News
Press release: Sullivan Street Partners acquires leading residential behavioural and mental health specialist UK Addiction Treatment Group (UKAT)
Sullivan Street Partners has acquired UKAT: Private Addiction Rehabilitation & Mental Health Services after a highly complex administration and sales process.
UKAT is the nation’s leading residential addiction treatment group. Operating over 200 beds across eight residential facilities in the UK, it specialises in comprehensive care and rehabilitation services for alcoholism, substance abuse, and wider behavioural health conditions.
Sullivan Street’s acquisition of UKAT will free the business of its restrictive ownership challenges and support its mission to provide best-in-class outcomes to vulnerable patients in a chronically underserved market. We’ve forged strong relationships with UKAT’s management team and developed a comprehensive knowledge of the sector. We’re excited to begin working on our plans spanning the next five years which will include an ambitious expansion of UKAT’s facilities and service offerings.
Layton Tamberlin, Co-Founder and Managing Partner, comments: “We have deep respect for CEO Daniel Gerrard and his drive to provide the best possible outcomes for UKAT’s patients and stakeholders, and persevering through challenging periods of fraught ownership. We are confident in UKAT’s resilience, and look forward to providing the business with the necessary capital and guidance to thrive.”
Roundtable: Pulling the right value creation levers | Real Deals
Sullivan Street Partners’ Richard Sanders joined the Real Deals editorial team and industry peers for the publication’s August Value Creation roundtable at Fortnum & Mason.
Richard discussed the strategies that private equity firms can use to grow and strengthen their portfolio companies alongside Steve Butterworth from Neighbourly, Confidas People’s Bruce Douglas, Marvin Fletcher Rogers from Sage, William Gresty from BGF, WestBridge’s James MacLeay, Valerie Monk from Montagu, and GRAPH Strategy’s James Tetherton.
They covered a wide range of topics, including how to navigate organic growth, the fresh perspective private equity investors can bring to businesses, and ESG as an essential avenue for value creation. Richard provided insight into how Sullivan Street retains top talent, methods for assessing a company’s purpose and culture whilst conducting financial due diligence, and how the firm remains authentic in its investments.
We have a unique experience transforming businesses in the face of complexity and creating value sustainably whilst ensuring meaningful change and strong returns. Thank you to all of the participants and to Real Deals for inviting us to partake in such a pertinent conversation.
Read the full piece here: https://lnkd.in/epKk_mrt
Portfolio spotlight: Octavius Infrastructure
Sullivan Street Partners offers a closer look at its portfolio company, Octavius Infrastructure , celebrating its success and reflecting on its evolution.
Sullivan Street carved out Octavius Infrastructure in 2021 from its parent company Geoffrey Osborne Group. The business had established a strong reputation in rail and road infrastructure services built on a highly collaborative, customer-centric culture. Many financial buyers would not have been comfortable with the work and risks involved in the separation. However, with a dedicated team and a clear vision, we were able to establish Octavius as a fully independent entity within nine months.
Once independent, Sullivan Street has played a pivotal role in growing Octavius’ value, setting ambitious goals for expansion, regional diversification and operational efficacy, and focus on electrification, complex projects, and impactful civil engineering.
Richard Sanders, Managing Partner and Co-Founder, said: “Thanks to our partnership, the excellent management team, and hard work across the organisation, Octavius has had unprecedented success, emerging as the only contractor in the UK to win frameworks across all four regions in England & Wales. By adding electrification capabilities and a design business, Octavius is very well placed to drive great results for its clients, keeping the trains running and the roads working.”
In 2023 alone, Octavius made two bolt-on acquisitions – R&W, a civil engineering contractor specialising in highway and engineering services, and Navitas Engineering Ltd, a railway consultant providing electrification, engineering, and design services to infrastructure supply industries.
