WEST MBO SPECIALISTS SECURE TRANSATLANTIC SALE OF UK FIRE SERVICES COMPANY
March 2007
Having become the West’s biggest MBO corporate finance firm in less than two years, Momentum Corporate Finance’s latest deal sees the venture capital investors tripling the value of their stake whilst the management team achieved more than a fifty times return on one of Momentum’s earliest MBOs (management buyouts) – after just eighteen months.
Having advised the managers of SFS Fire Services Limited in their £18.5 million MBO from Staveley Industries in September 2005, Bristol-based Momentum has now advised the MBO team and their original venture capital partner, Barclays Ventures, in the sale of the company to UTC Fire & Security of the USA - the world’s leading provider of fire safety and security products, with brands such as Chubb and Kidde.
The precise financial details have not been disclosed, but the sale was priced at slightly less than the UK company’s annual sales.
SFS Fire Services, which primarily operates under the Hall & Kay and Central Fire Protection brands, is the UK’s largest independent fixed fire protection business. The company has a major presence in Bristol, and opened a South West operation last year.
Since the 2005 MBO, when Momentum’s founding partners, Tony Kenny and Rob Crews, personally invested in a minority equity holding as part of the transaction, the business has grown organically across its UK sites in Bristol, Birmingham, Glasgow, Portsmouth, Manchester, Warrington, Ware and Windsor as well as through its Detection division.
SFS Fire Services has also set up new initiatives focused on the distribution sector and non-water-based fixed fire protection systems. The business expects to continue to benefit from increasing awareness of the benefits of sprinkler systems, as well as strong legislative drivers.
Barclays Ventures has realised all of its shareholding in SFS Fire Services Limited, achieving a 3.5 times return on its original equity investment in less than 18 months and an IRR of over 140%.
The business is being sold to UTC Fire & Security (UTCFS), a business unit of United Technologies Corporation, following an unsolicited approach by UTCFS for the business in 2006. The shareholders appointed Momentum Corporate Finance to explore the group’s options and manage the exit process.
Momentum’s Rob Crews said: “The transaction clearly demonstrates the substantial returns that a management team and their venture capital backers can achieve if they get the right guidance and advice at the time of undertaking a MBO”
Tony Kenny partner at Momentum has been an observer on the board since the original deal was completed. He commented “this deal is further evidence that the traditional cycle of time between a management team undertaking a management buyout and selling the business is shrinking substantially. In this case it was only an eighteen month period. During that time the management team improved the financial performance of the business very substantially. The quality of the Hall & Kay management team convinced us that they would deliver sustained growth, and they proved us absolutely right”.
Simon Quillish, Managing Director, Hall & Kay, said: "We have been able to establish ourselves as the leading independent specialist of Fixed Fire Protection systems in the UK.
"The acquisition of the company by UTC Fire & Security has the full support of the management team, and we are delighted to now be part of such a respected major international fire protection company. We firmly believe that under UTC ownership we can enhance the range of products and services we can offer our clients, whilst providing additional career opportunities and benefits for all our employees.
"The company now looks forward to further periods of growth through enhanced sales resulting from recent market developments, additional legislation and the development of new and innovative products."
Alex Brebbia, Director, Barclays Ventures, said:
“SFS Fire Services has been a highly successful investment for Barclays Ventures. The excellent returns for all shareholders are a testament to the management team who, with the benefits of equity ownership and focus have delivered growth ahead of plan.”
Bill Brown, President UTC Fire & Security in the USA said:
“This acquisition complements our existing strong Chubb and Kidde brands, where we have good positions in fire detection and alarm, fixed and portable fire suppression, and fire fighting equipment.
“Hall & Kay has an excellent reputation with customers and a strong management team, who will remain with UTC Fire & Security. Under the leadership of Simon Quillish the company has achieved double digit growth rates and improved profitability. This acquisition positions us well for further growth in the fire safety industry,”