Invoice Discounting Case Studies
MBO of Reading firm saves local jobs
A Tilehurst-based business has secured funding from Lloyds TSB Commercial Finance to enable management to acquire the firm from its failing US parent company and save local jobs.
Olympia Tools is an importer and distributor of premium quality hand tools to DIY chains, builder's merchants and independent retailers. It supplies over 500 different products to customers such as Homebase, Focus DIY, Screwfix and Jewsons.
The business' US-based parent company filed for bankruptcy in December 2005 after trading suffered as a result of US steel import duties driving up the cost of raw materials.
However the UK operation, which was established in 1996, has remained successful with turnover growing from £1.25 million in 2001 to £4 million in 2006.
To raise the funds required to buy the UK arm from creditors, management approached asset based lending specialists Lloyds TSB Commercial Finance.
The team at Commercial Finance put together a US$1 million package of facilities which lent against the UK company's stock and debtor book.
Following the deal, the business is implementing a strategy which aims to grow sales by 20 per cent year on year. Sales to Europe have risen to 10 per cent and the management plans to continue targeting the lucrative market on the continent.
John Bramwell, managing director of Olympia Tools, said: This deal is vital to the future of the business and its employees. The UK division of Olympia Tools has been going from strength to strength and it was important for us to take full control in light of our parent company's bankruptcy.
The niche market for quality hand tools continues to grow in the UK and Europe and we are in a good position to capitalise on the strength of our brands and the quality of our products.
The facilities developed by Lloyds TSB Commercial Finance were essential for us to complete the transaction. We could not fund the deal using cash or our overdraft so we leveraged the value of our assets to ensure we could do the deal quickly. Steve Buckmaster, director - business development at Lloyds TSB Commercial Finance, said: "Lloyds TSB is delighted to have been given the opportunity to assist this strong management team in the acquisition of Olympia Tools.
By leveraging against Olympia's significant asset base, management now have a solid and flexible financial foundation that leaves them well placed to achieve their growth goals.
Second deal in nine months at property management company
A new refinancing deal has been completed at Integral Services Limited the UK's biggest independent outsourcing company for facilities and property management just nine months after a £20 million management buy-out.
This refinancing secures a £13 million balance sheet for the business and will provide the foundations for significant further growth. The deal was led by Bristol-based Momentum Corporate Finance and funded by a package of debt and asset-based lending facilities provided by two divisions of Lloyds TSB, Lloyds TSB Commercial Finance and Lloyds TSB Corporate.
It sees the exit of the venture capitalist that backed the original MBO, Barclays Ventures, who more than doubled the value of their investment, from £5 million to £12.5 million.
Integral, which has its headquarters in Bristol, employs over 2,000 staff in 12 locations, with a 900-vehicle mobile maintenance fleet and around 400 clients, and turnover is set to exceed £130 million this year.
Last summer Momentum's partners, Tony Kenny and Rob Crews, acted as lead advisers to Integral's management team, led by managing director, Bryan Glastonbury, to complete a £20 million management buy-out of the company from its previous owner, Guinness Peat Group plc. Now they have structured a further MBO to provide an exit for Barclays Ventures, and a balance sheet of more than £13 million.
The result is that Integral's management team now controls the business and are able to take the long-term decisions necessary to continue the rapid growth experienced in recent years.
Momentum's partners, Tony Kenny and Rob Crews, invested their own money to become minority shareholders in Integral Services at the time of last year's MBO, and have now increased their personal stake in the business, as part of the latest deal.
Finance was provided by Lloyds TSB Corporate's Bristol-based specialists, combining mezzanine and senior debt funding, in partnership with the bank's Acquisition Finance Team. Lloyds TSB Commercial Finance, which helped to fund both last year's MBO and this year's deal, put in place facilities which lend against the value of the firm's sales ledger.
The management team was advised by Paul Cooper at law firm, Osborne Clarke, while Lloyds TSB's legal adviser was Julian Kinsey of Bond Pearce. Integral Services has grown extremely rapidly since last year's MBO, outperforming even the most optimistic plans put in place at that time, and further rapid growth is projected this year, says Momentum partner, Tony Kenny.
The fact that we are prepared to back the management team with our own money underlines our confidence in their ability to continue on its rapid growth path, he added.
Managing director Bryan Glastonbury commented: Integral is extremely well positioned as the UK's largest independent buildings maintenance business. This market leading scale appeals to our blue chip customer base which is increasingly looking to work with a buildings maintenance partner with a truly nationwide capability. We are able to offer our customers a two-hour response time anywhere on the UK mainland.
Peter Anderson, director, business development for Lloyds TSB Commercial Finance, said: The UK's facilities management sector is worth around £96 billion per annum and outsourcing is an area that continues to develop at pace. Intregral's management team has already driven significant growth in the business and this latest deal ensures that it has the control and the backing to continue making the most of this expanding market.
Clive Hetherington, Lloyds TSB Corporate's regional director for Large Corporate services said: "We have maintained a close working relationship with Integral's MBO team and this new package will bring significant cost savings for this highly successful business. In addition, the management team now has full equity benefit and can take a long term strategic view without having to plan for a VC exit."
