OC&C advises on sale of TES Global to private equity firm

16 January 2019 Consultancy.uk

International educational platform TES Global has been purchased by private equity firm Providence for an undisclosed fee. TES was provided with strategic advice and vendor due diligence support by OC&C Consultants.

TES Global is a digital education company offering teacher training, recruitment, teaching resources, classroom technology, news and events for the worldwide teaching community. Headquartered in Britain, TES is the 5th largest initial teacher training organisation in the UK, supporting a network of 11.6 million teachers and schools throughout the world. The online platform facilitates the sharing of educational resources and training materials, which are downloaded up to a million times a day. TES also provides recruitment and training services in order to allow schools to fill vacancies and qualify and train their teachers.

As of the New Year, TES has been purchased by private equity firm Providence from TPG Capital. Under TPG Capital’s ownership, TES has undergone a digital transformation from a predominantly print-based teacher classified business into a truly global tech-enabled education company. TPG made a series of strategic investments in the business during their ownership, via mergers and acquisitions, and by incorporating teacher training and education technology, as well as new systems and digital capabilities to develop product innovation for schools and teachers globally.

OC&C advises on sale of TES Global to private equity firm

Formed in 1989, Providence is an asset management firm with approximately $30 billion in assets under management across complementary private equity businesses. TES will now look to expand its network further, which is currently growing at 45,000 per week, backed by funds from its new ownership.

Commenting on the deal, Rob Grimshaw, CEO of TES Global said, “Over the next few years and backed by the strength of Providence’s expertise in the education sector, we look forward to taking that vision further. In particular, we aim to build on our already strong credentials as a software services provider, bringing smart digital solutions to schools both in the UK and worldwide. On behalf of everyone at TES, I’d also like to thank TPG for their guidance as owners of the business in recent years and their unwavering support for our successful strategic transformation.”

Dany Rammal, Managing Director at Providence, added, “By partnering with TES Global, we can combine their leading education platform with our expertise developing innovative education businesses around the world to build an even stronger operator in this exciting sector. Providence has over 150,000 students across our existing portfolio of education-focused groups that includes NACE Schools, Galileo Global Education and Study Group International, which make us particularly well-positioned to help Rob and his team propel TES Global’s world-leading community of teachers and school leaders towards its next phase of growth.”

During the sale process, TES Global was provided with strategic advice and vendor due diligence support by OC&C Strategy Consultants. OC&C provided TES Global with strategic advice and vendor due diligence support, leveraging their deep expertise in global education markets. The firm’s M&A team was led by partners Pedro Sanches and Zee Ashraf. Other advisors that were tapped by TES Global were corporate finance firm Jefferies, US law firm Cleary Gottlieb Steen & Hamilton and UK law firm Travers Smith. Providence was advised by UK-based M&A advisory Arma Partners and American law firm Weil, Gotshal & Manges.

Related: M&A team of OC&C advises on sale of Aston Manor and Wagamama.

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Consumer goods start-ups grow interest from venture capital

23 April 2019 Consultancy.uk

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.