leading the way - grant thornton

Leading the wayA review of corporate finance deals in 2014

Contents

2 Leading the way: A review of corporate finance deals in 2014

3 Industry outlook 20154 Key highlights 20146 What we do8 Business Support Services9 Case study: Benson Group10 Consumer Markets11 Case study: Golfbreaks12 Healthcare13 Case study: Nurse Plus14 Technology, Media and Telecommunications15 Case study: Sequel16 Industrials17 Case study: Andrew Industries18 Financial Services19 Case study: Cabot Square Capital20 About us20 Contact us

Ali SharifiHead of Corporate Finance Advisory

Industry outlook 2015Underpinned by accommodative capital markets and the robust financial health of corporate UK, deal activity increased in 2014. With economic and financial conditions remaining supportive, we are optimistic that activity will improve further in the coming year.

As we anticipated at the start of last year, a more benign macroeconomic backdrop fed through into a higher level of deal activity. The increase in IPO activity we expected was realised and banks’ returning risk appetite was supportive for lending. A number of new debt funds entered the market, which improved the availability of credit, both for large LBOs and lower down in the mid-market. In addition to these sources of capital, UK Plc is prospering and corporates are sitting on high levels of cash available to invest.

The growing UK economy is a great place to deploy capital. Overseas capital too, is looking for places to invest and the UK provides an excellent springboard for an entry or expansion into Europe. Looking ahead, from a macroeconomic perspective, lower oil prices create opportunities for consolidation in the oil and gas sector, while many other sectors will benefit from the boost to their profitability and consumers’ disposable incomes that cheaper energy costs bring. From a political viewpoint, election years are always a time of greater uncertainty, but barring any obstructive changes to tax legislation, we expect further growth in M&A activity.

At Grant Thornton we have benefited from this positive market environment, but we believe that our success is underpinned by three factors that are specific to the firm. The first is the quality of our people, both within corporate finance and across the wider firm. Our teams bring a sharp focus and deep sector knowledge to bear across a number of industries. We are continuing to invest to strengthen our capabilities and over the course of 2014 we made more than ten senior hires, or promotions and expanded further in debt advisory, due diligence, operational deal services and business consulting.

Not only do we have great people, but also the culture in which they work is ideally suited to provide the best service for our clients. Our approach is very collaborative, both between colleagues across business lines within the company and also in our relationships with our clients. For Grant Thornton, a client relationship is a partnership in which we are focused exclusively on the client’s goals.

This collaboration extends geographically, providing our third source of differentiation: our integrated approach, which draws on the strength of our network, both within the UK and internationally. Our corporate finance teams make full use of these internal and external resources to open doors for our clients.

A professional services firm delivers the best for its clients when its various parts enjoy working as a team. This is the culture that we enjoy and continue to foster at Grant Thornton and the results are clear. We are delighted that, for the third year in a row, we have been confirmed as the number one financial adviser to UK companies by deal volume1.

In the coming year we look forward to using our focused, integrated approach, supported by the strength of our international network, to help all our clients find innovative solutions to finance their growth and realise their strategic ambitions.

1 Source: Experian Corpfin 20143Leading the way: A review of corporate finance deals in 2014

We are nominated advisors

to 40+ clientsactive in over 45

countries

NUMBER of deals in2014 32 International

40%

24%1 3 6

Over 40,000

clients in the UK

4,500+ people 185+partners

$4.7bnrevenuesCombined global

*Source: Experian Corpfin

54 Private Equity

Over 200 Corporate Finance professionals nationally

25officeswithin the UK

DUE DILIGENCE

firm of the year 2014

*M&A Atlas Awards 2014

We have worked on

in 2014

54Private Equity deals

in 2014

No. 1 Ranked

number one UK Financial Advisor in

2012, 2013 & 2014

40,000+

130people in over

countries

14

Key highlights 2014


We are nominated advisors

to 40+ clientsactive in over 45

countries

NUMBER of deals in2014 32 International

40%

24%1 3 6

Over 40,000

clients in the UK

4,500+ people 185+partners

$4.7bnrevenuesCombined global

*Source: Experian Corpfin

54 Private Equity

Over 200 Corporate Finance professionals nationally

25officeswithin the UK

DUE DILIGENCE

firm of the year 2014

*M&A Atlas Awards 2014

We have worked on

in 2014

54Private Equity deals

in 2014

No. 1 Ranked

number one UK Financial Advisor in

2012, 2013 & 2014

40,000+

130people in over

countries

14

5Leading the way: A review of corporate finance deals in 2014

What we do

At Grant Thornton UK LLP, we combine award-winning technical expertise with the intuition, insight and confidence gained from our extensive sector experience and a deeper understanding of our clients.

