UK lower mid-market private equity firm ECI Partners has agreed to buy a majority stake in Citation, a consultancy that advises small businesses on employment law and health and safety, in a deal that values the company at £50m.
The deal was made through the London-based firm’s £430m 2010-vintage ECI 9 fund.
Cheshire, England-based Citation has more than 200 employees and provides professional advice and compliance packages to 7,500 business clients across the UK through a team of regionally located and employed consultants.
Since 2006, sales have risen more than 50 per cent to £15.4m for the year ended December 31 2011.
Andrew Vaughan, current chairman of ECI Partners-backed Premier Care, will join the board as chairman to work with the London-based private equity firm to expand Citation.
“We recognise there is a growing requirement for SMEs to demonstrate their compliance in Personnel & Employment Law and Health & Safety,” Richard Chapman, head of business services at ECI Partners, said in a statement released today.
“Our investment will help to accelerate the growth of the core Personnel & Employment Law and Health & Safety divisions.”
The deal is the latest instance of private equity involvement in the industry since the Legal Services Act came into effect in October last year, which lifts previous restrictions around the management, ownership and financing of firms providing legal services.
Dubbed “The Tesco Law” as it removed restrictions on where such legal products may be sold and allowed outlets such as supermarkets to provide legal services, the Act allows firms to receive external investment, a shake-up that has made Britain’s legal market one of the world’s most liberal.
European mid-market private equity firm Palamon Capital Partners completed the first major buyout in the sector after it bought a majority stake in QualitySolicitors, a UK brand of high-street solicitors for individuals and SMEs.
The Citation deal marks a busy period for ECI, which recently sold healthcare outsourcer Harmoni to Bridgepoint-backed services group Care UK, a move that wrapped up the firm’s seventh fund and delivered a healthy multiple and IRR to its investors.
Sean Whelan, ECI’s managing director who led the deal, told AltAssets in November that the sale of Harmoni marks the eighteenth and final exit from the firm’s seventh fund, which is now running at 3.1-times cost and generating an IRR of 45 per cent.
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