MML acquires Arrow from GCP

Unquote understands the deal is valued at around £110m. MML invested £47m in equity drawn from MML Partnership Capital VII, which has yet to hold a final close. This is the second investment from the fund following the acquisition of a significant minority stake in advisory firm Stoneturn.

Management reinvested in the company, while GCP fully exited generating a return of 2.8x money.

Prior to the deal, Arrow was expected to be marketed at around £10m EBITDA and was likely to fetch a 12-14x EBITDA multiple, according to Unquote sister publication Mergermarket.

The vendor mandated Arma Partners to explore a sale in August 2019 and accepted indicative bids for the company in December 2019. The final bidding stage saw five participants.

During GCP's holding period, Arrow made eight acquisitions, including BTL Communications in December 2019, European Utility Management in December 2018, and 360 Solutions in June 2018. The firm also invested in human resources, systems and national office infrastructure.

Richard Burke, who joined Arrow in 2017, will take the position of CEO, while former CEO Chris Russell will take on the role of chairman. Russell will focus on strategy and acquisition plans, and Burke will be responsible for operations.

CVC Credit has provided a £70m acquisition facility to the company, including a senior term loan and a committed acquisition facility

Company
Founded in 2005, Arrow provides businesses with telephony, data, IT and energy services – including gas, electricity and water. Headquartered in Godalming, the company has nine offices, annual sales of more than £51m and 245 employees.

People
MML Capital Partners – Luke Jones (partner); Amar Shanghavi (investment manager); Harry Smith (associate). 
Growth Capital Partners – Richard Shaw (partner).
Arrow Business Communications – Chris Russell (chairman).

Advisers
Equity – Pinsent Masons (legal); Alantra (corporate finance).
Vendor – Arma Partners, Andrew Wheatley, Tom Wells, David Smith, Samer Sweidan, Felix Ng (corporate finance); EY, Derek Smith, Rajan Goel, Michael Hall, David McHugh (financial due diligence); OC&C, Chris Woodland, Mohsin Saleh, Michael Connolly (commercial due diligence).
Management – Kemp Little, Deborah Angel, Charles Claisse, Patrick Roux (legal).

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• Topics
• Buyouts
• Exits
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• United Kingdom
• MML Capital Partners
• Growth Capital Partners (aka Close Growth Capital)
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