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HKA owner Bridgepoint prepares exit

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Bridgepoint is preparing to exit its stake in consulting firm HKA Global in a process expected to kick off in the first half of next year, according to four sources familiar with the matter.

JP Morgan is in pole position to secure the sell-side mandate after the buyout group solicited informal pitches over the summer, three of the sources said. A process is expected to kick off early next year, two of them added.

Mergermarket reported in February that HKA would undergo a recapitalisation of the business this year, following which a sale process would take place in 2022.

HKA, which specialises in dispute advisory services for the construction industry, is expected to be marketed based on EBITDA in the USD 55m range, according to one of the sources.

EBITDA increased by 31.9% to USD 43.4m for the year ending in December 2020, partly driven by revenue obtained from its integration of Kenrich Group, a litigation consulting firm in the US, for a net cash payment of USD 54.1m, according to Companies House filings. Revenue increased by 10% to USD 200m.

HKA has performed well in the last year and could fetch a multiple in line with Jacob Industries' GBP 1.825bn acquisition of PA Consulting announced in late 2020, the second source said. PA fetched a 14.5x-15x last-12-month EBITDA multiple, according to Mergermarket data.

Recent deals in the sector include Duff & Phelps' acquisition of London-headquartered Blackrock Expert Services Group last December for an undisclosed sum. The deal valued Blackrock Expert Services at 12-13x EBITDA.

Secretariat, a US litigation consulting firm, was also acquired by JLL Partners in February 2018 for undisclosed terms.

HKA's advisory services aim to resolve disputes or litigation related to construction delays and damages or changes in contract conditions. It handles construction claims that are typically for international firms and contractors undertaking large, complex building and infrastructure projects.

Bridgepoint acquired HKA from US management consultancy Hill International for USD 147m in December 2016.

Recent deals include its acquisition of UK-based Probyn Miers last August for an undisclosed sum. HKA has more than 1,000 advisers and consultants across 45 offices in 15 countries. It competes with Ankura Consulting, though the former operates more like a pure-play provider.

Bridgepoint and JP Morgan declined to comment. HKA did not respond to requests for comment.

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