Our corporate finance offering is truly integrated. We provide access to a full spectrum of transaction specialists and an international network of M&A experts. Whether buying a business, selling a business, advice on mergers, management buy ins/outs, or raising finance to support your business’ plans, our team will guide you through the process.

We do more deals than anybody else in the mid-market and are consistently ranked No. 1 in the Experian Corpfin M&A league tables. Our transaction size is between £5 million to £250 million in value, making us the preferred supplier for mid market transactions. We know how to transact. Through empowered client service teams, approachable partners and shorter decision-making chains, we provide a wider point of view and operate in a way that’s as fast and agile as our clients. The real benefit for dynamic organisations is more meaningful and forward-looking advice that can help to unlock their potential for growth.

Our specific areas of expertise include:

Buying a businessFor businesses looking to grow through acquisition, our corporate finance advisory team takes a hands-on approach to helping you find the perfect match to achieve your business objectives. The process starts with research and identification of target businesses, both in the UK and internationally, drawing on the knowledge of our own team of in-house researchers and sector specialists.

Once a target has been identified we help our clients through every step of the process. We approach and then negotiate with the target on your behalf, as well as develop the offer, from valuations and funding requirements through to drafting all documentation and negotiating Heads of Agreement. We also undertake due diligence and provide tax planning, before seeing the negotiations through to a smooth completion.

Selling a businessWhen considering selling your business you want to be sure that you will achieve the highest possible value, with the best terms and that the sales process will be as smooth as possible.

Our team focuses on advising you how to maximise the value of your business on sale. By understanding your objectives and exploring all the options available to you, we can help you decide on the most suitable sales strategy. We will support you through every step of the sale process, including valuing your business, drafting the information memorandum and working with our tax colleagues and sector specialists to strengthen and accentuate your position in the market. We help to identify and evaluate potential purchasers, including exploring overseas opportunities and will lead or support in the negotiations, right through to completion of the transaction. Throughout the sales process we will work with you to ensure as smooth a transaction as possible.

Raising financeIn the current economic climate, raising finance can prove a major challenge for your organisation. As a result, busi-nesses are increasingly looking to innovative ways of raising finance. We are experienced in helping management teams, corporates and private shareholders raise private equity and/or debt finance to support growth, release value or refinance. We can help you explore the numerous options open to you in terms of raising finance, highlighting the advantages and disadvantages of each method for your business, based on our expertise and experience.


Public Company AdvisoryOur Public Company Advisory team helps companies float on AIM or the Official List. We are the leading independent Nominated Adviser to AIM companies, we act as financial adviser on transactions involving Premium Listed and Standard Listed companies, and are experts in advising on public company M&A including the Takeover Code. Our team of highly experienced and qualified professionals has depth and breadth of expertise, providing strategic, commercial, financial, regulatory and operational advice to public companies, its board of directors and its shareholders.

We offer integrated solutions on a diverse range of corporate finance matters to dynamic publicly listed companies, private companies aspiring to a listing, private equity houses and family offices, as well as shareholders of public and private companies. We tap into specialists from other teams across advisory and the wider firm to deliver a range of services to public companies and those seeking to go public. We pride ourselves on developing deep business relationships with our clients based on trust, as well as our proactive and pragmatic advice.

Transaction Advisory ServicesWe have a national team of advisers, who apply their strong experience and capabilities in a very hands-on way. Our business is built on long-term working relationships, because we endeavour to develop a deep understanding of our client’s businesses. Our services have been developed to meet the needs of the mid-market sector including vendor, acquisition, commercial, technology and operational due diligence, bid support, vendor assistance (exit readiness, preparation for due diligence and completion mechanism advice) and public company transaction work.

We identify key business issues through our rigorous and tailored risk and business analysis process and report findings to suit your business and funders’ needs and your preferred medium. Our team then work closely with you and

Credentials

Grant Thornton’s Corporate Finance team is one of the UK’s leading mid-market M&A teams.

