Yorkshire game developer completes MBO with private equity backing

GAME development studio Sumo Digital has completed an MBO with backing from private equity firm NorthEdge Capital, as it looks to accelerate its growth.

One of Europe’s leading independent game studios, Sheffield-headquartered Sumo, which was founded in 2003, partners with top tier publishers and has developed a number of high profile titles including Forza Horizon 2 for Microsoft’s Xbox360, Sonic and Sega All Star Racing, and Xbox Fitness. Most recently, Sumo has partnered with Sony to develop Little Big Planet 3, which is due for imminent release.
In its tenth investment, Leeds and Manchester-based NorthEdge has backed the existing management team, comprising Carl Cavers (CEO), PaulPorter (COO), Chris Stockwell (CFO) and Darren Mills (executive art director) to complete an MBO from Foundation 9 Entertainment, the US entertainment media company which acquired Sumo in 2007.
Director James Hall and investment manager Phil Frame led the deal for NorthEdge. Hall and Frame will join the board as non-executive directors.

Sumo also has an office in Pune, India, and employs more than 240 people. It’s revenues in the year to December 13 were £13.2m and operating profits were £899,042.
Carl Cavers, Sumo CEO, said: “With the imminent release of Little Big Planet 3 and a number of exciting projects under development, the business is in an extremely strong position. We are delighted to have completed the MBO and to be partnering with NorthEdge as we accelerate our growth strategy and cement our position as one of Europe’s leading game developers.”
The deal is the sixth this year for NorthEdge Capital, representing nearly £80m of investment into Northern businesses.

NorthEdge’s Hall said: “Sumo Digital is a fantastic business, with an incredible reputation and a track record of delivering top titles. The business is working on a number of exciting projects and we look forward to partnering with Carl and the team as they further grow the business, capitalising on opportunities within the marketplace. Sumo has an exciting time ahead and we’re extremely pleased to be on board.”

Deloitte provided advice to Northedge Capital, including lead advisory (Dan Renton, Paul Trickett, Will Johnson, Maninder Minhas), financial and tax due diligence (Stuart Cottee, Matt Henderson, Jon Steed, David Aindow, Julie Campbell), and commercial due diligence. Addleshaw Goddard (Yunus Seedat and Susie Siddall) provided legal advice.

Dan Renton, director at Deloitte in Leeds, said: “NorthEdge has quickly built a strong reputation for investing in dynamic growing businesses in the North and we were delighted to have the opportunity to work with them alongside Carl Cavers and his team to provide lead advisory, tax and financial and commercial due diligence services to support the delivery of this transaction. I am confident the partnership with NorthEdge will help Sumo Digital realise its exciting growth ambitions in what is an emerging and increasingly important sector for Yorkshire.”
The Quinn Partnership provided management due diligence. Intuitus provided technical due diligence and Hendersons provided insurance due diligence. Banking facilities were provided by Barclays (Richard Faulkner).
Mike Lang, president of Lang Media Group and board member for Foundation 9 (parent company of Sumo) helped facilitate the deal for the seller.

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