Stories
Kevin MacSweeny arrived early for lunch in 5 Points, a well-known New York-style bagel cafe in Cork.
It was after the pandemic and MacSweeny, then head of new investment with Broadlake, was there to meet Tim McCarthy, a well-known Cork corporate finance advisor, about a potential business deal. To his surprise, he was greeted by a man he didn’t know.
Kevin Canning was then an up-and-coming accountant and a colleague of McCarthy in the accountancy firm Quintas.
The two men laughed when they realised that McCarthy had accidentally invited them both to the same lunch because of their shared forename.
Over lunch, Canning grilled MacSweeny about Broadlake, which invests long-term in entrepreneurial businesses such as TTM Healthcare Solutions and the 2468 Group.
Canning was setting up an EIIS fund to invest tax efficiently in emerging companies so he wanted to pick MacSweeny’s brains.
“Kevin was in his early 30s with serious ambition,” MacSweeny said. “I loved that. I also loved the dynamic between Tim and Kevin. Tim was really letting him grow the EIIS business himself. So that’s how we met. I didn’t think that much about it, but we stayed in touch.”
Two years later, and a lot has changed.
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Last September, the Xeinadin Group, a British accountancy group backed by private equity firm Exponent, bought the accountancy business of Quintas. Canning has spun out the EIIS business as the EIIS Innovation Fund and taken Quintas Capital, which also has a private credit arm, with it.
MacSweeny, meanwhile, had decided amicably to leave Broadlake where he had spent 15 years.
MacSweeny had learned a lot from working with Broadlake’s Pete Smyth and Brian Crowley. He had bought, sold and scaled companies with Broadlake, a long-term investor which has seven businesses employing more than 4,000 people in various sectors including healthcare and office services.
Broadlake has a mission of 3X 10X for its business: three times the size and ten times the positive impact. MacSweeny, however, wanted to make his own investments focusing on businesses that were at an earlier stage on their journey.
He started to talk to his friends in Broadlake about moving on in 2023, and an agreement was reached. MacSweeny spent much of last year exiting Broadlake and working on a new venture with other associates called MGK Capital Partners. It will formally launch later this year.
Around the end of 2023, he met up with Canning – the two were now friendly and lunched every few months in Cork. Canning told him about his plans to grow Quintas Capital, and about the potential he saw in its EIIS Innovation Fund to back exciting companies like SQUID, Gigable, All Real Nutrition, Velo Coffee Roasters and Ground Wellbeing.
He also told him that the accountancy part of Quintas was likely to be acquired by another firm and that the area he was in wasn’t going to be part of the deal. MacSweeny asked Canning if he could be involved. “I said one piece that is missing here in Quintas Capital is equity investments. I’d like to invest in the business,” MacSweeny said.
A deal came together.
Deploying capital, sector agnostic
Kevin MacSweeny is now a 20 per cent shareholder in Quintas Capital. He will be a director of the company, but it won’t be a full-time role. He will however bring his skills and experience to helping Quintas Capital make equity investments; it was this experience that attracted Canning to work with him.
MacSweeny explains how its equity investments will work. “We will invest deal by deal. This will not be a fund,” he said. “It will be opportunity by opportunity, company by company and with no time horizon.”
Part of MacSweeny’s investment will be used to buy out some other shareholders, and part of it to grow the business.
Quintas has a network of high-net-worth investors and family offices that it plans to present with suitable equity investment deals. It will also include its existing business, the EIIS Innovation Fund, and its credit arm.
Canning has just over 30 per cent of the business, with the remaining shares in Quintas Capital held by accountants Tim McCarthy, Fachtna O’Mahoney, Dave O’Brien, Paul O’Connell and Brendan Moran.
MacSweeny is prepared to invest his own capital in Quintas deals alongside its clients. “I am going to use Quintas Capital as the vehicle to deploy capital into Irish companies.”
In relation to the investor profile for equity deals, Canning said they will “often be SME owners; some will have had exits but others will not. There will also be a mixture of tech executives and multinational executives too”.
MacSweeny said its equity investments will be sector agnostic. “In the Irish market you can’t be too sector specific,” he said, adding that Quintas will take stakes in companies of between 30 per cent and 60 per cent.
“We want to back founders and management teams. We are not doing venture investing. We want to back established businesses with on the smaller side €500,000 Ebitda to about €1.5 million Ebitda. It won’t be upwards of €2 million, as everyone is there.”
Canning added that it will be all equity and not debt as well, unlike private equity-type deals which can be leveraged and with complicated structures. MacSweeney added that this type of investment allowed founders to de-risk partially and also expand the business.
It can also help them with planned succession by growing a business to a scale where existing management takes over, new talent can be brought in, or the business is attractive to potential buyers.
“It is a mixture of cash-out and growth capital,” he said. “A lot of it is down to the ambition of the founder and management teams. We don’t have a predetermined exit horizon so if a company is really good and we want to hold a position and the founder is happy then we will continue to hold.
“Equally, if the founder and the business get to a certain point and the market is good, we can exit after three or four years. We’re not in a fund cycle where we need to make decisions that are bad for the company but good for the fund. We want to avoid that and deal and exit as we all see fit.”
Pipelines and cheque sizes
Canning said this approach was attractive to other SME owners who may have exited and are interested in investing in other companies. “They know what it means to be an entrepreneur. They want to put meaningful cheques into businesses in which they can get actively involved if they want to by taking a board position,” Canning said.
“But how much they want to get involved won’t be forced on them. If you invest in a fund you don’t get involved in the businesses in any way, so this is attractive to our pool of SME business owners who like to be involved, but not too involved.”
MacSweeny believes his experience of growing companies will help. With Broadlake he helped portfolio companies to acquire other firms and scale domestically and internationally. He hopes to bring these skills to SME owners who want to take their companies to the next level.
“I learned my trade through Broadlake, and I owe a lot to Broadlake”, MacSweeny said. “But I want to challenge myself in a different way by using my own capital. I am very lucky that Broadlake gave me the springboard to do that. My experience is in Irish SMEs that are looking to trade out of Ireland and scale,” MacSweeny said.
Canning said for investors interested in getting involved in investing equity in Irish SMEs, the minimum cheque size was about €250,000. Does he have deals identified already? “We have two deals in the pipeline, possibly three,” Canning said. MacSweeny said hopefully two of these deals will close this year.
How many deals does it want to do? “We want to get to a portfolio of about five businesses,” Canning said. “Some deals will be to pursue a buy-and-build model, but there will be other strategies. This is managed equity. It is not passive,” MacSweeny added. He said helping founders and business owners develop growth strategies was part of what Quintas Capital would bring to the table.
“We can bring an outside view to your business,” he said. “No one knows your business better than you do, but bringing a partner in can really complement what you do and help you do even better.”
