CVC Capital Partners acquires QA from EMK and Bregal

Kenny Wastell
20 June 2017

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CVC Capital Partners has agreed to acquire a majority stake in QA, a UK-based IT training business, from EMK Capital and Bregal Investments.

Financial details of the transaction remain undisclosed, though a source close to the situation confirmed to unquote" that the deal valued the business at around £700m.

EMK closed its maiden fund on its £575m hard-cap in May 2017, two years after being founded by Bregal Capital co-founder Edmund Lazarus to manage a portfolio of nine companies previously under his management while at Bregal. According to a statement issued by the GP at the time of the fund closing, the seven companies remaining in its portfolio had a combined net asset value of around £1bn.

Under the vendors' decade-long tenure, QA has undertaken an acquisitive growth strategy, bolting on six competitors, including Xpertise Group in 2008, Remarc in 2009 and Netbuilder Academy in 2015. According to a statement issued by the vendors, the company increased its EBITDA from £2m in 2007 to a run rate of more than £50m today.

Following the latest deal, QA's management team will retain a significant stake in the business.

CVC's capital for the transaction was drawn from CVC Fund VI, which writes equity cheques of more than $150m. The vehicle held a final close on €10.5bn in June 2013, after just six months on the road.

Debt
Barclays Bank has underwritten the entirety of the debt financing to support the transaction. A person familiar with the situation told unquote" sister publication Debtwire that other banks are expected to join the syndicate in the coming weeks.

Company
Founded in 1985 and headquartered in London, QA is an IT education and training company. The business has a professional training division, a work-based apprenticeship division, a consulting division and an education division offering undergraduate and postgraduate degrees.

According to publicly available records, QA generated a turnover of £154.2m in the year ending May 2016, with operating profits before amortisation and exceptional items of £29.9m, up from £139.7m and £25.1m year-on-year respectively. It has a total headcount of around 1,000.

People
EMK Capital – Edmund Lazarus (managing partner).
Bregal Investments – Steve Black (co-CEO).
CVC Capital Partners – Richard Blackburn (managing director).
QA – William Macpherson (CEO).