Stirling Square cancels Outcomes First Group sale process

Claude Risner , Josh O'Neill and Rachel Lewis
31 August 2022

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Stirling Square Capital Partners has halted the sale of Outcomes First Group, a UK specialist care and fostering provider, after almost nine months of trying to get a deal over the line, two sources familiar with the situation said.

The private equity firm, which had appointed Moelis and JPMorgan to run an auction earlier in the year, was working on a deal to sell the education part of the business to Onex, one of the sources and a third source familiar said.

But the two parties were unable to agree on a price for the unit, the first source added. Stirling Square was reported to value the whole business at more than GBP 1bn. The macroeconomic environment and a highly critical report from the Competition and Markets Authority (CMA) made it a difficult time to sell the business, the second source added.

ICG, Mubadala, and Civitas rounded up a thin field of parties who were involved in the process, according to a fourth source.

Stirling Square is now expected to continue the break-up of the company before relaunching the sale at some point, the first source added.

OFG works right across the UK social care landscape, operating more than 50 schools, 60 residential children's homes, 20 residential homes for adults, and more than 6,000 fostering places, according to filings.

As the timeline for the sale dragged on, the owner had been expected to consider placing the asset into a continuation vehicle or SPV, according to a fifth and a sixth source familiar. However, that option was ruled out as exit options for the asset would be more limited after five more years of growth, the same sources said.

Stirling Square declined to comment. Onex, ICG, Mubadala, and Civitas did not return requests for comment.