HKI (CHKS & CRC)
Deal Summary
Catalyst advised HKI, a management buy-out in 2004 backed by Inflexion Private Equity, on the sale of its subsidiaries CHKS and CRC to Capita Plc for £12 million.
CHKS is the UK’s leading independent provider of healthcare intelligence and quality improvement services including the critical area of benchmarking national hospital performance. Its services include coding, data and performance management, benchmarking, accreditation, quality assurance, and the development of healthcare standards overseas. CHKS has over 90 NHS trusts as clients and also operates in the independent sector and overseas.
CRC is a pharma consultancy business and its services include health economic surveys and drug impact models for drug companies which enable them to understand the burden of disease across the primary and secondary care sectors and the impact of drugs in secondary care intervention.
Capita Plc is a FTSE 100 company which specialises in business process outsourcing. It operates in over eight key market sectors which are local government, central government, education, transport, health, life and pensions, insurance, and other private sector organisations (including financial services).
What difference did we make?
Catalyst was appointed to help the shareholders appraise two unsolicited bids for HKI Group. Catalyst had further discussions with these bidders and after clarification concluded that there was little substance to the offers. HKI agreed not to pursue these offers and thus saved a great deal of time and protected confidentiality.
Catalyst was then asked to manage a targeted sales process for HKI to a short listed group of four potential buyers. During this process it became clear that different buyers were valuing the group in different ways and that shareholder value would be maximised by selling the UK and Spanish businesses to separate buyers.
The shareholders agreed with our advice and accepted a bid for the UK trading businesses from Capita Plc. Having spent two years advising the business on how to prepare itself for the sale the due diligence process was straight forward and without any issues and CHKS was sold to Capita in eight weeks from the first meeting.
Our greatest challenge on this transaction was managing the different objectives of the shareholders - which included private equity, retiring managers and those managers staying with the business post sale - to achieve a price, deal structure and potential buyer that satisfied everyone.
