A private equity firm has acquired fast-growing business services provider Citation, which is headquartered in Wilmslow and employs more than 350 professionals, from ECI Partners for £185m.
HgCapital, the manager of listed investment trust HgCapital Trust, has announced a majority investment in Citation, a provider of health and safety, HR, employment law and ISO certification. HgCapital Trust will invest in Citation alongside other institutional clients of HgCapital, which are participating through the HgCapital 7 Fund.
The trust will contribute a total of approximately £10.5m. The acquisition of Citation represents the ninth investment by the HgCapital 7 Fund and, following completion, the fund will be approximately 60 per cent invested.
Following the deal, HgCapital will assume majority ownership from ECI Partners, investing alongside the existing management team.
Chris Morris, chief executive of Citation, said: "Since joining Citation in 2013, the business has delivered sustained growth and has developed all areas of sales and marketing, service delivery and culture.
"The management team have enjoyed the period of ownership under ECI Partners, where we have put in place a platform for growth and success that will continue for many years, and we are excited to be partnering with HgCapital to continue this development and realise the very great potential that remains in the business and in the wider sector."
Citation said that the change of ownership gives the business support to expand its sales and marketing, service delivery and range of products.
Thorsten Toepfer, a director in the HgCapital services team, said: "We first spent time with Citation in 2012 before ECI invested in 2013, and have always been impressed by the quality of its business model.
"We have followed the company's success over the last three years, and it is a pleasure to finally work alongside the team to support its ongoing growth."
Meanwhile, ECI Partners revealed that it has generated a multiple of more than 5x for investors from the sale of its investment into Citation.
The private equity firm backed a full management buy-in team led by Chris Morris in December 2012, enabling the previous shareholders to sell their entire equity in the business. Since the investment, Citation's customer base has grown from 5,000 to 16,000, revenues have grown from £20m to more than £40m forecast in 2016 with a compound annual growth rate (CAGR) of 26 per cent, and profits have grown at a CAGR of 32 per cent.
Richard Chapman, head of business services at ECI and director at Citation, said: "It has been a pleasure supporting Chris and his team at Citation over the past three years, working with them to transform the company.
"Since our investment, the team have achieved a huge amount and created a business that understands its customers' needs and delivers a high-quality service they value. This successful investment adds to our strong track record in backing high-growth businesses in the tech-enabled business services sector.
"We wish the team every success with Hg as they continue to develop their role as a leading champion for UK SMEs."
In May 2015, Lord Sugar's former aide on the Apprentice became a brand ambassador for Citation.
HgCapital was advised on the transaction by Rothschild, Dean Street Advisors, Weil, Gotshal & Manges (legal) and Deloitte (financial and commercial due diligence, debt and tax).
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