• Ranked no.1 adviser for deals by volume in 2014, 2013, 2012 (Sources: Experian Corpfin)

• M&A Atlas awards 2014 – Due Diligence provider of the year

• Insider Deal Maker Awards winner 2014

Operational Deal ServicesOperational Deal Services is a specialist deal based team focused on providing practical operational insight and advice to corporate and private equity clients, to help achieve their deal goals. We operate across the whole deal cycle and our team members have experience of working on over 300 transactions. We offer solutions and advice in: integration and 100 day planning, carve out (preparation for sales / separation), operations due diligence, synergy review and planning, and performance improvement.

your other advisors to find practical solutions that resolve these issues with a reporting method designed to suit your business and your preferred medium.


A selection of deals


Business Support Services

Looking at the year ahead, while the forthcoming General Election may have a bearing on M&A in some sub-sectors of Business Support Services, we expect deal activity to be underpinned by several investment themes. At the macro level, continued cuts in government spending will lead to further outsourcing in the public sector, creating opportunity for the private sector. From a sector perspective, further bundling of services will benefit diversified operators with

scale, driving further consolidation through M&A. Larger players will look to optimise their portfolios and maximise their growth potential, offloading non-core domestic assets and considering overseas opportunities, both outbound and inbound. PE investment in the sector will continue to be underpinned by contractual long term revenue streams and strong debt markets.

Concertare Limited

WestBridge Capital LLP

Acquisition of the Woods Group Limited

MBO of Vista Retail Support Holdings Limited

January 2014

May 2014

Charity fundraising services provider

Support for EPoS terminals and associated devices in the retail, leisure and hospitality sectors

£undisclosed

£12.3 million

Grant Thornton provided due diligence services


RM2 International SA

Staffline Group plc

Admission to AIM and IPO

Acquisition of Avanta

January 2014

May 2014

Composite pallet manufacture and supply

Welfare to work training

£316.2 million market cap£137.2 million raised

£65.4 million

Grant Thornton acted as reporting accountant


Inflexion Private Equity

Benson Group

Disposal of Optionis

Disposal to Graphic Packaging International Inc

January 2014

May 2014

Workforce management service provider

Packaging

£undisclosed

£100 million

Grant Thornton provided corporate finance advisory services


CAP Automotive Limited

Mobeus Equity Partners LLP

Acquisition of Derwent Management Services Limited

MBO of Creative Graphics International Limited

February 2014

June 2014

Automotive

Design and manufacture of vinyl graphics

£undisclosed

£6.25 million



Career Teachers Limited

PMC Treasury Limited

Disposal to Impellam plc

MBO

March 2014

June 2014

Education recruitment

International deals

Business consultancy services

£22.3 million

£undisclosed


Grant Thornton provided corporate finance advisory and tax services

Case study: Benson Group

BackgroundGrant Thornton’s corporate finance advisory team formed a very strong relationship with Benson Group in the period since 2005, assisting with three acquisitions in as many years, the management buy-out support-ed by Lloyds Development Capital in 2011, has now culminated in the ultimate sale to Graphic Packaging International for a consideration of £100 million.

Benson Group is one of the UK’s leading printed folding carton suppliers, producing packaging for both the food retail and healthcare industries for a wide range of UK and European customers.

The Midlands-based business, which has a turnover approaching £120 million, employs more than 900 staff and manufactures packaging products at four production sites across the UK at Bardon, Newcastle, Gateshead and Crewe.

Graphic Packaging International, headquartered in USA, is a leading packaging provider to the food, beverage and other Consumer Markets. Benson Group’s current position in the growing convenience and retail market will particularly complement Graphic’s existing operations and further strengthen its growing presence in Europe.

Solution Grant Thornton project managed the deal to completion, supporting Benson Group’s management through complex financial, commercial and regulatory phases of the transaction.

Mustafa Abdulhusein from Grant Thornton’s advisory team said: “I am delighted to have advised Benson Group’s management since 2005 on five transactions, with the ultimate sale to Graphic.

We will continue to provide support to Mark and his team as needed.”

Maria O’Donnell from Grant Thornton’s advisory team added: “This is a great opportunity for the management team to be part of a global business with significant growth aspirations, where they will continue to drive the business into the next phase.”

Grant Thornton delivered an excellent deal in line with the agreed timetable.

