|Deal completed in:||14 Months|
A commercial and leisure light-fitting production specialist with over 90 years of industry trading history. Having built up strong in-house engineering capabilities, including precision metal fabrication, powder coating, and electrical assembly, this company benefitted from a well-established and loyal customer base of prominent industry players.
Whilst the main focus of the company had centred on lighting products for commercial and leisure facilities, the company had extended their precision sheet metal fabrication capability to produce other products, including wood burners and stoves, opening the way to sell into other product sectors.
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The sale offered an opportunity for existing engineering and metal fabrication businesses to add onto their current business offering. The sale also presented potential for investors looking to acquire an established business offering consistent returns, experienced production capability, a niche market, as well as opportunity for growth.
The business was originally founded by the grandfather of the some of the shareholders 100 years ago, and so had been in the family for several generations. The current managing director had a long history with the company, having started 47 years ago as an apprentice. He worked for many years alongside the last two director-shareholders and grandsons of the founder, prior to acquiring 51% of the shares through a management buyout (MBO) in 2006. As part of the MBO deal, the remaining 49% of the shares were retained by the existing shareholders and family members.
The incumbent Managing Director came to Hornblower in 2018 in order to facilitate his retirement plans through a sale of the company.
Whilst the Managing Director was prepared to continue in the business on a consultancy basis following completion of a sale to facilitate a full handover, due to a strong Tier 2 management team being in place, he envisaged this period consisting of 3-6 months post completion.
The company operated from premises, which were owned by the original family shareholders of the company, and held an ongoing lease for another 8-10 years.
The business premises were located between two other industrial premises owned by a third party. With the widespread development and demand for land in the area, the acquisition of the middle property represented a potentially valuable property development opportunity for this third party. However due to the lease, in order to buy the land he needed to acquire the company too.
This prospective buyer had made offers for the company and land previously, all of which had been below expectation and rejected.
What Hornblower Did
Through our engineering sector experience and our own database of engineering focused buyers registered with us, we were able to generate a significant amount of interest in the company. With over 40 enquiries and 5 offers within 5 months of our marketing the company, we were able to determine the true market value for the company, which was significantly above the level of the previous offers received.
As a result, we were able to negotiate a premium value offer for the company shares with the consideration paid 100% on completion, alongside a full market value for the property. The managing director was also able to retire after just a 5-week handover.
One of the primary challenges in concluding this deal lay in bringing together several parties each with different objectives. The other key challenge was keeping the momentum on the deal.
Delays in preparing Due Diligence is a common issue which slows momentum considerably. In this case, Hornblower stepped in to keep things on track by dedicating time with the seller to go through the Due Diligence questionnaire line by line and upload the required information to the dataroom.
Sellers can often be overwhelmed with providing large amounts of specific information while maintaining the day to day running of the business. This form of proactivity on a practical level is something Hornblower prides itself in delivering.
The sale was successfully completed in January 2020, facilitated through Hornblower’s deep expertise and long-standing experience in selling engineering businesses and negotiating win-win deals which work well for both parties. The process was managed throughout by Business Sales and Acquisitions Consultant and Managing Director, Henry Campbell-Jones.
SOLD – January 2020