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Chequers, Paragon to acquire Silverfleet's 7days

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Chequers Capital and Paragon Partners are to acquire medical workwear business 7days, a portfolio company of Silverfleet Capital.

The deal has generated a gross money multiple of 3.1x for Silverfleet, according to a statement.

The transaction is expected to be completed in January 2021 and remains subject to competition authority approval.

During Silverfleet's investment period, the GP supported the development of the company's online sales channels, as well as the implementation of CSR product standards. 7days acquired Denmark-based Praxis Herning in December 2018, expanding its activities in the Nordic region.

Unquote sister publication Mergermarket reported in September 2020 that teasers were being circulated for the sale process. A report in November 2020 stated that although the company has performed well under Silverfleet's ownership and has seen increased demand for its products during the coronavirus pandemic, the sustainability of this demand could be questioned by potential buyers.

Besides the winning bidders, parties involved in the auction process included FSN Capital Partners, Gilde Buy Out Partners and Investcorp, Mergermarket reported.

The company has been marketed based on EBITDA of €17m, the report added. The company was expected to generate a valuation of more than €200m.

Paragon is currently deploying equity from its third flagship fund. Paragon III held a final close in June 2019 on €780m. The fund invests in DACH-based businesses, deploying equity tickets of €30-150m with a sweet spot of €100m and targeting businesses with enterprise values of €30-250m and EBITDA of €10-30m.

Chequers Capital XVII held a final close in May 2017 on €1.1bn. The fund deploys equity tickets of €40-120m, targeting businesses based in Europe, and was 36% deployed as of March 2020. 7days is the fund's second investment of 2020; it acquired computer services business Econocom Business Continuity in April 2020.

Previous funding
Silverfleet acquired 7days in December 2017 in an SBO from Odewald KMU. The GP invested via Silverfleet Capital Partners II, which held a final close in June 2015 on €870m. Debt was provided by a consortium of DZ Bank, BKB and Commerzbank, according to Unquote sister publication Debtwire.

The auction saw interest from bidders including FSN, Gilde and Riverside, according to a report from Debtwire released at the time, with Silverfleet, Quadriga and a US-based strategic investor advancing to the final round.

Company
Founded in 1999 and headquartered in Lotte, 7days designs, produces and sells workwear for use in medical settings. The company reported revenues of €25m and EBITDA of €10m at the time of its acquisition by Silverfleet in 2017. 7days is expected to generate revenues of €40m in 2020 and has increased its headcount from 160 staff in 2017 to 240 employees in 2020.

People
Silverfleet Capital – Joachim Braun (partner); Benjamin Hubner (principal).
7days – Ulrich Dölken (CEO); Carsten Meyer (CFO).

Advisers
Vendor – William Blair (M&A); PwC (financial due diligence, ESG due diligence, tax); Latham & Watkins (legal); McDermott Will & Emery (legal); Shearman & Sterling (legal); Goetzpartners (commercial due diligence).
Equity (Chequers Capital) – Latham & Watkins (legal).

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