Tenzing backs DJH Mitten Clarke MBO

The transaction is the seventh investment of European mid-market tech investor's GBP 400m Fund II, according to a press release. The vehicle, which held a final close in June 2020 and started investing in 2021, deploys equity tickets of around GBP 20m-25m, according to Unquote Data.

DJH Mitten Clarke further expands Tenzing's involvement in the UK accounting services market following its investment in Jeffreys Henry in 2021, a tech-enabled accounting and service provider in London.

Following the investment, Tenzing will support management to maximise the business' potential by continued investment in sales and marketing, according to the press release. The GP will also help the business continue its inorganic growth strategy by providing dedicated acquisitions director support to complement the team in-house. Management is interested in acquiring regional accounting firms in the North of England, with cultural-fit being the key decision-making factor, a spokesperson from Tenzing told Unquote.

Increased regulation continues to drive demand in the UK accounting market, which is large and growing at 5% YoY, with the SME segment estimated to be worth GBP 9bn, according to the press release. UK businesses have to adapt to the market changes due to increased regulation mandating ongoing compliance work, and Tenzing believes DJH Mitten Clarke is well-positioned to capitalise on this opportunity due to its client delivery approach, according to the press release.

"The UK accounting market is also benefitting from a trend to outsource 'office of the CFO' related work resulting in increased demand for adhoc advisory services," said the spokesperson. "DJH Mitten Clarke can benefit from these dynamics, outpacing the market leveraging its scalable people-centric model, as well as its established brand within the Northern England SME market."

The business has been delivering double-digit organic growth, supported by its use of technology and the pod structure approach to service delivery. It bolstered its team with four senior appointments in recent weeks, including a new chief technology officer, Paul Freeman, who joined the business after providing technology consultancy to accountancy firms at Tech Alliance Ltd.

The investment is one of fourteen high-growth businesses within the Tenzing portfolio. The GP reaped 74% IRR and a 9.6x multiple on invested capital in its exit of CitNOW Group to Livingbridge in July, Unquote reported. It continues to back the company via its Fund II and companion fund Tenzing Belay I.

Company
Headquartered in Stoke-on-Trent, accounting firm DJH Mitten Clarke provides accounting, audit and payroll compliance services, as well as tax advisory, to SMEs across the Midlands and North-West. The entity took its current structure in March 2021, when Mitten Clarke merged with its domestic counterpart DJH. The new entity, which has approximately 122 employees, was recently listed among UK's Best Mid-Sized Companies to Work For list and ranked as a top 3 firm for ‘Investing in People' in the 2022 Accounting Excellence Awards.

People
DJH Mitten Clarke − Scott Heath (CEO), James Beardmore (COO).
Tenzing − Mike Reynolds (investment team).

Advisers
Equity – Alantra; Osborne Clarke; PwC.
Management − Clearwater International; Knights plc.

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• Tenzing