UK - NVM reaps 8x return on DxS sale

The transaction could be more lucrative still for the investor, with a complex array of earnout payments potentially almost doubling the cash-on-cash return.

The purchase price is essentially structured in two parts: the first comprises a cash component of $75m, which alone equates to a return of 8x money and an IRR of 34%, as well as $20m in deferred payments. The second part of the deal comprises earnout provisions of up to $35m.

If the total purchase price is realised it would boost NVM's returns to 13x invested capital and a 39% IRR.

Manchester-based DxS specialises in the provision of molecular diagnostics, which are designed to aid doctors and drug companies in selecting safe and effective therapies for patients based on their molecular profiles.

NVM backed the business with a seed investment of £1.25m when the company was founded in 2001. The firm later led two further funding rounds in 2004 and 2006, which saw YFM and Hygea introduced as co-investors.

In total, NVM has invested £3m into the business.

DxS now employs about 80 staff and its EBITDA was £4.5m for the year ending June 2009.

The partnership with Qiagen is expected to help DxS roll out its assays globally and expand its Manchester headquarters, establishing it as a centre of excellence in pharmaceuticals partnering.

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