Pitch Best MidCap Deal 2021: House of HR – Cohedron

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Name of the deal: House of HR acquires Cohedron 
Date announced: 21-06-2021 
Date closed: 20-07-2021  
Published value:  175 – 225 Million (€) 
Buyer(s): House of HR 
Target: Cohedron 
Seller: Argos Wityu and the Management 

Involved firms and advisors buy side: 
Corporate Finance International (M&A advisory), Deloitte, Banning (Legal Advisory Corporate/M&A), Accuracy (Financial Due Diligence), Deloitte (Tax advisory), Mazars (social due diligence) 
Involved firms and advisors target: 
KPMG (M&A advisory), Houthoff (Legal Advisory Corporate/M&A), Deloitte (Financial Due Diligence), EY (Tax advisory) 
Involved firms and advisors sell side: 
Quore Capital (M&A advisory), Houthoff (Legal Advisory Corporate/M&A), KPMG (Financial Due Diligence), EY (Tax advisory), HVG Law (social due Dilligence), Boncode (IT due diligence)


Brief description deal / Deal outline 
House of HR, a Belgium-based pan-European staffing group with over €1.8bn sales acquired Cohedron, a Netherlands-based provider of staffing, outsourcing, and consulting services with c.€150m FY21E sales. 
Why should this deal win the Award for Best Deal 2021? 
The transaction reflects the truly international nature of the Dutch M&A market, involving pan-European Private Equity funds, a Belgian (pan-EU conglomerate) buyer, and a truly Dutch market leader as the target. Although the asset is very Dutch, the opportunities unlocked are both local and European, enabled through the new shareholder. The deal is a milestone and success story of Argos Wityu as an investor supporting an exceptional managementteam in a complex management buy-in transaction in 2017. After Cohedron reinforced the leadership, rebranded, developed proprietary software, and added 16 bolt-on acquisitions to its portfolio, the shareholders realised an exit to a party with whom a history of relationship building preceded this great result for all involved. We believe that in the House of HR / Cohedron deal, numerous aspects of the process and the deal outcome itself were absolutely outstanding and deserve recognition. In the middle of the global pandemic, with severely restricted travel movements, the following were achieved:   

1) A significant cross-border transaction was achieved on a rapid timetable, with less than two months passing between indicative offer (27th April) and signing (18th June).   
2) Successful exit by Argos Wityu’s Benelux team of its first Dutch investment, which itself was a remarkable transformation. Over the last three and a half years Cohedron tripled EBITDA while at the same time establishing a platform that will allow Cohedron to grow significantly further under its new owners.   
3) Multiple parts of the transaction process were carried out in an exceptional way, including the efficient auction process whereby House of HR was immediately identified as a potential front-runner, and the well-prepared ACM cartel clearance which enabled rapid execution.   
4) And most importantly, the transaction allows both House of HR and Cohedron to accelerate their respective growth plans which involve helping more vulnerable members of society, progressing the careers of thousands of professionals across Europe and helping local businesses thrive with the right human capital. The deal helps accelerate positive ESG developments for both Companies.   
Further, we believe the positive impact on (Dutch) society from this deal is profound. Combined, House of HR and Cohedron will help more than 45,000 people find work every month. Importantly, this transaction is a key enabler for Cohedron to achieve many of its strategic growth objectives, such as being able to meet the increasing demand for outsourced services from local municipalities and becoming CO2 neutral by 2025.   
The transaction and all its complexities, as well as its societal role and value-add, as described in the deal questionnaire has had considerable involvement of- and received interest from the (Dutch) M&A and advisor community. However, the most convincing reason why this deal deserves a nomination is the significant conviction management has in this business and deal. Upon realising considerable returns for over 30 managers who invested alongside Argos Wityu in the share capital, 50 managers (re-)invested in the transaction alongside House of HR. This signifies a strong belief in the business case and the future – and a reason why we want to make everyone involved proud with this nomination. 
Deal rationale: 
The deal enables the creation of a European ‘Powerhouse’ in highly fragmented markets of outsourcing, secondment and staffing for municipalities from a Dutch platform investment. 

