Eaton House Schools.

Founded in 1897, Eaton House comprises five schools and nurseries for children aged three-to-13 situated in Belgravia and Clapham.

Sovereign Capital executed a leveraged buyout of Eaton House in 2016 using funding provided by Permira Debt Managers.

EducationInvestor Global understands that LAVA Advisory Partners – founded last September by a handful of former Grant Thornton corporate financiers – has circulated a prospectus for Eaton House to a pool of potential buyers, laying the foundations for a competitive auction in due course.

The prospectus puts Eaton House’s earnings before interest, tax, depreciation and amortisation (EBITDA), for the year ended 31 August 2020, at £4.8 million. Growth is expected to be flat this year due to the impact of Covid-19 on the independent school sector, it is understood.

A well-placed source told this publication, on the condition of anonymity, that Sovereign Capital is targeting an enterprise value north of £90 million – equal to around 19-times Eaton House’s EBITDA.

News of the process comes hot on the heels of EducationInvestor Global’s revelation that the owners of Northwood Schools, another London-based private school operator, are in discussions with City advisors around a sale of the business.

Eaton House is headed up by Luchie Cawood, second-generation owner and chief executive, who five years ago spearheaded a management buyout of the group backed by Sovereign Capital, which owns a controlling stake in the business.

Eaton House alumni include former British Prime Minister Harold Macmillan, as well as Laurence Olivier, Eddie Redmayne, Bear Grylls, Anthony Asquith and Philip Pullman.

Eaton House’s schools are non-selective. Its nurseries are co-educational, while its pre-prep and prep schools are single sex.

Sovereign Capital, which manages £650 million in funds, has in the past controlled several school groups, including Alpha Plus and Astrum Education, as well as BIMM Institute, a for-profit music institute acquired by Intermediate Capital Group last year.

A spokesperson for Sovereign Capital declined to comment.

LAVA Advisory Partners had not responded to requests for comment at the time of publication.

Date published: 4 May 2021

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