26 August 2020 – SKS Business Services Limited (“SKS”), the award-winning firm of chartered accountants, has been backed by Shard Credit Partners with an additional £10 million commitment to fund a range of strategic acquisitions in the North East of England and elsewhere. Heads of terms have been signed on the first deal, which is expected to be completed in September 2020.
In total, Shard Credit Partners has committed £20 million to support SKS’s acquisition-led growth as it aims to become a top 20 UK accounting firm. Using finance arranged by Shard Credit Partners, SKS has completed ten acquisitions since May 2018. These acquisitions include the recent acquisition of Thompson Jones in Bury, just north of Manchester, in September 2019. This expansion into the North West marks the first of what is expected to be a series of acquisitions in the North West and North East as SKS continues its nationwide expansion plans into new geographic areas.
SKS provides accounting, bookkeeping, tax, payroll and outsourced finance function services to SMEs across the UK and has a growing insolvency business. SKS is one of the UK’s leading SME-focused accounting services firms, with client numbers growing to circa 8,500, up from 3,500 in 2018. The new acquisition will cement this position, giving SKS a new foothold in the North East. SKS already has a presence in four out of the eight UK regions, including the East of England, the South East of England, London and the North West of England.
SKS’ buy and build strategy has delivered strong revenue growth from £4.7 million in June 2018, to over £12.0 million as at 30 June 2020. EBITDA has increased from £1.2 million to £3.2 million in the same period, consistently achieving an EBITDA margin of around 27%.
SKS has a strong pipeline of additional acquisitions across the UK expected to complete during the remainder of 2020 and into 2021, with the continued support of Shard Credit Partners. Providing this funding fits with Shard Credit Partners’ strategy to become a leading provider of capital to companies focused on achieving growth in the North of England. In the past 18 months, Shard Credit Partners has deployed investment commitments totalling £46.8 million in this region.
Shard Credit Partners CEO, Alastair Brown, said: “As it builds upon its highly successful acquisition-led growth strategy, we are excited to be supporting the next phase of SKS’s expansion as it moves into the North East. The region is an area of focus for Shard Credit Partners. In the past 18 months we have completed four management buyouts in Newcastle, Leeds, Durham and Liverpool. We have deployed investment commitments totalling £46.8 million in the North East and North West regions. Despite the economic conditions, we see lots of investment opportunities in the area in the coming months.”
Sanjay Swarup, Managing Director of SKS, said: “Shard Credit Partners’ financing has been instrumental in our acquisition strategy. We are developing a reputation of helping accountancy and insolvency firms merge with us seamlessly with minimum client attrition. Our modern working practices have allowed us to deliver high-quality services, on time and without disruption, to our clients during the pandemic. We are proud of the fact that both the increase in Shard Credit Partners’ commitment by £10 million and talks with potential firms wanting to merge with SKS happened during the height of lockdown. This interest reflects the momentum that SKS has developed over the last several years.”
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About Shard Credit Partners
Shard Credit Partners is an investment manager focused on private credit strategies in the UK lower mid-market. Its funds seek to generate superior risk-adjusted returns from conservatively structured senior secured credit investments at low leverage, benefiting from robust documentation and full covenants. Shard Credit Partners is currently investing from its debut direct lending fund Shard Credit Partners Fund I, which held a first close in October 2017 at £90 million. Shard Credit Partners will commence fundraising for its second UK lower mid-market direct lending fund during the fourth quarter of 2020.
Shard Credit Partners invests in solid small to medium sized businesses with strong management teams, supporting them by providing transformative growth capital and event driven financing in support of innovation, growth and expansion. The fund invests in businesses across all sectors and throughout the UK. The firm has a strong ESG focus; in particular, it is a strong supporter of female entrepreneurs and firms with meaningful female leadership and senior management.
Recent investments include the innovative double MBO of BW Legal and PRAC Financial in Leeds, which was named by Insider Media as their Deal of the Month for February 2019. In the same month the fund also backed the primary MBO of GadCap Technical Solutions Ltd in Newcastle. In September 2019, Shard Credit Partners completed the MBO of Alexander Technologies Europe Limited in Peterlee, County Durham. In March 2020, Shard Credit Partners backed the MBO of Jackson Lees Group in Merseyside by its senior management team. The fund is currently working on a number of live mandates around the UK for completion in the fourth quarter of 2020.