Sale of a Manufacturer and Distributor of Fuel Additives
The Company
A leading fuel additives brand that formulates, manufactures and distributes fuel additive solutions to hundreds of wholesale and retail businesses. The extensive range of their products are sold throughout the UK and Ireland under the company’s own brand identity as well as via a white label service.
The company which is based in the west midlands holds valuable Intellectual Property with a patent in place. A loyal client base from an extensive range of sectors and no serious direct competitors or certainly none that offered such an extensive product range, technical knowledge and support.
Founded in 2005 it boasts high gross margins and has an efficient operational base giving rise to an excellent level of net profitability.
The sales revenue for the financial year to 2017 was c. £2.3m with a gross profit of c.70%.
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The Situation
Two of the three vendors, were working part-time hours for the business and for personal reasons wished to exit following a successful sale and handover. The third shareholder, the MD of the business and responsible for the day to day running, offered to fully support the transition of the business into new ownership as well as offering to stay with the business for a longer term if mutually agreed.
An extremely strong team of 22 highly qualified and accredited staff helped to make the company the success it is.
The company operates as a technical resource for the UK’s fuel supply sector and the vendors believed they had barely scratched the surface in terms of the scope of opportunities for upgrading fuels in the UK and Ireland by using fuel additives, leaving significant room for growth.
The company presented an excellent opportunity for an existing fuel distribution company, lubricant manufacturer and distributor, or any other fuel additive manufacturers to invest in a business with both high margins and valuable Intellectual Property.
What Hornblower Did
As with all business sales, Hornblower was first able to target its large database of potential buyers in the appropriate sectors. In addition, we specifically researched and targeted companies in the fuel additives, fuel distribution and chemical sectors.
Within 3 months, we had received in excess of 110 enquiries, agreed a sale and concluded heads of terms with a medium sized fuel additives manufacturer. Ultimately this buyer failed to secure funding for the acquisition so we commenced a re-launch in March 2017. Terms were agreed again with a large fuel distribution company in late September 2017 and the sale transaction completed in early 2018.
The sale of the company was a relatively challenging assignment. It was led and managed by Mark Sykes, our International Mergers and Acquisitions Director. As it was a niche business with few large direct competitors, none of which proved to be suitable acquirers, with the assistance of our research team, Mark continued to seek out an acquirer who was likely to be in the fuel related business and willing to diversify into additives.
SOLD – January 2018
