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1.2 Acquisitions

Acquisitions have consistently played a key role in stimulating our growth. We continuously look to acquire niche businesses that will support and supplement our organic growth by enhancing our existing offering or market reach.


Acquisitions 2008
Total spent 2008: £147.4m   2007 total: £114m Value

Legal services

d3 (Investment)		 Investment in legal services administration company. £1.2m
+£1.5m*

Insurance

Schoolsafe		 An intermediary for the provision of supply teacher insurance for schools. £2.0m
+£1.5m*

Financial services

Niewenhuis Corporate Services		 Provides trust administration and SPV services. £4.3m
+ £2.5m*

Property

Lovejoy Partnership		 One of the UK’s leading land planning and design practices: planning and designing the environment around buildings. £5.0m
+£5.0m*

IT services

ComputerLand UK		 Provides services designed to improve business productivity, increase the quality of IT and reduce IT costs to corporate clients. The increased scale offered by this acquisition will enable Capita to offer enhanced propositions to existing and new clients. £27.8m
(net of cash acquired)

Insurance

Lancaster Insurance Services		 Specialises in providing insurance for classic cars. Will add both new, specialist expertise and important cost synergies to Capita’s personal insurance intermediary and administration business. £16.5m
(net of cash acquired)

Property

NRM Bobrowski		 Specialises in structural and civil engineering. £2.0m
+£2.5m*

Financial services

Weedon Grant		 Treasury and financial adviser to housing associations. £1.1m
+£0.4m*

Software

IBS OPENSystems		 A provider of software systems and related services for the management of social housing and the collection and payment of revenues and benefits to local authorities and housing associations in the UK. £69.6m
(net of cash acquired)

Property

Pearce Buckle		 A leading provider of professional consultancy services for new build and existing structures in the commercial and public sectors. Will further enhance the services offered by Capita Symonds. £2.5m
+£1.5m*

IT services

ABS Network Solutions		 Provides IP based business networking solutions and will bring CISCO accreditations and capability in emerging technologies.Will enable cost savings in spend on CISCO equipment across Capita. £13.6m
(net of cash acquired)

Health

MMO		 Membership administration software provider for NHS Trusts. £1.8m
+£0.1m*

*Deferred consideration

Selecting acquisitions for growth

We focus on acquiring small to medium sized businesses that will strengthen our position in our target markets, bring complementary skills and services, and provide opportunities to create further economies of scale or expand our current reach.

We will also acquire businesses which help us enter or grow our presence in a new market. In education, insurance and financial services, for example, we entered each market with an acquisition. Expanding our presence through subsequent acquisitions and contract wins brought us significant scale and good returns.

To stimulate growth we generally seek target acquisitions that:

  • Have operations and customers in the UK and/or Ireland
  • Fit with our strategy and core competencies
  • Generate sustainable, quality revenues.

Applying rigorous criteria when selecting targets and agreeing purchase prices

Potential acquisitions are identified and brought to the Group by people in our businesses, external consultants or direct approaches. We are highly selective: in the past year we assessed some 100 acquisitions and proceeded with only 12. Due diligence is undertaken at both Group and business level and all acquisitions are assessed, priced and agreed by the Board.

We tend to select acquisition targets that are:

  • Privately owned
  • Too small to interest the private equity market
  • Not in an auction – we aim to acquire without competition
  • Attractively priced, with scope to add value for shareholders.

This disciplined approach enables us to negotiate sensible purchase prices and terms, so generating good returns for the Group.


Adding value through acquisitions

In 2008 we spent £147.4m on 12 acquisitions, and in the first 2 months of 2009 we spent a further £13.6m on 2 acquisitions.

The current economic climate is creating a healthy pipeline of acquisition opportunities, particularly in financial services and IT. We expect this to continue throughout 2009. There is a good volume of opportunities valued at attractive levels. We will remain disciplined when assessing opportunities.


Successfully integrating acquisitions

We have substantial experience of successfully integrating acquired businesses and achieving synergies with our existing operations. Stringent due diligence, before and after acquisition, enables us to set clear targets for growth, integration benefits and profit. A dedicated project team manages the transition – bringing financial procedures, information and communications technology (ICT), HR, legal, compliance and marketing quickly into line with our standards, using Group systems and resources where available.

Acquiring only small to medium sized businesses enables us to integrate them into our existing business infrastructure efficiently and generally allows us to generate value faster.

Acquisitions: Priorities for 2009


  • Continue to encourage businesses to identify suitable acquisitions
  • Select acquisitions that complement or grow our business offering
  • Maintain rigorous criteria for selecting targets
  • Maintain stringent disciplines regarding pricing
  • Continue to enhance integration process.