KEEPING UP WITH CAPITA: It’s been weeks since Goldman Sachs collected final bids for Capita’s Education Software Solutions (ESS) unit, but the show is far from over. After Bloomberg reported that Bain Capital and Montagu Private Equity had failed to table final-round offers, leaving industry gossips scratching their heads, Rumour Has It speculated last week that something was amiss. Now that the dust has settled, we have a clearer picture. This publication hears that both Bain and Montagu are coming back to the table with eleventh-hour bids, though, as we have previously reported, both will be well south of the original £500 million-plus asking price. Earn-outs, whereby sellers ‘earn’ a portion of the purchase price based on post-acquisition performance, are the flavour of the month in this risk-laden climate. But we’re told it’s “highly unlikely” such a structure will be applied in the case of Capita ESS. A well-placed source explains: “It’s a listed business with debt problems. If Capita accepted a price with an earn-out clause, they would have to write off the upside now on the chance they might get it back later. Hypothetically speaking, being paid seven-times EBITDA now is a much better result than five-times now, plus another five-times later.” We expect the chosen party to enter a period of exclusivity within weeks.

NOT SO FAST(LANE): Bidding on FastLane, the German IT training provider that we revealed had been brought to market by Robert W. Baird & Co, has progressed into the second round. But things aren’t moving as fast as Baird or the business’s shareholders would like, it seems. “Most – if not all – of the handful of bidders are local private equity houses,” said one insider, who claimed that “all of the UK parties either dropped out or weren’t taken through” to the second round. Some suitors had trouble getting on board with FastLane’s finances, which have not been properly scrutinised, a source said: “There are no audited accounts or vendor due diligence – and the pack of financial information only covers 70% of revenues. This doesn’t exactly give comfort to a buyer.” Complicating matters further is that FastLane’s main shareholder, Torsten Poels, “wants to take a significant amount of cash off the table while retaining control” of strategy – a notion that simply won’t fly with many control-obsessed buyout funds. “It’s a difficult situation that will likely have a local solution.”

FREE KICKS: First-round bids for a minority stake in UCFB, the football-focused private university in Manchester, are being collected tomorrow by Signia Corporate Finance, the Northern shop that we revealed is running the auction. We hear that “a number” of preliminary offers are set to be filed, though we’re unsure by who. What we do know is that some fancy footwork has been performed on its finances. A prospectus puts UCFB’s core EBITDA at £5.5 million for 2021 – but this figure is ‘adjusted’ for degree-validation fees totalling £2 million, and brand development costs of £1.7 million. Basically, UCFB is betting that these costs will be irrelevant once it secures degree-awarding powers and no longer needs to market its newest campuses. But, given it can take several years to secure such powers, whether these sums can be considered one-offs is up for debate. One financier said: “To look to get full credit now through the P&L for something that hasn’t even happened yet is an ambitious thing to do. One might even say that, as an adjustment, it’s aggressive.”

CATCHING UP ON CORNDEL: Last week, Rumour Has It revealed that German private equity firm THI Investments was one of four suitors that had progressed into the second round of bidding on apprenticeship provider Corndel, the sale of which is being steered by Lincoln International. Four have now become three, after Queen’s Park Equity, a new mid-market investment house founded by a former Sovereign Capital partner, was “knocked out or dropped out” of the second round. Corndel could have been a good buy for QPE, whose maiden acquisition of embattled training provider Learndirect was revealed last month by EducationInvestor Global. We understand that THI Investments is up against another private equity firm and an “unconventional” trade buyer, with second-round bids due on 5 November. We will be keeping an ear to the ground – and you updated – on who makes it through to the final leg of bidding.

ON THE MONEY: Palatine Private Equity this week confirmedEducationInvestor Global’s scoop from August that is was to acquire a minority stake in Back2Work Group. Good to know we got it right.

Josh O’Neill, editor, EducationInvestor Global