We really valued their support and transaction experience which guided

us through a complex process. Having worked with them on five transactions,

I would have no hesitation in recommending them as advisors.

Mark KerridgeChief Executive Officer

Benson Group

Our Corporate Finance team advises on the sale of Benson Group to Graphic Packaging International.


Consumer Markets



The M&A market was more active in the last year in the Consumer and Retail sector than the previous year and we expect these buoyant conditions to continue into 2015. Appetite in 2014 proved especially strong from private equity buyers in the Consumer sector, and in Food & Beverage in particular, with investors attracted to premium brands in a sector deemed to be relatively recession-proof. Trade purchasers with healthier balance sheets are continuing to use M&A as an investment tool, with buyer interest remaining from emerging markets, keen to enter new markets through acquisitions and drawn to ‘western’ brands and lifestyles.

Conversely in the Food & Beverage sector, we anticipate a key M&A driver will be the need to have a more balanced portfolio and to find alternative routes to market to reduce dependency on the major multiples, who are closing stores,

reducing the number of products stocked and squeezing pricing. This will include acquisitions by UK food and drinks companies of overseas businesses, as well as acquiring companies with established export infrastructures.

We enter 2015 with a steadily recovering UK economy and improved consumer confidence, buoyed by a decline in energy and food prices, employment and real wages on the rise, and with inflation at its lowest level since records began. Whilst the pace of economic growth will be subdued by domestic, political and geopolitical uncertainty and ongoing Euro zone weakness, business and consumer confidence should be resilient to these issues. Uplifted consumer sentiment is boosting retail and leisure spend, and this in turn should further encourage M&A activity in the Consumer and Retail sector in the coming year.

Edward Billington & Son Limited

Patisserie Valerie

Acquisition of TSC Foods Group Limited

Aim IPO and placing

January 2014

May 2014

Food and beverage

Casual dining

£undisclosed

£170 million market cap£79 million raised



Patisserie Valerie

B&M European Value Retail S.A.

Acquisition of Philpotts

Admission of B&M European Value Retail S.A. to the Official List

March 2014

June 2014

Casual dining

Discount retail

£undisclosed

£2.7 billion market capitalisation



A F Blakemore & Son Limited

Conviviality Retail plc

Acquisition of BA Cash & Carry (Cardiff) Limited

Acquisition of 26 Rhythm & Booze Stores from Bibby Retail Services

March 2014

May 2014

Cash and carry operator

Franchised off-licence and convenience retail chain

£9.125 million

£1.7 million



Business Growth Fund / Dudson (Holdings) Limited

tastecard

Growth capital fund raising

Disposal of tastecard to DIDIX BV

May 2014

August 2014

Ceramic tableware producer for the travel and hospitality industry

Restaurant dining club

£3 million

£undisclosed



The Co-operative Group Limited

Produce World Group Limited

Carve-out of the Co-operative Pharmacy

Acquisition of TIO Limited

October 2014

July 2014

Retail

Organic vegetable supplier

£620 million

£undisclosed

Grant Thornton provided vendor assistance and separation planning services


International deals

A retail bond offering was an ideal financing instrument for

Golfbreaks, a growing business with a loyal and extensive

customer base. The bond has not only provided the company

with unsecured covenant light debt, but also strengthened its

relationship with many of its supportive customers.

Philip SecrettPartner, Grant Thornton

Case study: Golfbreaks

Background to dealWe advised UK golf travel company, Golfbreaks Limited, on the development and issue of its ‘Golfbreaks Bond’ offer.

The bond issue included a choice of two unlisted retail corporate mini bonds, each having an initial four-year term.

The company successfully raised a total of £2.9 million, far exceeding its initial target fundraise of £2 million, from its membership base of golfing enthusiasts. They plan to invest the funds in continuing to build their presence in the US market, make investments in new technologies and IT infrastructure, and expand the Teeofftimes.co.uk brand.

The two bonds included ‘The Cash Bond’, which offered interest of 7.5% (gross) per annum, payable in cash and ‘The Breakpoints Bond’, which offered interest of 10% (gross) per annum payable in points in the company’s Breakpoints customer rewards programme, which can be redeemed against golf holidays, tee times and/or spa breaks via Golfbreaks.com, Teeofftimes.co.uk and Bookaspa.com respectively.

