spotlight on manufacturing & engineering

SPOTLIGHT ON...

MANUFACTURING& ENGINEERING

UK ENGINEERS AND MANUFACTURERS HAVE LONG BEEN PRIZED BY INTERNATIONAL ACQUIRERS LOOKING TO EXPAND THEIR OPERATIONS, BUT DON’T ASSUME THAT INTERNATIONAL INTEREST IS LIMITED TO LARGE, LISTED BUSINESSES.

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At BCMS we have seen consistent overseas demand for specialist UK engineering and

manufacturing companies, and have completed a range of transactions that demonstrate

the numerous motives driving today’s acquisition strategies.

What makes the UK such a magnet for international investment? In general terms, the UK

provides a highly stable legal, fiscal and political environment in which to do business. The

UK is also renowned for its highly skilled pool of labour and a flexible regulatory environment

towards recruitment. And our long-held reputation for innovation and engineering

excellence is reflected in a wide range of high quality, specialist companies, often with

world-class skillsets.

The next few pages show real stories of real clients who have sold with BCMS,

told in their own words – we hope you find them informative and enlightening…

JONATHAN DUNNManaging Director, BCMS Major Transactions Group

www.bcms.co.uk

SPOTLIGHT ON... MANUFACTURING & ENGINEERING

IF YOU THINK YOU ALREADY KNOW THE MOST LIKELY BUYER FOR YOUR BUSINESS, THINK AGAIN. MICHAEL SPENCER OF TEW ENGINEERING EXPLAINS HOW THE WIDE-RANGING BCMS APPROACH FOUND THE RIGHT ACQUIRER, AT THE RIGHT TIME.

BCMS client: TEW Engineering, based in Nottinghamshire

Transaction type: Trade sale

Company activity: Application engineering business specialising in the design, manufacture and installation of control systems

Company size (pre-sale): <90 staff, £12m turnover

Acquiring company: USA-based LB Foster Inc

FACTFILE

OUR ACQUIRER WAS NEW TO US – BUT AN ABSOLUTELY PERFECT FIT…

VIEWPOINT


54 www.bcms.co.uk

WHY DID YOU DECIDE TO SELL YOUR BUSINESS?

It was part of a five-year plan. I first attended a BCMS seminar in 2009,

at which point there was no timescale or burning desire to sell the

business, but I went along because I thought it would provide very

good background information. I thought that the seminar was very

compelling. Everything that was said really made sense and was very

convincing. I liked the BCMS approach.

In summer 2013, I thought it was the right time to kick off the

sale process. The business was growing rapidly, but there were

still plenty of further opportunities for growth for which we would

need much more resource in terms of personnel, finances, and also

skillsets and knowledge.

Another reason for selling was a personal one from a succession

planning perspective. I was Managing Director, with a great team

of five around me, three of whom were looking to retire. We didn’t

necessarily have people within the existing business who could step

into their roles, and I didn’t want to have to put a new team in place. £303MTHE AVERAGE TURNOVER SIZE OF ORGANISATIONS ACQUIRING BCMS CLIENTS IN THIS SECTOR IS

DID YOU KNOW?HOW DID YOU FEEL THE SALE PROCESS WAS MANAGED?

Superbly. We were impressed at BCMS’ depth of knowledge,

the depth of the team and how people were brought in at the

appropriate time – also the hand holding, if it was necessary, and the

reassurance about confidentiality. The documents BCMS produced

were nothing short of exceptional. I loved the style in which BCMS

put it together, but more importantly, we were stunned at how well

BCMS had understood the business and the essence of it.

There was a real depth to that knowledge that made it clear

that we were dealing with very bright, professional people

who are at the top of their game. Everything that BCMS promised

you would do, you did, and when you said you would do it.

BCMS exceeded our expectations.