In addition to assisting the company in its financial growth, Sullivan Street has also commited to key social and environmental initiatives. Octavius has generated over £80 million through local supply chain partnerships, partaken in over 2000 hours of volunteering initiatives, and taken on 25 apprentices. The business has also made great strides in its environmental objectives, reducing its Scope 1 and 2 carbon emissions by 27%, and is on track to achieve its ambitious goal of net zero emissions by 2035.
Shake it up | Real Deals
Richard Sanders spoke with Xhulio Ismalaj from Real Deals on the rise of restructuring as a strategy to reset various fund managers’ portfolio companies through a difficult growth environment.
The article explores the ways different private equity owners are restructuring assets that have not come to market due to the last few years of turbulent macroeconomic conditions. Richard outlines why cost-based restructuring is highly likely to increase in 2024 as an initial fix, now that some asset managers’ patience is wearing thin.
At Sullivan Street Partners, we’ve always been a long-term investor that can expertly navigate complex deals, so it was a pleasure to reflect on our experience and share our insights with Real Deals alongside Ivo Hobson from Mutares SE & Co. KGaA, and Interpath Advisory‘s Richard Harrison, David Pike, and James Fagan.
Read the full article here: https://lnkd.in/exVbgMxG
2024 UK Private Equity Outlook | Actum Group
Richard Sanders has shared his foresight on sector expectations in Actum Group’s UK Private Equity 2024 outlook.
With our sector-agnostic perspective, Richard comments on the industries that he anticipates will perform well in 2024, highlighting that Sullivan Street Partners has observed strong deal flow in asset heavy businesses, engineering, and healthcare. He also considers the reasons for this performance, namely that owners are wanting to derisk after facing losses during the pandemic.
We are seeing many situations where an operations-led approach is key to helping vendors and future management teams. As investors with comprehensive experience dealing with complex and operationally-intensive situations, we look forward to the opportunities that 2024 will bring.
As always, we enjoyed having the opportunity to share our market perspectives with Reporter Paul Francis-Grey and to be part of a wider discussion alongside Jamie Roberts from YFM Equity Partners, ECI Partners ’ Tom Wrenn, Peter Barkley from WestBridge, and RSM UK’s Jasper van Heesch.
Read the full report here: 2024 UK Private Equity Outlook | Actum Group
Sullivan Street plots more acquisitions to accompany organic growth strategy behind Octavius | Actum Group
Sullivan Street Partners‘ Richard Sanders recently spoke about one of our flagship portfolio companies Octavius Infrastructure with Paul Francis-Grey from Actum Group.
The article focuses on the infrastructure sector, namely Octavius’ journey since acquisition, and its ongoing partnership with Sullivan Street. Richard shares his outlook on the construction sector and how it’s proving to be a challenging area for private equity to navigate. Despite this, he outlines Octavius’ successes in winning new contracts that are supporting Network Rail and National Highways projects, as well as its most recent bolt-on acquisitions of R&W and Navitas Engineering Ltd.
As long-term investors, we’re excited to continue being part of Octavius’ journey in welcoming new acquisitions into the group, mobilising new contracts, and delivering several internal improvement projects.
It’s always a pleasure catching up with Paul from Actum Group to discuss our various avenues for value creation and sharing updates on our portfolio companies.
Read the full article here: https://lnkd.in/edHsr3vm
Insight: Our approach to the triple bottom line
Our approach to the triple bottom line: Across all companies in the Sullivan Street Partners portfolio, we require a sustainable and well-balanced approach to company strategy. Language nuances change depending on the sector and the organisation we inherit at acquisition, but the goal always remains the same: drive growth that positively impacts the interconnected triple bottom line of people, profit, and the planet.
Richard Sanders, Managing Partner and Co-Founder, shares: “I’ve faced many questions about how to make sustainable goals work, and how to strike the balance between generating profits and doing the right thing. The truth is, for the vast majority of businesses, there is significant scope to improve operations whilst also driving positive impact for people, profit, and the planet. We don’t think about them in separate buckets, but rather as a comprehensive package.”
