Sale of Precision Sheet Metal Engineering & Fabrication – Healthcare & MOD
Hornblower Business Brokers took on the mandate to sell Uniform Engineering (UE) in the first quarter of 2020. Operating as a sole trader, this UK-based sheet metal engineering business located in Somerset specialised in the manufacture of metal enclosures and housings necessary to accommodate electronic and plumbing installations for a wide range of products, machinery and equipment produced by their customers.
The essential enclosures manufactured by UE ranged from the very simple to the highly complex, with many products forming part of end products manufactured to meet high approval standards. UE benefitted from deep expertise in producing bespoke metal parts developed from drawings supplied by their clients’ in-house design teams and had the advantage of owning thousands of CNC programmes, providing templates for a wide variety of pieces of equipment. UE had compiled this collection of programmes over many years of trading, easing the production process and reducing the costs of replication.
The owner of UE had built the business to operate across a wide and diverse range of sectors which included pharmaceutical, healthcare, laboratory equipment, anti-corrosion systems, power washers, general electrical, MOD filtration systems and biological safety and auto services. Over the years, UE had developed a favourable reputation within the pharmaceutical, healthcare and laboratory equipment sectors for precision and work of a high standard. This reputation has been attained as a result of the skill and expertise of the team in place in UE.
The business enjoyed an ongoing, long-term trading relationship with its largest customer, a prominent laboratory containment systems manufacturer. Income derived from this client constituted 32.4% of turnover from June to October 2019, with orders consisting of thousands of individual components.
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The Situation
The potential acquisition of UE came with significant opportunities to increase operational capacity. Having grown to a stage of operating at full capacity, UE’s enviable portfolio of long-standing customers relied on the highly specialised finished products delivered by the business, and regularly requested more work than the business had capacity to accommodate.
The business operated with a small, specialised team and an integral issue for potential buyers to consider was that fact that key members of the management team intended to exit the business following a successful acquisition. As a sole trader, the business owner had plans for retirement along with the incumbent Production Manager who had been with the UE since inception and was his 70s at the point of the mandate. UE’s Compliance Manager also intended to exit the business.
However, going forward, a key element of expertise was due to be retained within the business in the form of the Supervisor who had been with UE for many years. This individual had effectively performed the role of Production Manager and had attained the relevant experience and ability to step up to a General Management role, undertaking the essential quotation work that the current owner of the business carried out on a daily basis.
The business benefitted from a good asset base of machinery, but had operated over the years with little marketing exposure - without a website presence or advertising. This presented an opportunity for a potential acquirer to grow the business from the outset by developing a marketing strategy and digital presence.
The Outcome
Marketing the business for sale generated a great deal of interest from the outset. In all we received 160 enquiries over the 8-month period of the business being on the market. Prospective buyers included trade buyers in the form of other engineering and steel fabrication businesses, private equity companies, SME investment firms and a number of qualified individuals with specialised sector background and expertise.
Hornblower handled all enquiries on behalf of the vendor, applying stringent selection criteria to assess each buyer’s profile and to determine which buyers to put forward to our client. Within this process, we fleshed out the detail of the offers and carefully negotiated Heads of Terms with the preferred bidder, making sure the buyers were adequately funded for the deal.
Due to the level of interest we generated, we were able to set the market value and negotiate the most favourable terms for our client.
Final Heads of Terms were signed in mid-December 2020 and the deal was completed at the end of January 2021, with Uniform Engineering sold to AIM quoted company SDI Group Plc in a bolt on acquisition by its subsidiary Monmouth Scientific Limited. As a highly specialised investor in businesses at the leading-edge of scientific and technological innovation, SDI aligned favourably as an acquirer, with a strong and diverse portfolio of engineering and manufacturing companies serving the life sciences, scientific instruments, industrial and healthcare markets.
This successful acquisition highlighted the ability of high-performing SMEs with a well-developed niche to attract investment for growth, regardless of the business structure. For businesses operating under a sole tradership structure, there is often the perception that larger potential acquirers may not take the business seriously and that this particular status may complicate the sale. Hornblower is pleased to demonstrate through the sale of Uniform Engineering that businesses operating as sole traders should not view this as a barrier to attaining a favourable sale.
The deal was managed by our Bristol based business sales and acquisition consultant, Sally Tankard. Sally manages business sales for Hornblower across the South West.
SOLD January 2021