THERE WAS A REAL DEPTH TO THAT

KNOWLEDGE THAT MADE IT CLEAR

THAT WE WERE DEALING WITH VERY

BRIGHT, PROFESSIONAL PEOPLE WHO

ARE AT THE TOP OF THEIR GAME.


76 www.bcms.co.uk

DID THE BCMS RESEARCH PROCESS LIVE

UP TO YOUR EXPECTATIONS?

Yes. BCMS identified 192 potential acquirers and I think we deleted

six names from it. BCMS lived up to their promises regarding research

and explained clearly the rationale for the names on the list in terms

of size and available finances. The BCMS approach was proved as we

had people that we thought might be interested, but none of the

meetings we had or any of the eventual bids we received were from

them. In fact, all of the people were new to us.

If we could have outlined who our perfect acquirer was going to

be, it would have been someone many times our size in terms of

resources. But at the same time, you don’t want to be swallowed up.

Alongside the extremely strong

commercial profile of the business,

interest in TEW Engineering was

driven by market sector growth.

Rail expenditure is up; passenger

numbers are up and there is

commitment to infrastructure.

For Industrial Automation, the

market is buoyant and experiencing

massive investment.

The UK is seen as a great place to

invest. We are open for business.

Our experience is that US acquirers

perceive the UK as an ideal platform

for expansion into Europe –

this is particularly true for

manufacturing and engineering,

where many of our client businesses

in that sector have sold to a

US-based acquirer.

If you are thinking of selling,

you need to think about selling the

future of your company. As such,

establishing a Research &

Development programme is

important, as acquiring companies

are always on the lookout for the

next mould-breaking idea that

will add value to their offering.

A well-funded, active R&D

department to see your company

through the next five years…

that can make a business very

attractive indeed.

DEAL ANALYSIS: HUGH ASHBURNER, ASSOCIATE DIRECTOR, BCMS

LB Foster was an absolute perfect fit. Worldwide, LB Foster turns

over $0.75bn, has approximately 40 offices and manufacturing

plants, and employs 800 people – but within the UK, LB Foster had

just about the same size turnover as TEW, virtually the same number

of people and two offices. LB Foster in the UK is in two markets –

rail and automation – and in both of those markets we do not

compete in any areas. As a result, LB and TEW can now offer their

customers so much more, and completely beyond the capability

of any known competitor.

A BUOYANT SECTOR, EXPERIENCING MASSIVE INVESTMENT

IF YOU ARE THINKING OF SELLING,

YOU NEED TO THINK ABOUT SELLING

THE FUTURE OF YOUR COMPANY.


98 www.bcms.co.uk

DID YOU KNOW?

83%OF BCMS UK MANUFACTURING/ENGINEERING CLIENTS SOLD TO AN OVERSEAS ACQUIRER


1110 www.bcms.co.uk

WHAT DOES IT FEEL LIKE TO BUILD A DYNAMIC BUSINESS FROM SCRATCH, RAISE INVESTMENT CAPITAL, AND THEN WORK ALONGSIDE THE NEW INVESTORS? GAVIN GOATES, DIRECTOR OF PRECISE COMPONENT MANUFACTURE LTD (PCML), HAS SOME INVALUABLE ADVICE…

BCMS client: Precise Component Manufacture Ltd (PCML), based in Cambridgeshire

Transaction type: Partial sale / growth capital

Company activity: Manufacture of complex precision components and assemblies for equipment and instrumentation used in the Life Sciences, Semiconductor, Digital Imaging and Medical sectors

Company size (pre-sale): <60 staff, <£6m turnover

Investor: Blauvelt Capital Partners

FACTFILE

FOR ME, OUR DEAL WAS LIKE STARTING AGAIN AND GOING ON TO A DIFFERENT LEVEL...

VIEWPOINT


1312 www.bcms.co.uk

WHY DID YOU DECIDE TO RAISE INVESTMENT CAPITAL?

I started the business back in 1998 with my father, and together with

shareholding partners Diane and Kevin Miller, the business kicked

off and went from strength to strength. Over time, it was evident we

had built something quite special.