The Wave, one of Sullivan Street’s flagship portfolio companies, was founded with the use of the triple bottom line. The company prioritised the development of a solar farm on site, ahead of the energy crisis, which has reaped significant financial benefits. During our partnership, we’ve modified customer service duties to combine positive social impact with sales responsibilities, finding common processes to make both more effective. These successes and improvements demonstrate how this set-up is an effective and simple means of ensuring balanced considerations in decision making and informing company strategy.
As stewards of our companies, we comprehensively review environmental, employee, and financial performance to develop bespoke plans for change. We consider all stakeholders in these interventions and state the impacts holistically so that, together with management, we can make informed decisions. This takes no longer than a narrow focus on profit and is simply a mindset shift.
Roundtable: Special situation market players find special purpose | Real Deals
Sullivan Street Partners‘ Zeina Bain took part in Real Deals‘ Special Situation Roundtable hosted at Six Park Place.
The roundtable discussion explored what to expect in this segment of the market in 2024 in terms of investor appetite, deal dynamics, and management approach. Whilst discussing the headwinds that businesses are faced with, we examined the possibilities these might create in the special situations space – ranging from scope for value creation, the need for more proactive ownership, and the new investment opportunities that may arise.
As investors focused on complex or operationally-involved situations, this was a great opportunity to draw on our experience working with management teams across businesses facing different challenges, and to hear what our peers are doing in this space during this eventful time.
It was a pleasure taking part in such a thought-provoking conversation alongside other sector specialists Jat Bains from Macfarlanes, Alchemy Partners ’ Thomas Boszko, Alex Cadwallader from Leonard Curtis, Tom Callaghan from Endless LLP, AURELIUS’ Tristan Nagler, and Ridgeway Capital Llp’s Ari Stavropoulos. Many thanks to Alice Murray, Taku Dzimwasha, and the Real Deals events team for organising this insightful roundtable discussion!
Read the key takeaways here: https://lnkd.in/gEZV2m5f
Roundtable: The art of the corporate carve-out | BZ
Sullivan Street Partners’ Investment Professional Oliver Marshall was invited to participate in BZ’s first round table on the ‘Art of the Corporate Carve-Out’. With approximately one-third of the top 20 deals in Q3 of 2023 being carve-outs, it is important now more than ever to understand their feasibility as a portfolio strategy and a means to build long-term value.
During the round table, we discussed the post-acquisition strategies typically employed, ways to work with existing management, and the criteria to ensure that a business can succeed post a carve-out. Given Sullivan Street’s comprehensive experience in executing complex carve-outs, we enjoyed digging deep into a topic that leverages our skillset and reflects our portfolio.
Thank you to Cem Yaslak for moderating and to the BZ team for inviting us to contribute. We are always keen to share our industry knowledge with our peers, and to have a candid conversation about the different approaches we adopt. It was a pleasure exploring this pertinent subject alongside Azeem Ahmed from AlixPartners, Dave Edwards from FRP Advisory, PwC’s Chris Hawes, AURELIUS’ Tristan Nagler, and Lincoln International’s Sophie Pollitt.
#privateequity #carveout #transformation #roundtable
Press release: Sullivan Street makes bolt-on acquisition of Navitas through its portfolio company Octavius
Sullivan Street Partners’ portfolio company Octavius Infrastructure Limited has just completed the bolt-on acquisition of Navitas Engineering Ltd.
Navitas, a specialist railway consultant, provides railway electrification, engineering, and design services to infrastructure supply industries. The acquisition of Navitas, an industry leader across the UK, is a perfect fit for Octavius, which strives to bring safe and efficient transport networks to its customers and partners.
Since investing in Octavius over two years ago, we are proud to see the company expand sustainably, and assert itself as one of the nation’s largest infrastructure solutions providers. We are thrilled about the opportunities that will emerge from this partnership, and are pleased to welcome the Navitas team to the Sullivan Street fold.