Unlisted retail bondsThis type of financing is being used more and more frequently by companies looking for a diversification of financing facilities. It also works well for companies with a strong brand and/or a large membership or subscriber base as it enables the company to engage with the members whilst enabling the investors to participate in the growth and development of the company.

Our Public Company Advisory team advised Golfbreaks Limited on its new retail bond issue.


2014 has been a very active year across the Healthcare sector and we have advised on Healthcare transactions as diverse as medical devices and pharma services to elderly care and private hospitals. Transactions have also been as varied as Private Equity backed buy outs, fund raisings to cross border M&A. In fact a key aspect of the 2014 year was the high level of international investment into and interest in the UK Healthcare market, demonstrating that it is an attractive long term area for investors. In common

with other sectors, we can expect a temporary slowdown in activity in the first half of the year with parliamentary elections looming, but as the political landscape becomes clearer in the second half of the year we can expect M&A activity to increase as a degree of certainty returns to the sector.

Healthcare



August Equity LLP

The Dental Director Limited

Acquisition of Westpoint Veterinary Group

Disposal of the Dental Directory supply business

January 2014

April 2014

Veterinary services

Supplier of dental consumables equipment and services

£undisclosed

£undisclosed



Octopus Healthcare

Tiziana Life Sciences plc

Private hospital group fund raise

Reverse acquisition of Tiziana Pharma Limited and re-admission to AIM and placing

August 2014

May 2014

Private hospitals

Biotechnology

£undisclosed

£24.5 million market cap£2 million raised



Mangar International

Rex Bionics plc

Disposal to management team backed by YFM Equity Partners

Admission to AIM and acquisition of Rex Bionics Limited

January 2014

May 2014

Personal moving and handling solutions

Medical devices-robotic exoskeletons

£undisclosed

£10 million fund raising



Boots UK Limited

Business Growth Fund / Abbey Pharma Limited

Boots UK Limited, Acquisition of Burrows & Close Limited and Burrells Limited

Growth capital fund raising

March 2014

August 2014

Pharmacies

Pharmaceuticals

£undisclosed

£undisclosed



Hallam Medical Group

Nurse Plus and Carer Plus (UK) Limited

Investment by Key Capital Partners

Disposal of Nurse Plus

April 2014

December 2014

Healthcare recruitment

Healthcare staffing solutions

£10 million

£undisclosed

Grant Thornton provided corporate finance advisory, financial modelling and tax services


International deals

Case study: Nurse Plus

Background to dealNurse Plus has grown organically and currently operates through 35 branches situated primarily in the South of England. Since 2005, the company has achieved an impressive compounded annual revenue growth rate of 37%. Along with a highly scalable branch roll out business model, Nurse Plus has a market leading reputation for compliance and quality of care, which is supported by a strong compliance culture.

Grant Thornton’s roleHaving worked closely with the management team throughout the transaction, Grant Thornton generated significant interest in the business which led to a fantastic result for the shareholders, and a hugely impressive return for Nurse Plus’ institutional investors, Key Capital Partners, who exit two and a half years after their original investment in July 2012.

As part of the transaction, Grant Thornton provided lead advisory services, as well as management advisory services, tax advice, working capital advice and ESS tax advice.

Peter Jennings, Grant Thornton Healthcare Corporate Finance commented: “This transaction achieved an excellent return for KCP in a relatively short time frame, as well as ensuring that the management team were partnered with the leading healthcare sector investor, Sovereign Capital Partners LLP. The business can now continue with their rapid expansion and ambitious growth plans and we were delighted to be able to work with the whole team on this journey from start to finish, and look forward to continuing to support them with on-going advice including audit and tax in to the future”.

Mark Naughton, Head of Healthcare from Grant Thornton’s advisory team added “It was a pleasure to work with Heath, Pamela and the Management team to build their relationship with Sovereign and advise them on their position going forward.”

Established in 2005 and headquartered in Canterbury, Nurse Plus offers high acuity and complex homecare to individuals and local authorities as well as healthcare staffing solutions to care and nursing homes.

We were hugely impressed by the commitment and competence of the Grant Thornton team during the

whole transaction process. The team worked tirelessly throughout and as a result of their knowledge of the sector

and deal tenacity, they delivered a fantastic result for all the shareholders.

