Thu 08/20/2020 09:54 AM
Relevant Documents:
Press Release
2018 Financial Results

Private equity firm KKR has acquired Hg-backed Citation Group after the deal was put on hold on April 21. KKR’s acquisition of the U.K. based HR services company is backed by a debt package based on a pro forma EBITDA of £35 million, sources reconfirmed to Reorg. The pro forma EBITDA remains as previously reported despite the deal being postponed until an EV multiple settled and the market moved out of peak uncertainty caused by the coronavirus outbreak.

One source familiar with the deal said it was using an EBITDA multiple of 15x, which would give Citation a price tag between £450 million and £525 million, based on £30 million to £35 million of EBITDA.

KKR declined to comment. It acquired the group through its European Fund V and through its Global Impact Fund, according to a press release. Deloitte, Jefferies, OC&C, Weil, Gotshal & Manges and Addelshaw Goddard advised Citation and Hg, the release added.

As previously reported, the Hg Capital-backed HR compliance and services company was in the final stages of the auction in late March with three private equity groups competing for the business.

Citation hired Deloitte at the start of 2020 to put together a debt package and was seeking funding of more than 7x leverage to refinance Alcentra’s incumbent debt structure. Post Covid-19, it’s expected that the leverage multiple will be lower than that.

Hg bought Citation from ECI in 2016 for £185 million and Rothschild arranged the debt package. Recent growth has been largely attributed to a series of bolt-on acquisitions including Solution Host Group and Safety Management in 2018 and Southall Associates Limited in 2019.

Citation reported LTM revenue to December 2018 of £40 million and cash flows of £9.6 million. Citation’s current CEO Chris Morris was brought in by ECI.

The Manchester-based company provides HR and employment law subscription services to more than 40,000 SMEs across the U.K. Founded in 1995.

--Lucía Camblor
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