|Deal completed in:||12 months|
Hornblower was mandated to sell Amtech Developments (UK) Ltd, (Amtech), a food and dairy engineering company providing industrial packaging machinery products and solutions. The business, located in Middlewich, Cheshire benefitted from accessible travel links via three major roads and motorway access to Manchester and Liverpool.
The company had developed the expertise to design, build and install custom machinery solutions and adapt standard machinery, positioned to fit between large original equipment manufacturers (OEMs) and the end user. Solutions delivered included preformed cup filling machinery, bottle packaging machinery, inline jar and tub filling machines, cutting machines and conveyor systems.
Established in 1998, Amtech had built a robust client base consisting of companies with a global presence in the food and dairy industry in addition to a solid UK client base. The business originally developed from an identification of a gap in the market for the refurbishment of proven machinery to create a viable alternative to purchasing expensive new equipment.
As business expanded Amtech developed other services alongside refurbishments, employing staff as client demand increased. The business had successfully built a committed team of 14 employees led by a highly capable General Manager who had been with the company for 14 years. The members of staff were a key asset to the company, characterised by longevity of service, industry expertise and an innovative approach.
Over the years, Amtech had established a client base of UK and multinational food producers, brands and distributors, generating £1.3m from their top ten clients in 2018. The company continued to enjoy a growing reputation for excellence, with recommendations from existing high-profile corporate clients and preferred supplier status with a number of blue-chip companies. In addition, Amtech had also gained strong client relationships with food manufacturing and distribution companies in the Middle East.
This particular business sale presented a set of unique challenges from the outset of the sales process. Hornblower were particularly mindful of key factors that this was a relatively small specialist business run by a husband and wife team directed by a hands-on approach and an interest in keeping their loyal and longstanding team intact. Given these factors, it was imperative to match the company with an acquirer aligned with these interests, which would prove to be a challenge during the sales process.
Amtech operated with a team of 14 staff led by a highly experienced and capable General Manager who intended to remain with the company post sale. The company was run with an efficient organisational structure supporting the Workshop, Design/CAD and Administration activities of the business. Both the Workshop and the Design/CAD departments benefitted from a team of highly skilled, experienced engineers, most of whom have 10+ years of service with the company.
Amtech came to the market with considerable opportunities for growth with a growing presence in the Middle East and the advantage of an agent relationship in the region. In addition, Amtech was poised to extend its presence throughout the wider MENA region, as well as accessing the Americas, through existing client relationships with global food and beverage brands.
The husband and wife team who had founded and led the business served as Directors of the company holding a 50% shareholding respectively. They intended to retire following the sale of the company and were fully committed to supporting any required handover of the company into new ownership.
The Vendor anticipated that the ideal buyer would be a trade buyer and communicated this to Hornblower, who in turn advised the vendor of the inherent challenges in finding a trade buyer willing to preserve and promote a small, niche business built on strong personal service values and a people-focused business culture.
Following placement on the market, Amtech initially attracted interest from a trade buyer in a similar space in the industry to the business. However, it soon became apparent that the potential buyer had not firmly committed to going through with the purchase and was slowing the process through prolonged decision making.
As weeks of due diligence passed by, Hornblower were increasingly concerned that the acquisition process would not be completed and decided to counsel the client regarding these concerns. Even though no exclusivity had been given to the potential acquirer, they had the advantage of having de facto exclusivity. Hornblower informed the client of the fact that the process was dragging and advised vendor to look for another buyer.
Hornblower set out to identify a better acquirer for Amtech by identifying and communicating with other potential buyers with aligned interests through our extensive resource of contacts. This approach resulted in the engagement with a company which were to ultimately acquire Amtech and the disengagement of the initial trade buyer who had shown interest but lacked commitment to follow the sale through.
The ultimate acquirer was a Leveraged Buy Out (LBO) type buyer which benefitted from having individuals in its network dedicated to understanding the specifics of the acquisition and willing to closely engage with the vendors throughout the sales process. Crucially, the acquirers were keen to ensure that Amtech’s existing management team was maintained and intended to develop a management plan for the continuity of the business. As an additional bonus, the Vendors got on very well with the acquirers on a personal level, as the acquirers recognised the value of the existing members of staff and held their interest and wellbeing as a team in high regard.
Hornblower are extremely pleased to have found an LBO acquirer with a high level of compatibility to a small business at a critical stage of growth. Often in our experience LBO buyers approach deals with a lack of any equity and an intent to leverage all investment against the assets of the business and with little regard to the post acquisition continuity of the company. In this case, the vendors were fortunate to have found an LBO acquirer who wanted to manage the business in the right way.
This deal also provided a key learning for Hornblower – as one of the few LBO-type deals we have carried out to date – it gave us further valuable insight into this particular business sale model, how it works and what to look for in LBO buyers. The deal was completed within 7 months of Hornblower being appointed by Amtech and the process was led throughout by our International M&A Director and Business Sales & Acquisitions Consultant, Mark Sykes.
SOLD – February 2020