Ultimately, the decision I needed to make was this: do I borrow

money and buy my shareholding partners out and put myself into

a debt position? Or do I sit tight and try and find a partner that can

invest some equity into our business? It had reached the point where

my fellow shareholders wanted to take it a bit easier, whereas, at 47,

I still had loads of energy and enthusiasm and drive.

DID YOU KNOW?

SIZE OF ACQUIRER BY TURNOVER

BCMS TRANSACTIONS OVER £10M IN VALUE

WHY BUYERS BUY – ACQUIRER MOTIVES IN PURCHASING

BCMS UK MANUFACTURING AND ENGINEERING CLIENTS

15% <£100m Geographic expansion

Access to customers/brand

Access to new skills or expertise

Consolidation strategy

31% £1bn

Financial investment/ROI

46% £100m - £500m

8% £500m - £1bn

Source: BCMS management statistics

HOW DID YOU FIND YOUR NEW INVESTOR?

You think in your mind that you know somebody who might

be interested in buying your company, but when you get down

to it nothing could be further from the truth. The research and

preparation we experienced with BCMS was superb.

It is the competition that BCMS creates which ultimately gets you

the deal. BCMS definitely got maximum value for our business by

creating that environment.

BCMS coached and prepared us ahead of the deal meetings with

prospective investors. You have to bear in mind that we have gone

from being a £5m company dealing with customers we know, to

dealing with guys that are multimillionaires, running big corporates,

with a different type of ethos and culture.

Blauvelt are the perfect partner for us – experienced, ambitious and

collaborative investors. We can push on to the next level with them.

We consider ourselves to be the best at what we do, but now I feel

that this is like starting again, and going on to a different level. I am

really, really excited by the prospect.

IT IS THE COMPETITION

THAT BCMS CREATES

WHICH ULTIMATELY GETS

YOU THE DEAL.


1514 www.bcms.co.uk

As a company, PCML is a black-belt

in lean manufacturing. It is a strong

business, that has carved

out a niche for itself in providing

low-volume, high-quality and

mission-critical parts. There is a

clear focus on investment in UK

engineering, especially as larger

manufacturers are looking to

consolidate their supply chain, and

on-shore work that was once carried

out in the far east.

PCML ticked a number of boxes that

acquirers and investors seek – focus

on quality, shorter lead times,

ongoing sustainable pricing,

flexibility in their supply chain and

access to R&D capability that

enables them to engineer cost out

of the product pre-production. For a

relatively small company, PCML has

established some big company

systems, such as its dynamic

ProcureSmart inventory

management software.

For private equity investors,

Gavin Goates himself was a major

draw – he was passionate, credible

and great at articulating the value

in his business.

DEAL ANALYSIS: ANDY DENNY, BCMS ASSOCIATE DIRECTOR

A NICHE BUSINESS, GENERATING INTERNATIONAL INTEREST

WOULD YOU DO IT AGAIN?

I would recommend BCMS to another company considering selling

or raising capital. I hope that in five years’ time we will be talking

again. In the meantime, if we grow through acquisition, the first

person that I’ll be picking up the phone and talking to is BCMS.

I could use all sorts of adjectives like professional, enthusiastic,

friendly – but at the end of the day BCMS was a partner.

It’s been a brilliant, brilliant process. I am going to miss the

BCMS team – they were great to get to know and I have learnt

so much from them.

IF WE GROW THROUGH ACQUISITION, THE FIRST PERSON THAT I’LL BE PICKING UP THE PHONE AND TALKING TO IS BCMS.


1716 www.bcms.co.uk

2.6XDID YOU KNOW?

