The sale of fostering and special educational needs provider Outcomes First Group (OFG), which is owned by private equity firm Stirling Square Capital Partners, has started with information memoranda (IM) being distributed to prospective bidders, EducationInvestor Global can reveal.

The company, which has been marketed off an EBITDA just north of £110m, is expected to reach a valuation in the 11-14x region, according to two sources.

“It is likely that OFG’s valuation will not exceed a low double-digit multiple, considering the difficult climate for fostering businesses and the possible repercussions of the report published by the Competition and Markets Authority (CMA) on the children’s social care market,” one of the two sources told this publication.

Among the possible bidders that have shown interest in the asset are a few private equity and infrastructure firms, including Civitas, one of our sources said.

Centerbridge, ICG and Onex have also shown interest in the sale, according to a report published by Mergermaket in February.

Based in Bolton, OFG is a provider of fostering, learning and therapeutic care for children, young people and adults with autism, complex needs and social, emotional and mental health difficulties.

Stirling hired JPMorgan and Moelis to run the sale in March 2021 but the process was delayed until the beginning of this year when it was finally relaunched, as reported by Mergermarket at the end of January.

OFG is the result of a consolidation project pursued by Stirling since 2015, when it acquired NFA Group, a provider of independent fostering services, by deploying capital from its £600 million third fund. The private equity firm subsequently boosted the company’s growth with the add-on of special educational needs provider Acorn in 2016.

In August 2019, Stirling’s NFA Group acquired Outcomes First from private equity firm Sovereign Capital, which had owned the company since 2013.

The group generated revenue of £365 million and gross profit of £164 million in the year ended 31 August 2020, according to its latest financial statement filed with Companies House.

Date published: 31 March 2022

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