#privateequity #acquisition #bolton #infrastructure
The art of fostering businesses | Real Deals
In the Real Deals article “Fostering businesses”, Sullivan Street Partners’ Richard Sanders shared key insight and experience with Reporter Matthias Plötz on the importance of trust and transparency when it comes to company culture and value creation.
In our discussion, we explained why ‘community businesses’, based on strong relationships between staff and customers, are particularly attractive to us and sit at the core of our portfolio, as well as the importance of fostering a culture based on inclusion and meritocracy. We also emphasised that building genuine trust through transparent and open communication between parties is paramount when it comes to creating meaningful value in a company.
Challenges can arise when companies move from a founder stage to professional ownership. At the centre of Sullivan Street’s operations and as stewards of our companies, we focus on being open-minded and clear with our approach to ensure that staff and management’s goals are aligned to enable each company’s transformation.
This is a topic that has always been close to our hearts and filters down into every decision we make at Sullivan Street. We’re always happy to discuss value creation from a people’s perspective as we continue to learn what drives the industry and those within it.
Read the full article here: https://lnkd.in/eceZ5QMz
Insight: Our approach to transformation
Our approach to transformation: Swathes of management theory have written about the art of successfully transforming a business. Different methods for effective integration post-acquisition include: preparing an organisation by stating a new goal, updating processes, changing systems, restating roles, developing new capabilities, or re-prioritising workloads. Sullivan Street Partners’s core principles lie at the heart of all these strategies.
Richard Sanders, Managing Partner and Co-Founder adds: “Transformation can often lead to a period of disruption or uncertainty for employees, leaders, clients, and other stakeholders, from the moment change is announced and for some time after the modification has happened. A planned transformation has to start with an appreciation for the culture of the business and an understanding of the behaviour and mindset required to undergo the change and beyond. The gap in experience and attitudes must be factored into the approach to transformation and the time taken to bring people with you.”
Although communication is essential throughout these transition periods, it’s only effective if the messages expressed are authentic and relevant. Examples of key information to share include: the reason for the change, the improvements you expect to make, how long the transition period will last, and what this means for each individual involved. When companies fail to share this information or fail to properly structure the transition period i.e. provide no plan, timescale, or explanation, a wedge can be driven into the group, and employees can be left guessing.
At Sullivan Street, we have implemented major changes in various businesses across many sectors. Our operational expertise enables us to effectively guide companies through these processes, helping them to be more comfortable with moving forwards and communicating more openly. We appreciate that every situation is different, but it is important to remember that people and their core needs are largely the same. Acting with empathy, respecting your colleagues, and fostering an open approach is the best way to ensure a successful transformation.
The Wave Bristol, Post-Summer Thoughts
As summer draws to an end, Sullivan Street Partners and the team at The Wave reflect on an active 18 months since the acquisition.
Hazel Geary , CEO at The Wave said: “It has been a great 18 months and we are very proud of the progress being made in Bristol. This summer the weather has been more unpredictable than ever, but as a team we’ve managed the situation well. This is not a challenge to be underestimated given all the planning around staffing and training that is undertaken in the winter. The key is working as a team with the visitor at the heart of our thinking. As always, we are thankful to all our staff and of course to everyone who has visited us!”
Richard Sanders, Managing Partner at Sullivan Street said: “It is easy to assume that operating a surf park is straightforward and that anyone with operational leisure experience can do it. In reality, it takes a significant amount of time to learn the intricacies of operating a surf park, and there are no easy ways to learn without doing. With lots of surf park developments being planned around the world, we’ve come across many unrealistic business cases being used to inform planning by developers, especially in the early years.”