THE AVERAGE DIFFERENCE IN THIS SECTOR BETWEEN THE LOWEST AND HIGHEST OFFERS ON OUR CLIENTS’ BUSINESSES IS


1918 www.bcms.co.uk

BCMS DEAL WALL: MANUFACTURING & ENGINEERING

ACQUIRED BY:IEWC

ACQUIRED BY:VALVITALIA

ACQUIRED BY:BLAUVELT CAPITAL PARTNERS

ACQUIRED BY:KABA

ACQUIRED BY:FTSE 100 DISTRIBUTION AND

OUTSOURCING GROUP

ACQUIRED BY:KSR INTERNATIONAL CO.

ACQUIRED BY:PROBAT GROUP

ACQUIRED BY:IDEX CORPORATION

ACQUIRED BY:L.B. FOSTER COMPANY

ACQUIRED BY:GENTEX CORPORATION

ACQUIRED BY:ENERCON SERVICES INC.

ACQUIRED BY:SURETANK GROUP LTD

BCMS CASE STUDIES

Don’t underestimate the importance of a UK manufacturing base. Helmet Integrated Systems Ltd (HISL) is the

MoD’s design authority for aircrew helmets, and specialises in the design, manufacture and support of protective

headgear, communications systems and respiratory equipment. HISL was acquired by USA-based Gentex Corporation,

and Gentex’s President, LP Frieder articulated the motive succinctly: “The addition of HISL will accelerate Gentex’s

international growth by providing us with immediate access to new markets and the ability to better support our

global customers from HISL’s UK facilities.”

In many cases, access to new technologies – and the shared future that can create – drives a deal. The Ladco Group

designs and manufactures specialist machinery for the production of cocoa and chocolate, and the business was

acquired by German coffee roasting machinery company Probat. “With this acquisition, the Probat Group continues

the expansion into an additional field of technologies directed to the processing of food,” said Wim Abbing, Probat’s

President and CEO. “The capability of the group to offer one-stop-shop solutions will be second-to-none.”

COMPANY DETAILS: BASED IN LETCHWORTH AND STRANRAER, 200 EMPLOYEES

ACQUIRING COMPANY: GENTEX CORPORATION (USA)

COMPANY DETAILS: BASED IN ARBROATH AND DRESDEN, GERMANY, 100 EMPLOYEES

ACQUIRING COMPANY: THE PROBAT GROUP (GERMANY)

HELMET INTEGRATED SYSTEMS LTD

THE LADCO GROUP


2120 www.bcms.co.uk

START HERE: THE 1-2-1 BUSINESS CONSULTATION

The BCMS approach is about building relationships, and establishing

trust, and that starts with our very first meeting. In this initial session,

which typically lasts 2-3 hours, I look to understand not only a

customer’s business, but also the personal goals of the shareholders.

What are they looking to achieve and when for themselves, their

business and their staff?

By discussing the company’s business activities, financial

performance, customers and sectors served and overall trends –

especially future potential – we are able to identify the company’s

key differentiators. Put simply, we uncover the factors that will make

that business stand out to an acquirer or investor.

FOR MANY CLIENTS LOOKING TO SELL THEIR BUSINESS, OR FIND AN INVESTOR, THE JOURNEY BEGINS WITH A FREE, CONFIDENTIAL CONSULTATION, AS SENIOR BUSINESS MANAGER HOWARD DINGLEY EXPLAINS

TO BOOK A CONFIDENTIAL, NO-OBLIGATION 1-2-1 SESSION WITH BCMS, PLEASE CALL 01635 296 193

From there, we begin to tailor a strategy, exclusively for them. Many

business owners find the session really rewarding, regardless of when

they are looking to pursue a deal. As an example, TEW’s Michael

Spencer first met with us four years before deciding to engage BCMS,

and his story is by no means unique!

BCMS RUNS FREE, INFORMATIVE SEMINARS ON THE DEAL PROCESS NATIONWIDE. FOR MORE INFORMATION, AND TO BOOK YOUR PLACE AT A VENUE CONVENIENT TO YOU, VISIT www.bcms.co.uk/seminars


2322 www.bcms.co.uk

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