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Business case M&A deal UK engineering firm
Business sale of a specialist engineering company
- The seller was an owner managed business dominant in providing engineering solutions to the UK water Industry
- The buyer was a global company (with 40 offices across 20 countries) active in Engineering solutions and support services particularly in the oil and gas sector.
- The CFIE M&A team member engaged early in the process with the seller helping the business become “exit ready”, and managed a systematic and thorough market analysis process to establish a short list of quality buyers.
- Competition was created particularly between two buyers and 75% of the business was sold to Global Energy Group at a price exceeding the sellers expectations.
UK engineering buyer strategy
The strategy of the UK based engineering buyer Global Energy Group was to grow across the world through both organic and significantly through acquisition. The buyer is a mature £500M turnover business with large and sophisticated shareholders including Mitsui Corporation, Japan. The buyer plans to realise the following synergies out of the acquisition:
- Acquire a core competency (chemical dosing) that many of its client base require within the oil and gas sector.
- Enter further in to the supply of engineering solutions to the water industry thus diversifying from the oil and gas sector
- Obtain quality and highly profitable revenue streams to add to the group performance.
- Utilise the PSI capabilities with other complementary engineering capabilities within the group. This allows the group to sell broader and higher value solutions to clients.
Profile of the engineering seller company – A specialist engineering firm serving the UK water industry
Overview of the target company (UK engineering company seller)
The seller company was a mature and highly respected UK engineering based business specialising in the design, manufacture, implementation and maintenance of high quality chemical dosing, transfer and blending systems to industry. It is a growing business and has excellent potential for growth in existing and new markets. The core capabilities of the UK engineering company that has been sold are:
The engineering company that was for sale has developed to become one of the leading suppliers in its class to the Scottish water industry. This is supported by quality feedback and actual performance against measureable indicators from clients within the water industry.
The target (UK engineering company for sale) had also had notable success and credibility in other industries such as semi-conductor, carbon capture, power generation and food industries.
Competitive pricing and achievement of significant levels of sustained profit are in part a result of the development of the high quality offering and repeatable methodologies associated with the design, modular production and installation of the Company’s solutions.
Activities of the CFIE M&A team
The structure of the proposal to help the UK engineering company with the business sale process is characterised by simplicity and the alignment of the parties’ interests. The structure needs to deal with the fact that the process is not scientific or necessarily sequential. Information will come to light during the process of the business sale of the UK engineering company which will undoubtedly inform the parties on how best to proceed at each stage or indeed within each stage of the business sale of an engineering company.The stages in the process of a business sale of an UK engineering company were:
1. Activation Stage –
a. The deliverables were:
i. Shareholder selling options model vsn 1.0.
ii. Valuation range rationale allowing shareholder to determine what valuation and deal structure would be acceptable. vsn 1.0.
iii. Detailed financial analysis completed.
iv. Refined seller options and valuation model vsn 2.0.
v. Data capture and analysis of company operating models, IT, intellectual property, clients, pipeline and management team.
vi. SWOT analysis of the sale of an UK engineering company.
vii. Marketplace analysis and report providing insight on competitive landscape and potential buyers.
viii. Seller Storyboard.
ix. Information Memorandum. Tailored depending on potential buyers identified.
x. Seller marketing presentation. Tailored depending on potential buyers identified.
xi. Prioritised list of potential buyers (and rationale) categorised by Trade Buyer or Institutional Investor.
2. Targeting Stage
This stage was tailored to the situation we found ourselves in after the 1st stage and the stage will was “triggered” by researching a viable, qualified lead in stage 1.
a. The deliverables will be:
i. The solicitation and management of notes of interest and pre-due diligence requests. Any non-solicited interest will be treated as originating from the project.
ii. Tailored documentation (for example IM) relative to each viable target identified.
3. Transaction Stage
Stage 3 was “triggered” by the Seller and a potential Buyer agreeing Heads of Terms.
The characteristics of the buyer, the transaction and the buyer team determined what further Advisory specialists were brought in to the Transaction Stage.
a. The deliverables of the business sale of the UK engineering company were:
i. The solicitation and management of “offers to purchase”.
ii. Heads of Terms negotiation and agreement.
iii. Support with due diligence process.
iv. Transaction management to completion.
Highlights of the UK engineering business sale
- Both companies (seller and buyer) have strong experience in the water industry
- The Seller capabilities can be used across a wide range of the Buyers clients and can be deployed in to overseas markets due to the modular design of the engineering solutions.
- The buyer can provide further investment needed to broaden the sellers footprint within the UK and beyond
- The Seller management team can add value across other group companies
Information about business sales in the engineering industry across the UK
Sell an engineering business
Learn more about the sale of an engineering business
Feel free to contact us for further details about this particular business sale in the UK of an engineering company. If you are looking for acquisitions or business sales engineering companies in other countries it would equally be worthwhile contacting us. Through our experience we may know of other potential targets for sale within the UK engineering industry and beyond.
Visit the profile of the M&A advisor who managed the sale of this engineering company in the UK, Harry Hogg.