Sale of Social Care Services Provider
The onset of the global pandemic in 2020 highlighted the importance of youth service provision in the UK. It was within this climate that Hornblower received a compelling proposition in June 2020 to sell a business delivering impactful solutions to this pressing issue.
CF Social Work Limited (CFSW) was a fast-growing independent social work and education company based in Ipswich, Suffolk with an extensive portfolio of social care and education services and a substantial roster of Local Authority clients. Since inception in 2006, this dynamic business had experienced dramatic growth, earning a solid reputation as a proven provider of high-quality social work and educational intervention. The company had developed a solid client base with a regional focus across Southern England and was in the process of replicating its successful model nationwide.
CFSW provided a wide range of assessment; support; education and youth services to Local Authorities, schools, private clients and Legal professionals throughout the UK. Run by experienced Senior Managers with over 50 years extensive social work and education practice and management experience across many disciplines, the company provided a wide range of assessment and practice interventions.
The experience of the Management Team was supported by a considerable network of Independent Social Work Practitioners and Education Professionals. CFSW also had access to professionals from related disciplines including psychologists, substance misuse experts, child sexual exploitation experts; domestic violence experts, counsellors, offender risk management experts and therapeutic social workers trained to work in the area of child sexual abuse. This network complemented the expertise within the company, enabling a response to any size or type of project required by commissioners in the field.
CFSW led with a portfolio of pioneering services, which included the ‘Education Wrap Around’ service, designed to support young people with challenging behaviours and complex or high-level needs. This service was also available to young people on the edge of care and/or at high risk of gang exploitation. The company had also developed a well-utilised Reverse Residential Assessment (RRA) service which was trademarked to CFSW and had become part of the court circuit language.
Priding itself on an ability to flexibly respond to customer needs with an adherence to robust quality assurance procedures, CFSW enjoyed a consistent record of repeat custom among its notable Local Authority and Legal Practitioner client base. The company anticipated realistic growth opportunities through a healthy contract pipeline for its key services, further referrals and demand for new service offerings.
CFSW had achieved a track record of consistent growth and had maintained this through the challenges posed by Covid19. At the point of mandate, CFSW was positioned on the threshold of its biggest step change in growth to date in a booming market. This highly cash generative business had achieved consistently high profit margins with a projected EBITDA of c.40% in the then current financial year.
The Situation
Upon engaging the company in June 2020, Hornblower began the process of marketing CFSW in August 2020. As a company dedicated to providing assessment services covering the complex and evolving range of child and family issues requiring Local Authority intervention, Hornblower was mindful to emphasise CFSW as a business experiencing rapid growth, urgently needing investment into its infrastructure and additional management expertise to support this growth.
It was also clearly understood that CFSW was already punching above its weight, having established major contracts with local authorities and government agencies. In terms of its client base, this Ipswich-based company had attained a strong regional focus in Norfolk but was starting to win contracts nationally. With this in mind, Hornblower determined that the impetus lay in targeting potential acquirers with the strategic expertise to use this platform to generate and secure serious future growth for the business.
As is often the case in service-led businesses, the key team members serve as the greatest asset. A significant element to CFSW’s success had been built on its highly experienced, dedicated and well-qualified team of social work and education experts. The staff structure was designed to facilitate access to its extensive network of experienced social workers and education professionals from a variety of disciplines and specialisms.
The business was offered on the basis of retaining a key team member serving as one of the shareholders and company CEO who was willing to stay with the company post acquisition. Due to the relatively young age of the CEO and his extensive capabilities, his ongoing presence was a key attribute for the future of the company.
The Outcome
Marketing CFSW generated a brisk response, generating over 55 enquiries from private equity firms through to trade players. The ultimate acquirer was a private equity firm that had been looking for an investment in the care sector and found the CEO of the company to be exactly the sort of principal they wanted to work with. They structured a deal which gave the CEO shares in the new company and also brought in a highly experienced Chairperson to assist with the strategic direction.
The private equity acquirer, BCF Equity Partners (BCF) is a specialist investor in fast-growing privately-owned businesses. On the acquiring CFSW, Tom Spencer, Managing Partner at BCF, stated that ‘CF Social Work is a very special business providing education and social work support to many vulnerable children and families. It is a privilege to be able to support Ross and the team as they grow the business and develop their service offering.’
Dale Cowdell, Relationship Manager at Allied Irish who had supported BCF’s acquisition funding package also commented ‘The acquisition of CFSW is a great addition to [BCF’s] investment portfolio … It feels great to help BCF to support the growth of a business that carries out such important and rewarding work supporting children and young families.’
Heads of Terms on the deal were agreed in September 2020 and the deal was completed mid-December 2020.
The deal was managed by our Nottingham based International M&A Director and Business Sales and Acquisitions Consultant, Mark Sykes.
SOLD – December 2020