This is a new industry with many lessons to learn. Many parks, just like Bristol, initially have to build awareness locally and nationally to attract visitors outside of the already active surf community. Aiming to make more than £2m in profit over the first year of business ignores the time it takes to amass a frequent following. Filling each surf session relies on highly capable marketing and sales efforts. To deliver the visitor experience consistently requires well-developed training and management across coaches and onsite staff. Therefore, the return on capital takes time to build up, particularly when the right expertise is yet to be put in place.
The Wave has now established more efficient ways of working, improved staff training, strong leadership, and effective communications and marketing approaches. A second site for The Wave will leverage that momentum and will benefit from a robust and transferable system. An outsider’s perspective doesn’t always see all the moving parts that fit together in balance, the lessons learnt along the way, and the potential pitfalls on either side of operations.
We are in discussions with two domestic locations and two overseas locations about supporting their wave park opportunities. We can provide marketing, ticketing, operational planning, systems, training, health and safety, recruitment, and customer service expertise to any site. We already have a full team able to support more than one location. Even if a park is fully funded and ready to go, we can save them money and risk in the build, take millions out of the set-up cost, and help avoid two years of pain when establishing a full operation.
If anyone is currently creating a new wave park, please get in touch. We’d be keen to further discuss our approach and find ways to collaborate.
Sullivan Street to internationalise The Wave’s operating systems | Actum Group
Richard Sanders reflected on The Wave’s first summer under Sullivan Street Partners’ stewardship in an interview with Paul Francis-Grey from Actum Group.
In our previous conversation, we discussed The Wave as a unique asset and our investment strategy. We enjoyed the opportunity to discuss what the last six months have presented for the inland surf park, since our last chat with Actum Group.
As strong believers of test and learn, we’ve experienced our fair share of unexpected changes, challenges, and updates. It’s always a pleasure looking back at the operational enhancements we have put into place at The Wave, our larger ambitions for the park and its technologies, as well as the lessons we’ve learnt along the way.
We’re always happy to share a snapshot of our investment strategy and the effective ways we create value.
Read the full article here: https://lnkd.in/e-3pt-Ni
How PE firefights reputational risks | Real Deals
Sullivan Street Partners‘ Zeina Bain spoke with Shivani Khandekar from Real Deals to share key insights on the potential reputational risks that private equity firms face.
In our discussion, we delved into what reputational risk means to us as an operationally-minded investor. Whether it’s going through extensive due diligence processes, setting behavioural expectations, or ensuring that communication between all parties is transparent and honest, these are all pertinent topics that are always at the forefront of our minds.
The key is to consider all stakeholders – staff, suppliers, customers, and broader environmental impacts ahead of going into a deal and setting the tone early to ensure the right culture in our investee companies is in place. At Sullivan Street, we always apply a personal litmus test when assessing investment opportunities as we are committed to being supportive stewards of good businesses.
Read the full article here: https://lnkd.in/ePdnDqQg
Insight: Our approach to bolt-ons
Our approach to bolt-ons: At Sullivan Street Partners, we believe that good integration comes from a good acquisition process. Too often, bolt-on acquisitions are treated as a mathematical and mechanical means of growing an existing portfolio company. However, at Sullivan Street, we treat bolt-ons as individual organisations, with much more to bring to the culture and operations of our portfolio company, rather than simply a vehicle for expansion.
When considering a company’s future and accompanying strategy plans, we consider the acquisition’s ethos, culture, people, and the elements it aims to preserve. We do this by having candid conversations with any new business to understand its operational strategy, as well as what the company is hoping to achieve.
Once we have successfully identified the growth strategies of both enterprises, we can then consider how to bring the two entities together. We rely first and foremost on the management teams of our portfolio companies to achieve this – we only ever embark on a bolt-on strategy once we have full confidence in said team. Beyond that, we depend on our forward-looking, pragmatic, and operational approach to help us advise management on which services should retain their differences, and which should be merged.
