Stirling Square relaunches Outcomes First exit with education division sale

Claude Risner , Harriet Matthews , Josh O'Neill and Rachel Lewis
13 July 2023

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Stirling Square Capital Partners is preparing to sell the education division of its UK social care asset Outcomes First Group, with Rothschild appointed to sell the unit which operates under the brands Acorn Education & Care and Options Autism, according to five sources familiar with the situation.

The private equity firm decided to split Outcomes First into separate education and fostering businesses last year after a failed attempt to sell the combined group. JPMorgan and Moelis were advising the sponsor on that process which almost culminated in a sale of the education unit to Onex, as reported.

After finalising a break-up of the asset, Stirling is now relaunching the sale with Rothschild acting as sellside advisor, the sources said. Commercial due diligence providers have already been lined up to help with the process, the first and second sources added.

The education division, which runs more than 50 schools catering for 3000 children with special needs, will be marketed off GBP 75m LTM August 2023 EBITDA, the first source said. That would represent strong growth on the prior year driven by an increasing population, better diagnosis of autism and more outsourcing to the private sector.

The sale is likely to kick off after the summer, the first source added. The precise timing remains uncertain, however, as the owner has to find a solution to the financing backing the combined Outcomes First Group. While integrating Outcomes First with its fostering business NFA in 2019, Stirling Square raised a GBP 500m unitranche provided by Apollo, Barings, Five Arrows and HPS, and this will need to be refinanced, the source added.

Stirling Square will keep hold of the fostering division for now, the first and second sources said.

Meanwhile, CapVest is weighing a sale of Polaris, one of the UK's largest children's services providers and a competitor to Outcomes First, according to a Debtwire article. Polaris had 55 externally registered services spanning fostering and adoption agencies, residential children's homes, schools and leaving-care services, according to its 2021 strategic report.

Stirling Square Capital Partners declined to comment. Rothschild did not return a request for comment.