HKA
Direct Lenders Consider 5x-6x Leverage for HKA Sale; Bridgepoint-Backed Company Marketed at $52M-$60M Ebitda, Could Reach 12x-15x Multiple; JPMorgan Advising
Thu 03/10/2022 08:02 AM
Relevant Document:
Consolidated FY’20 Accounts
Direct lenders are considering offering between 5x and 6x leverage to support the ongoing sale of U.K. consulting company HKA, sources told Reorg. Some sources added that the company's scalability and low capex needs are particularly attractive.
The Bridgepoint-backed company is being marketed off EBITDA of between $52 million and $60 million and is expecting a valuation multiple of between 12x and 15x, sources said.
HKA has appointed JPMorgan to run the sale and the first round bids are due this week or early next week, sources added.
The process is expected to attract private equity firms in both Europe and the U.S., given HKA has a significant presence in both these regions, sources told Reorg. Sources noted that potential sponsors have been instructed by JPMorgan not to engage with lenders until later in the process.
From March 2020, HKA directed all staff to work from home. The group drew down its RCF as protection against any potential adverse impact of the Covid-19, according to its financial report.
Despite initial concerns, the pandemic had little impact on the financial performance of the business. The group reported a revenue increase year over year of 11% to $199.97 million, in the year ended Dec. 31, 2020. Reported adjusted EBITDA was $43.5 million, a 32% increase from the previous year. The group acquired U.S.-based litigation consulting firm Kenrich Group in 2019.
As at Dec. 31, 2020, HKA’s net debt was $104.5 million. The group’s cash position doubled to close at $60.1 million with a significant decrease in days sales outstanding. Cash generated from operations was $47.6 million from $37.1 million a year earlier. The repayment of the RCF was made in June, 2020.
HKA’s capital structure is below:
HKA specializes in risk management and claims consulting for the construction industry, focusing on helping to resolve disputes typically arising from delays, unforeseen costs or changes in contract conditions. It was previously part of the U.S.-listed global construction consultancy Hill International, until it was acquired by Bridgepoint Development Capital in 2016, for $147 million in an all-cash transaction, according to a statement.
The group has a global network of more than 40 offices in 18 countries, handling construction claims that are typically for international firms and contractors undertaking large, complex building and infrastructure projects, according to Bridgepont.
Since being acquired by Bridgepoint, HKA has continued to expand geographically. In 2019, it acquired Kenrich Group LLC, a U.S.-based consulting firm, and in 2020, it acquired U.K. specialist engineering consultancy Probyn Miers.
HKA, Bridgepoint and JPMorgan did not respond to Reorg’s request for comment.
– Andrew Ross, Lucía Camblor, Kerstin Kubanek
Consolidated FY’20 Accounts
Direct lenders are considering offering between 5x and 6x leverage to support the ongoing sale of U.K. consulting company HKA, sources told Reorg. Some sources added that the company's scalability and low capex needs are particularly attractive.
The Bridgepoint-backed company is being marketed off EBITDA of between $52 million and $60 million and is expecting a valuation multiple of between 12x and 15x, sources said.
HKA has appointed JPMorgan to run the sale and the first round bids are due this week or early next week, sources added.
The process is expected to attract private equity firms in both Europe and the U.S., given HKA has a significant presence in both these regions, sources told Reorg. Sources noted that potential sponsors have been instructed by JPMorgan not to engage with lenders until later in the process.
From March 2020, HKA directed all staff to work from home. The group drew down its RCF as protection against any potential adverse impact of the Covid-19, according to its financial report.
Despite initial concerns, the pandemic had little impact on the financial performance of the business. The group reported a revenue increase year over year of 11% to $199.97 million, in the year ended Dec. 31, 2020. Reported adjusted EBITDA was $43.5 million, a 32% increase from the previous year. The group acquired U.S.-based litigation consulting firm Kenrich Group in 2019.
As at Dec. 31, 2020, HKA’s net debt was $104.5 million. The group’s cash position doubled to close at $60.1 million with a significant decrease in days sales outstanding. Cash generated from operations was $47.6 million from $37.1 million a year earlier. The repayment of the RCF was made in June, 2020.
HKA’s capital structure is below:
HKA specializes in risk management and claims consulting for the construction industry, focusing on helping to resolve disputes typically arising from delays, unforeseen costs or changes in contract conditions. It was previously part of the U.S.-listed global construction consultancy Hill International, until it was acquired by Bridgepoint Development Capital in 2016, for $147 million in an all-cash transaction, according to a statement.
The group has a global network of more than 40 offices in 18 countries, handling construction claims that are typically for international firms and contractors undertaking large, complex building and infrastructure projects, according to Bridgepont.
Since being acquired by Bridgepoint, HKA has continued to expand geographically. In 2019, it acquired Kenrich Group LLC, a U.S.-based consulting firm, and in 2020, it acquired U.K. specialist engineering consultancy Probyn Miers.
HKA, Bridgepoint and JPMorgan did not respond to Reorg’s request for comment.
– Andrew Ross, Lucía Camblor, Kerstin Kubanek
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