M Group Services acquired by CVC

CVC agreed on 27 June 2024 to acquire M Group Services from PAI Partners, investing through CVC Fund IX, the vehicle that closed at 26 billion euros in 2023. The transaction valued the business at an enterprise value of £500M–1.5bn, an EV/EBITDA multiple of 5x–12x and an EV/revenue multiple of below 1.5x on the year to March 2024. Completion was expected in the third quarter of 2024, and chief executive Andrew Findlay remained at the head of the group. Formed in 2016 out of Morrison Utility Services, with antecedents running back more than a century, M Group Services builds, repairs and maintains utility and transport infrastructure across the United Kingdom and Ireland. Its crews lay and renew water mains, electricity cables and telecommunications networks, carry out work inside customers’ homes, and deliver capital projects and technical engineering for the operators of those networks. It employs more than 11,000 people across over 216 locations, and recorded revenue of £1–10bn with an EBITDA before exceptional items of £100–200M. The margin, below six per cent, is characteristic of infrastructure contracting, where work is won under framework agreements with regulated utilities and priced against published cost schedules. Volume and the duration of those frameworks determine the economics rather than pricing power, which is why consolidation has been the route to scale in the sector. Revenue more than doubled under PAI Partners, from one billion pounds in 2018, while the order book likewise doubled and fourteen businesses were acquired and integrated. The firm also invested in the group’s systems, operating processes and environmental reporting, and broadened the range of services towards higher value work. Demand rests on obligations its clients cannot defer: water networks losing volume through pipes laid decades ago, electricity grids requiring reinforcement for electrified heating and transport, and copper telephone lines being replaced by fibre across the country. Deutsche Bank acted as lead financial adviser to PAI Partners, with Citi also advising, while Evercore advised CVC and Pinsent Masons acted for M Group Services.

In the past, M Group Services was acquired by PAI Partners in 2018 as part of its expansion strategy.