Their level of service exceeded our expectations and the shareholders are

grateful for all their efforts.Heath Blake,

Chief Executive OfficerNurse Plus UK




Technology, Media and Telecommunications

thinkFolio Limited

Darwin Private Equity

Sale to Markit Group Limited

Buyout and refinancing of ASK4

January 2014

May 2014

Investment and portfolio management software

Provider of telecommunications services

£undisclosed

£21.5 million



Kodak Alaris

Gamma Communications plc

Investment in ITyX Solutions

Admission to AIM

June 2014

October 2014

Software based on artificial intelligence and computer linguistics

provider of telecommunication services

£undisclosed

£165 million



Argonon Limited

Sequel Business Solutions Limited

Acquisition of Windfall Films Limited

Sale of Sequel to Hg Capital

March 2014

July 2014

TV production

Insurance software and consultancy

£undisclosed

£undisclosed



Symetri, a division of Airbus Group

Momondo Group Limited

Disposal of Symetri, a division of Airbus Group, to Addnode Group

Sale of majority equity stake to Great Hill Capital Partners

May 2014

October 2014

CAD software reseller

Online travel metasearch

£undisclosed

£210 million



Motivcom plc

Springboard Research Limited

Disposal to Sodexo Motivation Solutions UK Limited

MBO backed by YFM Equity Partners

September 2014

October 2014

Incentives and loyalty and event management

Technology and retail intelligence

£41 million

£6 million

Grant Thornton provided corporate finance advisory, tax and valuation services and acted as Rule 3 advisor


International deals

The strong resurgence in Technology, Media and Telecommunications M&A activity looks set to continue into 2015. There is a well-balanced market for shareholders looking to realise value or de-risk, with trade buyers and private equity firmly in the market for scalable businesses with the right characteristics to deliver long term growth. This has been supported by positive appetite in the public markets for new issues and to support management teams in capitalising on transformational growth opportunities through M&A.

Whilst the headlines are dominated by some of the global mega-deals which have continued to transform the TMT landscape, the mid-market remains the battleground for M&A in the sector. The TMT sector has continued to be one of the most robust in terms of a progressive recovery in the deal market. We expect this to continue through 2015. Whilst there will undoubtedly be volatility, technological change is underpinning much of the drive for growth across all sectors of the economy and this provides a firm platform to support M&A – both transformational and infill.

Case study: Sequel

Background to dealEstablished in 1993, Sequel has grown from a trusted consultancy services business to a leading insurance and reinsurance software specialist delivering a modern and powerful suite of applications which provide full end-to-end management of all insurance and reinsurance business.

Based in London and Malaga, Sequel has users globally and its Eclipse suite of products now support some of the largest players in the Lloyd’s of London market. Sequel has invested heavily in innovation and continues to target new areas like risk management and health insurance.

Attracted by a proven and scalable product portfolio of mission-critical applications, an unrivalled reputation for service delivery and significant opportunity for continued growth, the shareholders had received a number of approaches from PE and trade investors in recent years.

SolutionGrant Thornton engaged with the shareholders early on to assess their strategic options and explore opportunities which met the key objectives of all stakeholders.

Following a detailed assessment of their options, we advised the shareholders on progressing the opportunity with HgCapital who showed a strong appetite to structure a deal that, while meeting stakeholders’ objectives, provided a strong platform for growth, creating potential for significant future upside.

The process was carefully managed to maintain confidentiality, critical given other events in the market, and therefore requiring delivery within a tight timescale.

Grant Thornton led the negotiations for the transaction and completed in a relatively short-time period of eight weeks from signing of heads of terms.

Darren Bear, Corporate Finance Partner, who led the deal commented: “Our knowledge and understanding of how to drive value in the deal, from both a software and insurance market perspective, was crucial. This combined with our extensive knowledge of mid-market private equity enabled us to deliver a transaction that matched the different requirements of the key stakeholders in the business in under 8 weeks. The investment made by HgCapital will support Sequel as it embarks on its next phase of growth and development.”


We are delighted with the support provided by

the Grant Thornton team over the years in preparing us for a transaction.

Their advice has been invaluable and they introduced us to a partner that has a strong understanding of our market, allowing us to

secure a great future for Sequel, and its many stakeholders. We look forward to continuing

our association with Darren and his team during the next phase of our growth.

Mario GarciaChief Executive Officer

Sequel Business Solutions Limited

Our Corporate Finance team advise on the sale of a majority stake in insurance software solutions provider Sequel to HgCapital.

