UK private equity firm invests in Australian consultancy TSA Management

11 December 2017

TSA Management, an Australian consulting firm, has received an investment from Livingbridge, a UK based private equity firm with offices in London, Birmingham and Manchester.

Established in 2001, TSA Management is a consulting firm that specialises in programme and project management. The company’s team of over 150 staff, of which 31% is female (well above Australia’s 11% construction industry average) is based across East-Coast Australia with a presence in Sydney, Melbourne, Brisbane, Newcastle and Canberra. TSA Management’s track record includes over 1,000 projects completed for private and public clients in the infrastructure and property sectors.

Last week Andrew Wilson, the CEO of TSA Management, unveiled that the Australian consultancy has received a capital injection from UK’s Livingbridge, a mid-market private equity firm that invests in fast-growing companies. The strategic collaboration between the two parties comes a year after Livingbridge expanded into Australia with the opening of a Melbourne office and marks its first investment in the country. The investor, which recently year won the ‘UK House of the Year’ award at the 2017 Real Deals Private Equity Awards, has since also branched out to the United States (based in Boston).

Wilson said the investment will be used to support the firm’s expansion into new sectors and geographies, while refraining from revealing more concrete details of the strategic plan. In its latest expansion, TSA Management opened a new office in Newcastle, Australia, in January this year, headed by the experienced construction expert Paul Muir. “We look forward to capitalising on both Livingbridge's investment and their know-how to support our growth plans.”

TSA ManagementHighlighting TSA’s attraction to Livingbridge, Gareth Young, Managing Director of Livingbridge Australia said, “TSA has built a talented workforce, specialist experience and long-standing client relationships across a diversity of infrastructure and property markets. We are excited to help them progress to the next stage of their growth.”

The deal between the two parties was facilitated by the UK and Australian offices of Equiteq. The M&A consultancy for the professional services industry is one of Livingbridge’s trusted advisors for targeting opportunities and transaction support, having previously worked together on investments such as Four Eyes Insight (a UK based clinical consulting firm) and The Test People (an IT services firm based in Gibraltar).

Commenting on the transaction, which closed on the 1st December 2017, Pierre Briand, Managing Director of Equiteq Australia said: “We are delighted that Livingbridge chose Equiteq for their first Australian investment. Not only is the TSA Management deal a milestone for us and our client, it is an example of the infrastructure boom, a growing and key sector for the Australian economy.”

Livingbridge’s added, “Equiteq were invaluable in providing sector specific advice to support our investment in TSA Management.”

Meanwhile, in Europe, Equiteq also closed a deal between French engineering group Assystem and Belgian life sciences firm The Biotech Quality Group last week. Equiteq served as the exclusive advisor for The Biotech Quality Group.

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Consumer goods start-ups grow interest from venture capital

23 April 2019

Funding the latest consumer goods start-up has been a real money-spinner for venture capitalist firms, with a number of $1 billion companies – or unicorns – having emerged in the space in recent years. New analysis has explored the resulting corporate consumer products activity in the acquisitions space.

Consumer products have enjoyed years of strong growth as new markets opened in developing Asia. China in particular has enjoyed strong growth across a range of consumer good types as the country’s middle class expanded. Private equity firms have been keen to pick up targets in the space as they expand their portfolios to include additional local capacity as well as customers in new markets.

As a result, a study from Bain & Company has found that interest from PE firms in the consumer product space grew sharply in 2018, hitting 6.1% of all invested capital for the year, and making it the third most sought-after category. It is now only behind financial services (23.9%) and advanced manufacturing and services (13.9%).

Corporate venture capital investment

The ‘M&A in Disruption: 2018 in Review’ research found that growth in the segment reflects key changes in the segment as a whole. This is particularly true of insurgent brands, which often leverage local expertise in order to take on international giants in domestic markets.

Short change

The market changes have led to shifts in motivations for consumer goods company investments from PE firms. The number of strategic investments stood at 50% in 2015 compared to deals that increased scope. This has shifted significantly, with 34% of deals focused on strategic outcomes in 2018 compared to 66% for scope. The move towards scope reflects companies seeking out fast-growing products that enable stronger revenue growth streams.

Acceleration in scope-oriented M&A in consumer products

However, there were other motivations for deal activity in the space. Activist investors have put pressure on companies to expand their portfolios in recent years, with the trend expanding from just US targets to Europe.

Further trends

The other key shift in the space regards outbound deal activity. The study found that outbound deal activity has increased significantly in the Americas (up 363%) with total deal volume up only slightly (15%). Key deals included Coca-Cola and Costa, Procter & Gamble and Merck’s consumer health unit, and PepsiCo and SodaStream. In the Asia-Pacific region, outbound deal activity rose 195% while total deal activity fell sharply, by -36%. The EMEA region saw both a sharp decline in outbound deal activity, at -68%, as well as lower overall deal activity, which fell by 32%.

Cross-regional deal making

Deal-making in the current environment is increasingly fraught with uncertainties, as business models change on the back of new technologies, new consumer sentiments and wider market changes from new entrants. As such, acquisitions are increasingly useful as possible hedges on changes in market direction. As such, companies are increasingly pressed to take a future-back position, making sure to incorporate a vision of how the company needs to look in five years into acquisition strategy.

The firm notes that certain acquisitions which enhance a remembrance of a nobler mission, revive a sense of entrepreneurialism and engage directly with consumers may be necessary qualities in acquisitions that transform a company to fit market expectations in the coming decade. While going forward, focus on innovation, partnering with retail winners, reducing cost base and constantly reallocating scare resources will be necessary to protect market share in areas where insurgent local and strategic competitors are active.

Related: Private equity asset growth top priority for 2018.