Altrincham-based “corporate compounder” investment group CorpAcq announced a $1.58 billion deal with Wall Street dealmaker Michael Klein that will see the UK firm join the New York Stock Exchange.
The deal is being done via Klein’s Churchill Capital Corp VI special-purpose acquisition company (SPAC) vehicle.
CorpAcq buys up small and medium-sized businesses led by their founders, and has expanded its portfolio to 41 such companies.
CorpAcq is run by Simon Orange, the brother of Take That singer Jason Orange. Simon Orange also owns rugby union team Sale Sharks.
Within the CorpAcq portfolio are construction equipment firms, packaging companies and clothing group Cotton Traders. CorpAcq last year reported $826 million in revenues, with adjusted earnings of $129 million.
“CorpAcq Holdings Limited, a corporate compounder with a proven track record of acquiring and supporting founder-led businesses, and Churchill Capital Corp VII, a special purpose acquisition company, announced today that they have entered into a definitive agreement for a business combination,” said the companies in a statement.
“The transaction values CorpAcq at a pro forma enterprise value of approximately $1.58 billion and is expected to provide CorpAcq with up to $592 million in the cash held in Churchill VII’s trust account (assuming no redemptions), which will help facilitate advancing CorpAcq’s strategy and accelerating its growth initiatives.
“Upon closing of the transaction, the combined company will operate as CorpAcq and intends to list on the New York Stock Exchange.
“Based in Altrincham, England and founded in 2006, CorpAcq has cultivated a leading reputation as a ‘preferred buyer’ for founder-led small and medium-sized enterprises (SMEs) based on its founder-friendly, management empowered value proposition and focus on investing for long-term performance.
“Through a disciplined approach, CorpAcq has acquired and built a diversified portfolio of well-established businesses in the UK with strong asset bases, high barrier to entry business models, profitable growth, free cash flow generation and experienced management teams who typically remain in-place after acquisition.
“As of the end of July 2023, CorpAcq’s portfolio consists of 41 businesses. The average age of its existing portfolio of companies is greater than 30 years old with at least one member of the pre-acquisition management teams still represented in 98% of the acquired companies.
“CorpAcq is one of a small group of companies in the Northern European region that employ the compounder model of acquiring and holding small to medium-sized businesses, at least one of which has grown to a portfolio size of more than 225 companies.
“CorpAcq’s approach to maintaining autonomy within its businesses and commitment to a perpetual ownership horizon has enabled it to purchase quality businesses at attractive single-digit multiples of cash flow and generate strong returns on investment.
“CorpAcq management helps to professionalize each business it acquires and provide a range of support functions that drive long-term operational improvements, growth, and sustainability.
“This acquisition strategy, supplemented by the current portfolio of mature and stable companies, creates an opportunity for investors to own a differentiated platform with a compelling combination of potential for earnings growth and strong risk-adjusted returns.
“Additionally, CorpAcq expects to initiate an annual dividend policy following the close of the transaction that is supported by the underlying cash flow generated from the current portfolio.
“Churchill Capital is a leader in listed equity growth vehicles.
“Churchill Capital invests in, executes value-enhancement strategies for and provides other support for high-quality, entrepreneurial businesses in the public markets. Its public equity growth vehicles have a track record of acquiring profitable, growing businesses of scale. Churchill VII consummated its initial public offering in February 2021.”
Orange said: “Today is an exciting milestone in CorpAcq’s history and validation of our team, our tremendous growth and our approach of partnering closely with and empowering portfolio companies to drive long-term performance.
“We are thrilled to partner with Churchill VII. With their team’s deep M&A and capital markets expertise, track record of value-added investing in companies as well as an extensive relationship network, we are confident that Churchill VII is the right partner to propel CorpAcq’s next phase of growth.
“As a public company, we believe CorpAcq will be better positioned to accelerate organic growth, expand our acquisition pipeline deeper in the UK and deliver compounding returns to shareholders, all while staying true to our ethos of fostering autonomy at our portfolio companies and investing over a long time horizon.”
Michael Klein, Chairman and CEO of Churchill VII, said: “When we launched Churchill VII, we wanted to identify a profitable, cash flow generating partner with strong management, a highly differentiated business model and clear growth opportunities.
“We believe CorpAcq fits all our criteria and more with its proven acquisition and operating strategy, established positioning in the UK SME space, track record of topline growth and profitability and talented management team.
“With its meaningful financial returns, current industry positioning, substantial cash flow to support dividends and upside potential to accelerate its acquisition pace in new markets, we believe the Company is a highly attractive opportunity for shareholders.
“We look forward to working with Simon and the rest of CorpAcq’s management team as we position this business for future success.”
Orange will continue to lead the company, along with CEO David Martin and the rest of CorpAcq’s leadership team.