LDC appoints Houlihan Lokey for Kerv sale

Min Ho , Josh O'Neill and Dominic Pasteiner
12 April 2023

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Private equity firm LDC has appointed Houlihan Lokey to run the sale of Kerv, its UK-based IT managed services provider, two sources familiar with the situation said.

The cloud and digital transformation services consultant is marketed at around GBP 15m expected EBITDA, the sources and a sector banker tracking the situation said. Sellside valuation expectations stands at around a GBP 150m-GBP 200m enterprise value, the sector banker added.

Kerv's revenue grew by 260% to GBP 45.3m and adjusted EBITDA grew by 240% to GBP 7m in the year to 31 March 2022, according to its most recent Companies House filing. During the period, Kerv bolted-on digital transformation specialist cloudThing and networking and security group Gyrocom.

The business has also since acquired the communications compliance practice business of TDS Global Holdings, last July, in a deal taking Kerv to more than GBP 60m turnover and more than 500 staff.

These acquisitions and their integration "will allow for a material increase in profitability in 2023 and beyond," Kerv said in its financial report, which adds that the business remains confident in the strength of the digital transformation market and related grow opportunity.

LDC initially invested in Kerv in 2020, providing GBP 30m to enable the company's formation via the merger of DoubleEdge Professional Services, Foehn and Metaphor IT. Kerv's offering comprise converged IT managed services, unified communications, contact centre, security and compliance applications, per LDC's website.

LDC and Houlihan Lokey declined to comment. Kerv did not respond to a request for comment