Description
Schoolblazer was acquired by Hancock and Gore (H&G), an investment company listed on the ASX with principal investment in Australia/New Zealand school uniform provider Mountcastle.
Schoolblazer is the UK’s leading supplier of school uniform and sportswear to independent schools. Combining with Mountcastle, the purchase forms a global group with £55m+ annual revenue and international roll out plans centred around Schoolblazer’s online model.
This is a multinational deal where a UK business has been sold to a listed Australian business, which brought a number of deal-related and regulatory complexities.
Schoolblazer is an important member of the Central and East of England business community.
Polestar’s Role
Following an earlier, self-managed process in 2023 that did not result in a transaction, Polestar was engaged to run a formal process.
Given the shareholders’ 2023 experience, the high level of interest in the business and concerns over buyer interpretation of the potential introduction of VAT on school fees, an early decision was taken to commission a vendor due diligence report.
Schoolblazer is an exceptional business and was well invested from an early stage. Its revenue model is akin to that of a SaaS provider. Consequently, we were confident there would be strong appetite and the potential for a premium valuation, despite the negative press and concerns that had been expressed to the shareholders around Labour’s proposal to levy VAT on private school fees.
Offers and Negotiations
A broad range of UK and international buyers were approached, including leading private equity firms, providers of uniform, sportswear, leisure wear and corporate wear. Several high-quality offers were submitted, with accompanying debt packages also secured from leading mid-market providers.
A buyer had previously indicated strong interest directly to the Shareholders, linked to an upcoming fundraising. Following feedback on its initial proposal, and site and management meetings that highlighted certain synergy opportunities, Polestar negotiated an improved offer and heads of terms were ultimately agreed.
Following successful due diligence and operational confirmation of its offer, this party was ultimately unable to proceed with the transaction.
However, with vendor due diligence complete, Polestar promptly supplied the VDD alongside a brief trading update, in a very short time frame, to a limited number of parties to facilitate a rebidding process.
Terms were secured with best bidder, H&G, introduced by Polestar’s Australian colleagues from Orion Investment Advisors, at a significant premium to Shareholders’ pre-process expectations.
Matters to Overcome
As part of the process, a number of matters required careful management to protect valuation and maintain buyer confidence. These included:
- Private School Fees VAT: To address differing views on the potential effect of VAT on school fees if Labour won the election, we commissioned a report collating data from multiple sources. The analysis assessed potential impacts on pupil numbers across Schoolblazer’s current and target schools, providing bidders with a balanced perspective amid politically skewed press coverage.
- Warehousing: Schoolblazer’s warehousing was split across several sites, creating an opportunity to consolidate its operations. A favourable lease opportunity emerged for a smart new, larger, single-site facility nearby, providing ample growth capacity. Polestar advised positioning the relocation as an advanced investment for the buyer’s benefit. The move was completed, presenting buyers with a new, modern facility, signalling seller confidence and removing post-sale relocation risk.
- Working Capital & Net Debt: Seasonal stock requirements and the associated funding arrangements complicated buyer assessments. To protect valuation, Polestar established a clear working-capital and net-debt basis, supported by detailed monthly financial analysis.
Completion
Terms were secured with H&G, introduced by Polestar’s Australian colleagues from Orion Investment Advisors.
The acquisition created a global uniforms platform, leveraging synergies between UK, Australian, and New Zealand operations, as well as ambitious international expansion plans to new regions.
Operations in Oundle, UK, have been maintained and expanding via new larger warehousing, leading to an increase in local employment.
The acquisition also allowed the supply to local (and national) private school networks to be uninterrupted and secured for the foreseeable future.
Tim James, Co-Founder, Schoolblazer, commented:
“Polestar were fantastic partners to help us navigate through a comprehensive process. I wouldn’t hesitate to recommend them. It was a challenging time to sell a schoolwear business, with VAT about to be applied to school fees and a pending change of government. At the same time we had a business owned by two strong shareholders who, frankly, had diverging views on what a great outcome looked like. Charlie, Richard and the team were excellent. They not only provided the necessary financial and marketing skills, they also actively supported both the shareholders and the wider management team through the process. We are all delighted with the result – we’ve found a long-term partner from the other side of the world who actively wants to build and drive our business, with the right structure for all parties”
Robin Horsell, Co-Founder, Schoolblazer, commented:
“We could genuinely not have chosen better partners, and I always knew you had our backs.”