Shard Credit Partners has provided financing of £900K to portfolio company eQuality Solutions Ltd (“eQS”) to facilitate the acquisition of expert psychology business The Education Guidance Service (“EGS”).
eQS is a leading disability, diversity and inclusion specialist, headquartered in the North East. The group specialises in the support of students that qualify for an annual grant under the Disabled Students Allowance (“DSA”), as they enter higher education within the UK. The acquisition of EGS is the third acquisition by eQS in only ten months since the primary Management Buy-Out (“MBO”) in December 2020, as the group successfully executes its M&A buy-and-build strategy with the financial firepower being provided by the Shard Credit Partners.
EGS is based in Halifax, West Yorkshire, and has over 40 employees. The company was established over 22 years ago and is one of the largest providers of educational and occupational psychologists. EGS provides services to children, young people and adults who experience specific learning difficulties and social and emotional barriers both within educational settings and the workplace.
Due to EGS’ complementary capabilities, the combined group will benefit from positive synergies by building on eQS’s disability services division, which provides specialist assistive technology equipment, software, training and mentoring in the education, workplace and government sectors.
EGS will add £1.7 million of revenue and c. £250K of EBITDA to the Group and will increase the number of employees to c.80 in addition to 350 freelance psychologists, consultants, trainers, and delivery engineers across the UK. This acquisition, combined with the completion of two recent acquisitions, strongly positions eQS to achieve £30 million turnover by 2023.
The acquisition financing was arranged by Shard Credit Partners as part of a committed £12 million senior secured unitranche facility provided in December 2020 in support of the primary MBO of eQS and to provide firepower for strategic acquisitions.
Andy Gough, CEO of eQS views this acquisition as being pivotal to the group’s ‘buy-and-build’ growth strategy and in becoming the leading global provider of Diversity and Inclusion (D&I) solutions. Andy commented: “The past couple of years have not only seen a global health crisis but also an awakening regarding inclusion and acceptance of individuals identifying with a cognitive disability. This has created an even bigger demand for cognitive disability assessments within both the educational and workplace settings.
EGS is a leader in this market and quickly became our top choice for our next acquisition due to its capability and outstanding reputation. Upon first meeting with EGS founder Alex Griffiths, it was clear EGS is a strong strategic fit for the Group, aligning with our purpose and mission. I believe we share a mutual passion for helping people achieve their best by removing barriers. I am looking forward to welcoming the EGS team into the eQS family and believe we will achieve great things together.”
EGS founder Alex Griffiths said: “I have had many organisations interested in acquiring EGS over the last couple of years but eQS was the only acquirer I seriously considered for the business. The eQS team stood out as down to earth people who understood what we were about and demonstrated a clear passion for looking after the EGS brand and developing it in the ‘EGS way’. There was a synergy between our business culture and values, and a very obvious desire to look after the exceptional team who have helped us create this legacy of doing good and unlocking potential.”
Alastair Brown, CEO of Shard Credit Partners, commented: “We are pleased to continue to support our investment in eQS with additional funding to complete this important acquisition. As a lender we are very focused on supporting the environmental, social and governance agenda and very much look forward to the ongoing growth and development of eQS and EGS as they move together continuing with their great work.”
Advising eQS on the acquisition were Corporate Financiers Carl Swansbury, Rhiannon Nightingale, Connor McBride and Ben Kain of Newcastle-based RG Corporate Finance (RGCF), with financial and tax due diligence delivered by Grahame Maughan and Simon Whiteside of RG.
Legal advice was provided by Corporate Partner Tom Pollard and Corporate Solicitor Liam Stubbs of Ward Hadaway LLP.
Shard Credit Partners’ strategy is to become a leading provider of capital to entrepreneur and management-owned companies, VC backed growth businesses and private equity-owned companies focused on achieving transformational growth and expansion in the UK regions. During the past four years, Shard Credit Partners has invested more than £130.0 million in supporting regional Management Buy-Out transactions and M&A buy-and-build acquisition strategies, as well as growth capital expenditure financing.
About Shard Credit Partners:
Shard Credit Partners Ltd is an alternative investment fund manager focused on private credit strategies in the UK lower mid-market. Its funds seek to generate superior risk-adjusted returns from conservatively structured senior secured credit investments with equity upside. Fund strategies include direct lending and tech-focused venture debt.
In January 2021, William Chappel joined Shard Credit Partners to launch the Venture Debt strategy which will be focused on senior secured loan investments in businesses in the Software as a Service (“SaaS”) and Fintech markets across the UK tech sector. Shard Credit Partners plans to hold a first close on its new Venture Debt Fund in Q4 2021.
Shard Credit Partners is currently investing from its debut direct lending fund Shard Credit Partners Fund I, which held a first close in October 2017 at £90.2 million. Shard Credit Partners plans to hold a first close on its second UK lower mid-market direct lending fund during Q1 2022.
Shard Credit Partners invests in solid small to medium sized businesses with strong management teams, supporting them by providing transformative growth capital and event driven financing in support of innovation, growth and expansion. The fund invests in businesses across all sectors and throughout the UK.
The firm has a robust ESG focus; in particular, it is a strong supporter of female entrepreneurs and firms with meaningful female leadership, ownership and senior management.
Recent investments include the venture debt refinancing of PassFort Limited in May 2021, the venture debt financing for Rezatec Limited in August 2021, the financing in support of the acquisition of The Technology Group by Gradwell Communications in March 2021, as well as the refinancing and shareholder reorganisation of Midwest Mechanical and Electrical Services Ltd in August 2021. The fund completed financing transactions for the MBI of JST Services Ltd in Scotland, the MBO and buy-and-build strategy of eQuality Solutions Ltd in the North-East of England, and the MBO of Chameleon Technology Ltd in Harrogate, North Yorkshire, each of which completed in December 2020.
In 2020, Shard Credit Partners ranked eighth in the Debtwire UK Direct Lender league table published by Acuris. Shard Credit Partners was recently awarded Alternative Finance Provider of the Year 2020 (North-east region) in the Insider Dealmakers Awards.
Shard Credit Partners Ltd is an Appointed Representative of Shard Capital AIFM LLP, authorised and regulated by the FCA (number 615463).
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