Deal done:
Sale of HVAC and facilities management company

Turnover:   £9.2m
Deal completed in:       18 months

The Company

A HVAC facilities maintenance and installations company, this business presented a strong opportunity for a successful sale, as a well-established concern, founded in 1993, specialising in the design, installation and maintenance of heating, ventilation and air conditioning systems.

Located in Hertfordshire, the business initially set out to leverage existing contacts in blue-chip companies, building trust and custom with facilities managers in the local aerospace, defence, pharmaceutical and telecoms industries. This proved to be a highly successful formula and Macair used this platform to expand into office fit-out projects within the construction sector. This expanded offer subsequently opened new opportunities to enhance its facilities maintenance division, resulting in the provision of a full suite of HVAC solutions to a wide range of commercial and industrial premises across London and the South East.

Macair provided its services from two key departments: Projects and Service & Maintenance. Both departments benefitted from an established management infrastructure and a team of highly skilled and dedicated employees. The Projects department undertook the design and installation of HVAC systems, generating an average project value of £220K. The Service & Maintenance department was efficiently structured to operate a genuine 24/7 call-out service, using a fleet of branded service vans.

Over the years, Macair had developed a diverse customer base, with customers remaining with the company over a number of years, ensuring a strong record for repeat business. The company held an impressive record for projects with a roster of notable clients including British Aerospace, ICI, Fujifilm and the University of Essex.

In 2010, Macair ventured into residential maintenance when a contract was won to provide a major independent landlord with CP12 gas-safety certification within over 1,800 domestic properties.  This contract continued to ‘roll-over’ year after year, bolstered by the inclusion of an additional contract to provide ACOP L8 water risk assessments at over 3,000 properties.

As a result of attaining a solid reputation, Macair’s had attained business partner recognition with Mitsubishi Electric and approved supplier status for Daikin (D1+), Toshiba and Fujitsu. The company also demonstrated full compliance, with accreditations from a range of industry organisations, including SafeContractor, Chas and Constructionline.

 

The Situation

Macair’s Founder and Managing Director intended to sell the business in order to take early retirement along with his wife; a fellow Director at Macair, who planned to exit the business and had successfully sold her own separate company in anticipation of this new stage in their lives. The acquisition of the business presented a buyer with a business characterised by a robust performance record and supported by a strong Tier 2 management team in place.

The business came to market in a position of confidence, projecting turnover from their top ten Service and Maintenance customers of £1.1m and £7.4m for Projects. These projections reflected the revenue split in the business, with the company generating the larger proportion of its revenues from delivering Projects. At the point of marketing the business, Macair’s largest Service and Maintenance customer; an international property development group, had projected revenues of £380k in the 2018 financial year, with the largest single Project projected at revenues of £2.3m.

 

The Outcome

At the key point in the sale process, the effect of Covid-19 began to impact the economy with immediate and severe ramifications for the construction sector as a whole. Macair experienced this impact directly with the Projects side of the business rendered to an abrupt halt, placing serious concerns for the future of the business, bearing in mind that Macair generated its largest proportion of revenues from Projects carried out.

The vendor responded to this difficulty with resilience and clarity by setting out a plan to rationalise the company and make it more flexible. As the Projects side of the business had borne the brunt of the Covid-19 fallout, the vendor rationalised business overheads so that the Projects side of the business could be placed on hold and the focus could be shifted to the Service and Maintenance side of the business which remained active.

As this rationalisation took place, we agreed with the vendor that we would present the vendor’s rationalisation plan to a selection of buyers who we had lined up at the earlier stages of the mandate. This approach proved successful, resulting in an interested buyer who wished to acquire the business on the strength of the vendor’s rationalisation plan.

Macair’s sale yielded a favourable outcome to the vendor in the form of the deal structure. The sale was agreed on the basis of payment of all cash upon completion, as opposed to consideration on a deferred basis. This result ensured a prompt exit for the vendor to facilitate their plans for retirement.

At the same time, the buyer acquired a strong sustainable service and maintenance business with capable Tier2 management in good shape for further investment and growth.

The deal was led throughout and completed by our International M&A Director and Business Sales & Acquisitions Consultant Mark Sykes.

SOLD – September 2020