Layton Tamberlin, Managing Partner and Co-Founder said: “At Sullivan Street, we work with businesses with whom we truly resonate. It is of the utmost importance to honour the original management team’s hard work and retain its high-calibre staff. We do so by considering operational realities throughout the process, and by doing our best to preserve the qualities that initially attracted us to the company. Similarly, we would always advise sellers to fully grasp their buyer’s understanding of the company – to guarantee that they appreciate and respect the company’s core mission.”
Insight: Our approach to test and learn
Our approach to test and learn: At Sullivan Street Partners, we operate on the belief that the simplest way to achieve continuous improvement is to always try new methods of working. Bringing about meaningful improvement involves attempting to make a change, gathering feedback, diagnosing the impacts, and learning from this process.
For many of the companies we are involved in, something has halted the learning process prior to being brought into the Sullivan Street fold. From our experience, breaks in the learning cycle can be caused by complex company structures, poor role definitions, a lack of ambition, an overbearing parent organisation, or insufficient funds; all these potential causes are often compounded by difficulties in the marketplace or a disconnect with clients.
Richard Sanders, Managing Partner and Co-Founder: “Anyone attempting to make proactive and ongoing change within any company, first needs to establish a test and learn mindset. It goes back to a very simple concept that we all learn through experiment and feedback.”
KPIs and performance culture are terms often referenced by private equity, consultants, and businesses in driving value creation, but the language of metrics can be off-putting. Test and learn is more human and natural than any report a dashboard could provide. Experimenting and learning from the results is essential. Sometimes things work, and sometimes they don’t – the real failure is not trying or ignoring the impacts when you do.
Press release: Sullivan Street makes bolt-on acquisition of R&W through its portfolio company Octavius
Sullivan Street Partners is pleased to announce the bolt-on acquisition of R&W by its portfolio company Octavius Infrastructure Limited.
Civil engineering contractor R&W specialises in highway and civil engineering services. R&W has always been an attractive business to Octavius due to its complementary culture, service, and capabilities, making it a natural fit to bring into the Octavius fold. This partnership marks a milestone for both companies and reinforces Octavius’ commitment to growth and market leadership.
We look forward to seeing how Octavius will integrate R&W into the business in the coming weeks.
Insight: Our approach to pricing risk
Our approach to pricing risk: Some of the biggest challenges in the industry are around assessing risk and pricing it appropriately, if at all! Some assets are cheap for a reason and some carry binary risk where the outcome is so unpredictable that it takes either a conviction view or leave of your senses to make the investment. At Sullivan Street Partners, we believe that every challenge can be priced adequately if the key factors are understood as well as potential opportunities, risks, and mitigants being sufficiently balanced. Well, almost every challenge…
Investors commonly back a central base case that they have convinced themselves of, following input from management, various diligence advisers, and experts. In reality, these cases are rarely correct, because any forecast case is rarely correct.
Zeina Bain, Managing Partner: “We are somewhat more fluid and conviction-led in assessing an investment. We consider what can go right, what it takes to get there, who can make it happen, and the extent of possibilities. We then compare that to what could go wrong, the potential gaps in the organisation, and its capabilities, positioning as well as its processes and systems. The next question is – do those inputs and outputs add up to an opportunity to make an exciting return for our investors? Are there sufficient mitigating or offsetting opportunities to those negative factors to still produce an attractive investment?”
As operationally-minded investors, we see performance as the aggregation of daily actions and decisions. The key consideration is whether they can be pointed in the right direction and adapt constructively to their environment.
At Sullivan Street Partners, we are committed to always ‘pricing the risk’ when approaching situations. “Rather than shying away from the potential challenges – we lean into assessing them – be that end market headwinds, operational complexity, opaque financials, legacy liabilities, or similar.” We quickly prioritise the key issues and concerns while figuring out the upside potential. We take a conviction view thanks to our extensive experience engaging with similar situations as well as applying both operational and financial perspectives.
We believe there is always a deal that can be done in any situation and will always back ourselves when navigating these circumstances – no matter how complex.