In a move which may have far-reaching consequences for private equity, the UK listed GlobalData has agreed to sell a 40% shareholding in its healthcare division to Inflexion. The deal values the division – which accounts for 36% of GlobalData revenue – at £1.115mn (22x EBITDA). That’s no less than 82% of the parent company’s £1.352mn market cap on 20 December when the deal was signed. For GlobalData CEO-founder and 60% shareholder Mike Danson, it was Christmas again – 16 years after he sold his Datamonitor company to Informa for an eye-watering £513mn (7x revenue).
Valuation of the Inflexion deal – which will give GlobalData some £434mn of net proceeds – will silence any investor questions about why there had been no competitive process. The plan had been prompted by Danson’s frustration with a sluggish share price which, with higher interest rates, had constrained the M&A of a once acquisitive company (about 30 deals in the past decade). Acquisitions had been getting just too expensive.
Continual approaches from private equity, either to take GlobalData private or to divest key assets, are believed to have made Danson think about the alternatives. The upshot was an approach by his M&A director Mark Thornton to a former 3i private equity colleague, David Whileman, now a partner at Inflexion. His Partnership Capital Fund had created Curinos, the $243mn retail banking data business, from a 2021 merger of Informa’s FBX and Novantas, with the listed Informa retaining 56%. Whileman jumped at the chance to do it again, with GlobalData.
The deal (which is expected to close in 2Q 2024) took just 77 days from first outline meeting to agreement last month; teams of 50 people on each side raced to reach agreement by Danson’s inflexible Christmas deadline. Perhaps the CEO wanted to complete before embarking on his traditional New Year tour of his global operations.
Healthcare is the largest division of GlobalData, headquartered in the UK and employing over 1,000 people across 10 countries. Its subscription service claims to offer a one-stop solution for over 2,000 global customers across global pharma and biotech, pharma suppliers, professional services and medical manufacturers. Its proprietary platform provides insights on drugs trends, trials and therapeutic reports, and supporting research and development of pharmaceuticals. The division is said to have generated £50mn of EBITDA for the 12 months ended June 2023. Its revenue is 50% from the US, 36% from UK/Europe and 14% APAC.
The genesis of the deal almost echoes the way that Ascential Plc – GlobalData’s fellow, UK-based B2B group – suffered with a share price which under-valued the company by at least 50% – until the recent breakup proved the point. But Danson’s deal is sweeter still, of course, because he keeps control of his company and its largest division. But it may now be able to expand more quickly and, ultimately, to command a higher exit multiple; specialisation and the blandishments of global pharma almost guarantee that.
But there’s more.
Following the Inflexion transaction, GlobalData’s balance sheet will be transformed from net debt of £230.8mn (as at 30 June 2023) to being debt-free with net cash. As well as improving its profitability and cash flow, the “new” balance sheet creates M&A opportunities for the rest of the company too.
Although the 2024 estimate (beow) will be subject to change, the financials show how GlobalData has increased its profit by more than 70% in the past three years and may this year achieve EBITDA margins of 42%:
| GlobalData Plc £mn | 2024* | 2023 | 2022 | 2021 |
| Revenue | 294.5 | 275.0 | 243.2 | 189.3 |
| EBITDA | 123.8 | 109.9 | 86.4 | 64.4 |
| Margin | 42% | 40% | 36% | 34% |
But something more strategic is likely to happen.
Less than a year after Danson had regaled investment analysts with his plans to acquire trade magazine brands and other B2B assets to create a ‘one stop shop’ of information, data, research and news right across his sprawling portfolio, he may be changing his mind. Although the CEO-founder has yet to clarify his strategic intentions, the fact that GlobalData now says it has three divisions – Consumer, Technology and Healthcare – is a definite shift from a presentation last year which had no fewer than 16 sectors – with a seemingly endless appetite for more. While some of these may have become sub-sectors within the new Big Three markets, it seems clear enough that GlobalData’s future may now be as much about divesting or pruning a long tail as using its ‘new’ financial muscle to buy high-value data and research. It will surely be doing a lot of each.
Whether or not we see an explicit reversal of the strategy to buy B2B brands (like Broadcast and Screen International acquired in 2022), Mike Danson is not the first to realise that – among much else – the acceleration of AI is sharply reducing the value of “nice to know” information while turbocharging “need to know”. Lest we forget, the future for so much professional media is exclusively about information you really cannot get anywhere else: everything else is, increasingly, everywhere else.
We might now expect the remaining two GlobalData divisions also to be “de-merged” (before or after any new equity funding deals), with the holding company continuing to operate the technology platform on which they depend. At least for now.
Don’t be surprised if Danson has a new three-pronged de-merger plan to unveil once the Healthcare deal completes. He knows that Inflexion – and many of its peers – will now be hungry for no-debt partnership deals of the kind which private equity financial engineers would once have done anything to avoid. Happy New Year.
