Fairmount Partners Assists Lyceum Capital in Sale of Synexus to LDC for £83m

Manchester, United Kingdom – February 23, 2015 –  Synexus, the world’s largest multi-national company dedicated to the recruitment and running of clinical trials at its own research centres across the globe, completed a management buyout from Lyceum Capital.  LDC, the private equity arm of Lloyds Banking Group, backed the £83 million management buyout, as the management team targets further international growth.  Completion of the transaction is expected shortly pending regulatory approval.

Synexus is one of the world’s largest patient enrolment and investigator site management organisations (“SMOs”), supporting pharmaceutical R&D through Phase II-IV clinical trials.  Synexus is critical for recruiting, enrolling and managing patients for clinical trials on behalf of a large list of leading pharmaceutical, biotechnology and contract research organisations (“CROs”) clients. UK-based Synexus operates a network of 25 owned Dedicated Clinical Research Centres (“DRCs”) in eight countries, including the UK, Germany, Poland, Hungary, Romania, Bulgaria, Ukraine, and South Africa, which enables it to access a population of over 68 million potential patients on behalf of clients.  In addition, it has a network of 25 complementary affiliate sites which further increase Synexus’ market access capabilities.  The business employs over 600 people including approximately 100 physicians solely dedicated to delivering trials.

Managing over 200 trials and thousands of patients at any one time, pharmaceutical companies and CROs utilise the company’s scale and critical mass to deliver cost advantages and improve speed to market for new in-patent drugs.  Synexus’ scale allows it to benefit from its investments in best-in-class Quality Systems, dedicated Scientific Advisory Boards for each therapeutic area and a wide network of Key Opinion Leaders which provide valuable insight to customers.  Its specialist patient enrolment and retention strategies address a key challenge in the global clinical trial industry, in which almost 90 per cent of all trials undertaken are delayed due to slow patient enrolment which often result in reduced in-patent revenues.

Andrew Aylwin, board member of Synexus and partner at Lyceum Capital, said: “When we initially invested in the business in 2007, Synexus was a company with great potential in a growing market which nevertheless lacked the scale, infrastructure and operational strategy to capitalise fully on opportunities.  With our backing, the business has been transformed into unquestionably one of the leading clinical trials specialists in the world.”

“Synexus now has a footprint in some of the fastest-growing global healthcare markets, including South Africa and Eastern Europe, alongside a presence in more mature regions. These developments, supported by long-term investment in resources, infrastructure and IT, leave the company in the best possible position to consolidate its place at the forefront of clinical trial research services and deliver exceptional growth.”

Dr. Christophe Berthoux, CEO of Synexus, added: “Our services are critical to therapy development within some of the world’s leading pharma and biotech businesses, which provide a significant opportunity for us to take advantage of increased investment in our infrastructure and operations. Partnering with LDC provides us with the firepower and expertise to continue the expansion of our international network, allowing us to capitalise on further opportunities in the markets in which we operate.”

“We are grateful to Lyceum, whose knowledge and experience have helped transform the business and put us in the best possible shape for this next exciting phase of growth.”

LDC is backing the management team to realise a clear strategy for organic growth, using scale and expertise to continue to take share in what is a highly fragmented market comprising around 80,000 predominantly independent General Practitioners/investigators globally.  In addition, the team has a number of potential acquisition targets which will further enhance the customer offering and its geographic footprint.

The transaction sees Lyceum Capital exit its investment in full.  It backed the buyout of the former AIM-listed business in 2007 in an £18m deal, and has supported Synexus’ organic and acquisitive growth into eight countries.  Since 2011, the business has generated over 30 per cent per annum revenue growth, with revenue generated internationally increasing three fold. With LDC’s support, Synexus will continue to selectively expand its international DRC network and further invest in its operations and infrastructure.

The deal was led by LDC director Ged Gould and investment directors Simon Braham and Chris Wright.

Ged Gould, who is also co-head of LDC in Manchester, said: “The pharma industry, alongside the rapidly expanding biotech sector is set for significant growth in the future driven by ageing populations and increasing R&D. This is an exciting area for investment and Synexus is leading a new generation of businesses offering expert clinical trial support that can help accelerate drug development for the benefit of patients.”

“Christophe and the management team have done a fantastic job in building an international network and one of the top global players in this nascent industry in recent years and we are eager to further support the ongoing growth and help the business to break into new markets via both greenfield site openings and potential acquisition opportunities in the US, South America and Asia.”

Fairmount Partners managed the transaction for the vendors, joined by Travers Smith (legal), KPMG (accounting) and LEK (consulting). LDC was advised on due diligence by EY (corporate finance, commercial due diligence), Deloitte (financial due diligence) and Dr. Regenold (regulatory consulting), while DLA Piper provided legal advice.  Bluebay and HSBC provided debt facilities to support the transaction.

Neal McCarthy, the Managing Director of Fairmount Partners said: “The biggest bottleneck in clinical trials is recruiting patients.   As a result, pharma and CROs are turning away from academic research sites, and shifting their focus to dedicated commercial research groups, and professional recruiting organizations. Synexus has demonstrated the value of combining recruiting services and professional dedicated Research Site Groups to leading pharmaceutical companies and CROs.  The support of Lyceum Capital was critical in establishing Synexus as a key player in the highly fragmented $13 billion global research site services market.   With Dr. Berthoux and his skilled management team, and the backing of LDC, we expect Synexus will continue to drive the consolidation of the market.  We also expect substantial merger and acquisition activity and investment in the research site market in the coming 2-4 years.”

About Fairmount Partners

Fairmount Partners is one of the largest investment banking groups in the Mid-Atlantic region. The firm specializes in advising middle-market growth companies with mergers and acquisitions, capital raising and strategic advice.  Fairmount offers deep expertise in the Healthcare Services and Technology, Information Technology Services, Technology and Software and Industrial and Consumer Products markets.  Fairmount has completed more than 140 transactions throughout North and South America, Europe, Asia and Australia since its inception in June 2003.  For more information, visit www.fairmountpartners.com.

Principals of Fairmount Partners acted as advisors to Synexus in this transaction.

Neal McCarthy