Cohedron has an excellent trackrecord in acquiring businesses and integrating them into its platform, having completed 8 bolt-ons within the first 6 months of 2021 alone. House of HR similarly has an impressive acquisition trackrecord – Cohedron was House of HR’s fourth acquisition in 2021. 
By leveraging House of HR’s own successful platform and in-house expertise, this transaction supercharges Cohedron’s ‘buy and build’ approach enabling ambitious growth targets to be achieved even quicker, whilst House of HR-benefits from a rapid expansion into the Dutch market and potentially other markets in Europe. 
As the serviceprovider to over 95% of all municipalities in the Netherlands, Cohedron propels House of HR into a market-leading position in the Dutch public sector. 
In addition, there is a strong cultural fit between House of HR and Cohedron as they both share a similar vision of helping people and society as a whole, and both have a strong entrepreneurial spirit. Cohedron CEO, Jeroen Ekkel, described the acquisition by House of HR as a ‘match made in heaven’. 
What is the impact of this deal on the company? 
For Cohedron: 
– Supercharging their already successful buy & build story. Building on a trackrecord of 16 closed acquisitions under the previous ownership of Argos Wityu. 
– Leveraging the significant scale and expertise of House of HR to be able to grow further both in its home market (Netherlands) but also in other markets where House of HR is well established such as Belgium.  

For House of HR: 
– Becoming a market leader in outsourcing and secondment to the Dutch public sector overnight. 
– Leveraging Cohedron’s proprietary IT and expertise in the public sector to grow House of HR’s public sector business in other countries around Europe. 
– Acquiring a rapidly growing subsidiary with a complimentary culture  

What is the impact of this deal on the direct stakeholders?   

– Argos Wityu successfully realises a considerable return on its investment after three and a half years that involved a complete restructuring of the company, professionalising the organisation, tripling EBITDA, and preparing Cohedron’s solid platform for even faster growth in the future.  

– Argos Wityu expands its trackrecord in complex investments and the Benelux-team successfully exit from their first Dutch investment.  

Cohedron Management:  
– 50 managers are re-investing in the share capital of Cohedron. The transaction not only realises considerable returns for over 30 shareholders, but the significant re-investment by the manager is a testament to their belief in the exciting growth outlook of the business. 
– Cohedron business unit leaders can continue to autonomously build out their labels in the market with the support and weight of House of HR behind them. 

– Customers: Public and private market customers will benefit from the expanding service offering, continued investment in IT and software solutions, and accelerated growth enabled by the transaction. 
What is the impact of this deal on society?  
House of HR’s motto is “We Change Lives” and their entire business is centred around helping small and large businesses recruit talent to help them succeed. Meanwhile, 70% of Cohedron’s business is providing critical services in areas such as social care and Debt Advisory relief to over 300 Dutch municipalities representing ~95% of all municipalities in the Netherlands. We believe the positive impact on society from this deal is profound. Combined, House of HR and Cohedron will help more than 45,000 people find work every month. Most importantly, this transaction is a key enabler for Cohedron to achieve many of its strategic growth objectives, such as being able to meet the increasing demand for outsourced services from local municipalities and becoming CO2 neutral by 2025. In short, this transaction helps two Companies whose businesses are focused on helping improve society, to grow and become an even greater force for good. 
What was most complex about this deal? 
Cohedron is a local M&A Powerhouse. In the first half of 2021 alone, it successfully made 8 add-on acquisitions. The transaction perimeter accounted for no less than 16 acquisitions, most of which had taken place in the last 12 months. Cohedron’s exceptional M&A trackrecord and ability to create tremendous value through integrating acquisitions into its existing platform was a key part of the value proposition to the buyer (House of HR). Preparing financials and a forward-looking business plan that allowed prospective buyers to fairly value this high level of deal activity was a complex process and involved exceptional levels of flexibility, timeliness, and commitment from the deal team. On top of this, Cohedron completed a refinancing on April 1st to finance continued (inorganic) growth and investment in its software capabilities, the day after the locked-box balance sheet position. Bridging the 31/3 balance sheet to the closing position was a challenge but was tackled successfully by the collaborative approach of all parties (investors, advisors, and management teams) around the table. 

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