Use Case: Manufacturing Company
Team of 12 employees
The company specialises in designing and manufacturing precision sensors with a strong presence in UK, Ireland and Europe. The sensors have applications in a large range of sectors from aerospace and motor sports to medical.
The company has a strong foundation including long-standing client relationships of 15-20 years with its largest customer representing less than 20% of sales and the top 10 clients represents <80% of the turnover. Therefore, we consider the business to have mitigated its client concentration risk, which is a key concern of our funding partners.
The business stands at a crossroad with the current executive directors having built up a strong and profitable business over the last 30 years, but they are now looking to retire and enable succession to an experienced managed team. This is a business that shows signs of a high potential future in need of some support today.
The business has delivered stable revenue over the last three years and has maintained a high gross margin of ca. 80% alongside an EBITDA of over £1m.
The founder and his wife are ca.70 years old and own over 60% of the company. Another 15% is own by the Managing Director and his wife who are both also retiring.
The shareholders are seeking to retire and pass on the baton to the incumbent management team, which has already been in place for over 10 years.
How Newable Capital helps the shareholders to transfer the business:
In this theoretical case study, we would be expecting to complete the investment in the next 3-5 months post-introduction. For this simple example, Newable Capital will be offering £5m Enterprise Value with the following breakdown of the transaction:
|Day one money||£2,250,000|
Therefore, £4.25m will be paid out on completion date and the remaining £750k def. consideration will be transferred over a 2-year period post transaction.
How Newable can help to grow the business:
In addition, we would provide mentorship from our wide range of experts including sector, region, innovation and business specialists to accelerate the business development.
Through our unique export relationship with the Department of International Trade (DIT), we are able to connect our portfolio companies to our export specialists in order to promote geographical and commercial expansion of their business in other areas.
This deal illustrates the depth of Newable’s expertise in our core services and sectors and the strength of our local and international network, which would enable the business to grow organically or through acquisitions and new export contract wins. Subsequently, we would be supporting the management team to create the conditions for a successful exit within the next 5-7 years.
In supporting the management buyout of this transaction, Newable Capital aims to help the business successfully navigate the challenges of the business transfer to potentially become one of the leading Engineering companies.