The outlook for companies operating within the Industrials sector is positive, with opportunities within both domestic markets, such as automotive, and global markets, where the British-Manufactured brand continues to be strong.

Analysing the key industrial sectors indicates that their potential value to the UK economy is significant, and as such, the UK Government is supportive of the sector and is aligning policies to support continued growth, within areas such as technology, skills, tax and regulations.

As the international market develops and changes, it is important for companies to adapt to increased globalisation, but doing so can lead to increased opportunities. Growth in emerging economies is forecast to be a key opportunity,

with the strong brand and reputation of UK manufacturing. Developing supply chains, which are increasingly globalised, is a key challenge to ensure continued strength within the sector; even smaller businesses can find themselves reliant on over 100 companies. Strengthening these supply chains is an important factor in underpinning the continued competitiveness of UK-based manufacturers.

The UK shows particular strength in industries which involve high levels of innovations, such as the automotive and aerospace sectors.

The manufacturing sector in particular has shown strong performance over the last 12 months, with December’s results showing a seventh consecutive quarter of expansion.



Industrials

RPC Group plc

Outreach Limited

Acquisition of Ace Corporation

Acquisition of Tech Safe Systems (UK) Limited

May 2014

July 2014

Injection moulding group

Industrial manufacturing and engineering

£253 million

£undisclosed

Grant Thornton provided commercial and operational due diligence services

Grant Thornton provided corporate finance advisory and due diligence services

Advanced Insulation plc

Tata Steel UK Limited

Disposal to Growth Capital Partners

RGF grant secured from the Department of Business, Innovation and Skills

March 2014

March 2014

Offshore oil and gas insulation and fire proofing services

Steel sector – R&D

£undisclosed

£8.2 million



IM Kelly Automotive

Rulin Capital LLP

Sale to ECA NV

Acquisition of Gordon Equipments Limited

February 2014

March 2014

Industrial manufacturing

Automotive car parts distributor

£undisclosed

£undisclosed



Watson Petroleum Limited

Flowtech Fluidpower plc

Disposal to World Fuel Service Corporation

Admission to AIM

March 2014

May 2014

Fuel distributor

Distributor of hydraulic and pneumatic fluidpower products

£117 million

£40 million raised



Fusion Group Limited

Andrew Industries Limited

Disposal of the UK distribution business of Fusion Group Limited to Wolesley plc

Disposal of the Filtration Division to Lydall inc

March 2014

February 2014

Utility infrastructure products

Individual filtration products

£undisclosed

US$83 million



International deals

Our Corporate Finance team advises on the sale of the Filtration division of Andrew Industries to Lydall, Inc.


Case study: Andrew Industries

Background to dealAndrew Industries Ltd (Andrew) was founded in 1894 and began business in the north Lancashire town of Bury selling woven textiles to laundries. Andrew has grown significantly since. Its filtration division is now a leading global manufacturer and supplier of non-woven felt filter media and filter bags used in industrial air filtration applications. The company today is head quartered in Accrington in the North West of England with revenues in this division of c.£90 million. Grant Thornton won the mandate to advise Andrew in 2008 on its strategic options. This initially led to the sale of its Canadian business, Filterfab, to National Filter Media in the US in 2009. Since then, Grant Thornton has continued to advise Andrew on its various options and potential partners for the filtration division.

Grant Thornton worked closely with Andrew to identify Lydall Inc., listed on the NYSE, as the right partner. Andrew’s market leading division has a global footprint with operations in the US, UK and China

and would offer Lydall the ability to expand its global footprint, add complementary and new technologies, as well as meaningful scale to the combined business.

SolutionGrant Thornton led the negotiations with Lydall to ensure that appropriate value was obtained in each of the division’s complex business operations across the globe.

In addition, Grant Thornton’s team worked hard to manage the diligence process liaising closely with the legal advisors. There were further detailed negotiations throughout the process which included the supplier-customer relationship between Lydall and the retained Andrew businesses as well as transfer of IP.

OutcomeThe transaction completed in February 2014 with both parties looking forward to a bright future. Andrew Industries continues to operate its Laundry and Engineering divisions.

Ali Sharifi, Corporate Finance Partner commented, “This transaction is a fantastic result for the shareholders and management of Andrew Industries who have obtained strategic value for the Filtration division and can focus now on growing its remaining businesses.”

