Waterland sells Cawood for 3.7x money

Harriet Matthews
16 November 2021

Tweet
Facebook
LinkedIn
Google plus
Send to

Waterland Private Equity has sold its stake in agricultural and environmental laboratory testing business Cawood to US-headquartered Ensign-Bickford Industries (EBI).

The exit has generated returns of 3.7x money and 79.9% IRR for Waterland.

The sale values Cawood at a high-teens multiple and the company's EBITDA has more than tripled from around GBP 3.5m to more than GBP 11m during the investment period, according to a source close to the situation.

The deal is Waterland's first exit from a UK-headquartered portfolio company, as well as its first exit from Waterland Private Equity VII.

Asked about how the exit came about, Ryan Hallworth, investment director and UK office co-founder at Waterland, told Unquote: "We had an inbound approach from EBI, who had been tracking Cawood for around 18 months. Cawood's acquisitions raised the profile: IES in Switzerland put it on the European map, and we entered the US market in the summer. We were in the process of further acquisitions, but EBI stated their willingness to acquire Cawood, so it evolved from there."

The GP had foreseen several potential exit options for Cawood in addition to a strategic buyer, although the exit came more quickly than expected. "There were a number of PE backed trade buyers who were quite interested, too," Hallworth told Unquote. "The most obvious exit would be a trade party or a PE-backed trade buyer, since there are a number in the market. Another buyout was not out of the question, but we were not preparing for an exit, so we had not been through the typical sale preparations."

Waterland acquired Cawood from Inflexion in July 2019, investing via its EUR 2bn, 2017-vintage Waterland Private Equity VII vehicle. The sale of Cawood marks the first exit from the fund, which made 20 platform investments, according to Unquote Data.

During the investment period, the company made four add-ons, including Switzerland-based IES, US-based I2L Research, and Elab.

The GP is present in the UK via its Manchester office, which was opened in 2017, as well as its London office, which it announced in June 2021, as reported.

Following the sale of Cawood, Waterland expects to continue to add to its UK portfolio. "We have five companies in the UK portfolio, now that Cawood has been exited, and we are looking to add to that," Hallworth told Unquote. "We are looking at a couple of platform deals, which will likely be done in Q1."

Exits continue to be on the cards, too, including via trade sales. "We continue to have other inbound approaches – we are essentially doing the hard work for a strategic player, since consolidating a fragmented market and integrating a number of acquisitions is something that a strategic would find more difficult," Hallworth said. "Sometimes they earmark one of our companies while we make it bigger and more integrated, paying a strategic premium. So that is a typical exit route for us, be it a buyer in the UK or oversees."

Previous funding
NVM Private Equity invested GBP 4m in Cawood to support its MBO in 2010. Inflexion acquired the business in 2017, selling it to Waterland in 2019 for returns of 3x money.

Company
Founded in 2006, Cawood provides research, laboratory analysis and monitoring services for land-based industries including agriculture, food and environment. Headquartered in Bracknell, the company has operations in 16 locations in the UK, the US, Spain, Switzerland, the Czech Republic and the Republic of Ireland.

Cawood generated a turnover of GBP 15.6m with an estimated EBITDA of GBP 3.5m in 2018. The company had 350 staff at the time of its acquisition by Waterland and now has around 620.

According to its latest publicly available accounts for the financial year to March 2020, the company posts revenues of GBP 23.4m, versus GBP 25.7m in the previous year.

People
Waterland Private Equity – Ryan Hallworth (investment director and UK office co-founder); Oli Bevan, (managing director and head of UK).
Cawood – Simon Parrington (CEO).

Advisers
Vendor – Rothschild (M&A); Addleshaw Goddard (legal); Deloitte (financial due diligence).