Grant Thornton

had done a very good job for us previously when we sold

a subsidiary in Canada which is why we invited them to guide us through the

sale of several of our subsidiaries around the world within our Filtration Division. Grant

Thornton were able to handle the complexities of the transaction to our total satisfaction with

a pragmatic approach to issues. They did a very good job for us again second

time round.Ted Andrew

Executive Chairman and ShareholderAndrew Industries Limited



Financial Services

2014 has been an active year for the Financial Services M&A market across all three sub sectors – Banking, Insurance and Investment Management. With transactions being driven by improving confidence in the economy, regulatory changes driving consolidation, improved access to debt and equity funding both from a transaction and operational perspective as well as strategic new entrants both from overseas and existing players expanding into new areas and taking control of distribution channels.

As the FCA clarifies and implements its compliance agenda certain players have decided to exit or restructure their business models to become compliant. We are likely

to see further M&A activity as Financial Services companies begin to understand more clearly the FCA’s approach in their specific sector.

Financial Services M&A in 2015 is expected to continue to be active as the UK economy continues to strengthen, consumer and business confidence grows and new equity funds specialising in this sector are raised. Clarity as to the political and fiscal environment after the general election will hopefully allow for further activity. From a macro economic and geopolitical perspective, stability across the eurozone and further afield will also be an important factor in determining the overall level of activity.

Arthur J. Gallagher & Co

Shawbrook Bank Limited

Acquisition of Baker Tilly Financial Management’s employee benefit solutions

Acquisition of Centric Commercial Finance

July 2014

2014

Employee benefits

Leasing and asset finance

£undisclosed

£undisclosed



Cabot Square Capital LLP

Target Group

Acquisition of Henry Howard

Acquisition of Freedom Finance Limited

March 2014

July 2014


Consumer finance

£undisclosed

£undisclosed



Henderson Global Investors

Star Capital Partners Limited

Share placement

Acquisition of Kennet Equipment Leasing

February 2014

2014

Fund management


£95 million market cap £20 million raised

£undisclosed



Haydock Asset Finance

Direct Line Group

RBS refinance of Haydock Asset Finance

Investment in The Floow Limited

2014

July 2014


Telematics

£undisclosed

£undisclosed



B.P Marsh & Partners plc

Towergate Insurance

Investment in Nexus Underwriting Management Limited

Acquisition of Arista Insurance Limited

August 2014

April 2014

Managing general agent

Insurance

£1.5 million

£undisclosed



International deals


Case study: Cabot Square Capital

Background to dealHHF was the first example of a UK mid-market PE firm backed management buy in of an asset finance brokerage, which has since been replicated.

The additional equity capital will enable HHF to raise significant debt finance in order to facilitate the conversion of previously brokered volume onto their ‘own book’.

OutcomeWith Cabot as their PE partner, HHF can benefit from additional financial and operational expertise which will enable the further development of their underwriting and collections functions which are essential in making the transition from broker to finance company.

Cabot have also recently acquired Lease Direct Finance from Investec Bank, who had acquired the broker in 2010, furthering their strategic push into UK SME finance.

In both cases, understanding the historic performance of both brokered and ‘own book’ volumes ie yield, fees, defaults and other income, were an integral part of the diligence process.

Our corporate finance team advises Cabot Square Capital with their acquisition of Henry Howard Finance as well as Lease Direct Finance.

About usGrant Thornton UK LLP is a leading financial and business adviser, operating out of 25 offices. Led by more than 185 partners and employing over 4,500 of the profession’s brightest minds, we provide personalised assurance, tax and advisory services to over 40,000 individuals, privately held businesses and public interest entities.

Our national team of corporate finance advisers work with entrepreneurial businesses, their owners and management teams in the mid-market at various stages of their lifecycle including growth capital and refinancing solutions, strategic acquisitions, management buy-outs and company sales. From exploring the strategic options

available to you as a business or shareholder, advising and project managing the chosen solution, we provide a truly integrated corporate finance offering. We are a member firm within Grant Thornton International Ltd, one of the world’s leading international organisations of independently owned and managed accounting and consulting firms. Clients of member and correspondent firms can access the knowledge and experience of more than 40,000 people in over 130 countries and consistently receive a distinctive, high-quality and personalised service wherever they choose to do business, adding real value on cross-border M&A transactions.

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