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Momentum Corporate Finance has started 2012 in flying form with the completion of the £8.5 million management buyout of Aero Stanrew Limited.

Aero Stanrew is the UK's leading supplier of complex electromagnetic modules and electronic systems to the aerospace sector.

The business employs approximately 170 staff, is headquartered in Barnstaple with a manufacturing site in Tunisia and has a blue chip client base including Rolls Royce, Goodrich, Thales and GE.

Momentum advised the management team, negotiating commercial terms with the outgoing vendors and arranging funding for the deal on behalf of management.  Private equity was provided by WestBridge Fund Managers with HSBC providing structured debt facilities. The MBO was led by the Managing Director, Clive Scott, and his management team, who together have a combined total of 40 years within the business.

Rob Crews, partner of Momentum Corporate Finance, said:

“This deal proves that management buy outs are still possible - even in the current difficult economic environment.  The three keys to success are proven management, good visibility of revenues and a growing market sector.

We are delighted to have secured a majority equity position for Clive and his team, particularly in partnership with WestBridge Capital, a private equity house which we believe will provide real value add to the management going forward.

The management at Aero Stanrew is precisely the type of high quality team that Momentum Corporate Finance enjoys advising – experienced, enthusiastic and entrepreneurial.”

Clive Scott, Managing Director of Aero Stanrew, said:

“Aero Stanrew is already in a very strong position with healthy profits, a strong order book and recession resistant business model, and this deal provides us with the opportunity to pursue ambitious plans for further growth.

We were delighted with the advice provided by Momentum Corporate Finance. From the moment we met them they delivered on their promises.  In particular the personal expertise and enthusiastic involvement of Rob and Alastair, the partners, was a key differentiator for Momentum.

From unlocking the deal with the owner to raising the necessary funding they guided us through the entire MBO process.  We would unreservedly recommend them to any team considering a buy out.”

Alastair Boorman, partner of Momentum Corporate Finance, added:

“It’s been a great twelve months for Momentum.  We have again proved that the deal market is well and truly alive. 

Our business model of working with entrepreneurial management teams continues to be vindicated.  The fact that we only provide clients with senior resource is a real differentiator, and is a critical part of our ability to complete transactions despite difficult funding conditions.”

Please click here for the Aero Stanrew deal sheet.

5 January 2012 Business Insider news article:

The coming year may see more management buyout (MBO) activity with opportunities for good management teams, Rob Crews, partner at Momentum Corporate Finance told Insider.

"The debt funding is still going to be a challenge but we are seeing signs that it is out there if there is a good opportunity and a good management team. That is the key thing," he said.

"With a good team, we think there is no reason why we can't see more MBOs in 2012."

The Bristol corporate finance boutique scooped Insider's Corporate Finance Advisory Team of the Year at the South West Dealmakers Awards 2011, in part for seeing through the £75m sale of Bristol-based Tocris to Techne Corporation in May.

"We expect to see more of the same in 2012, with trade players consolidating smaller businesses, for example the sale of Response One that we did in September," Crews added.

"The reason we will see this is because trade acquirers typically will have the cash resources to execute these deals. However, we are hopeful of increased activity on the MBO space. That's one area which was pretty sparse over 2011."

Click here for a link to the news article on the Business Insider's website.

Momentum has advised the shareholders of Origin Publishing Holdings Limited (“Origin”) on its sale to BBC Magazines Limited as part of a larger deal with Exponent Private Equity, the new owner of Origin following completion yesterday.

This follows Momentum’s role in the management buyout of Origin in 2006, where Momentum were lead advisers to the management team.

Origin’s magazine portfolio includes craft titles, hair interest titles and specialist hobby titles including the award winning "220 Triathlon" title.  The business is based in Bristol and employs 70 staff.  The business generated revenues of £11.4 million and operating profit of £1.1 million in the year to 31 March 2011.

The original buyout saw the management team, led by Andy Marshall (Managing Director) and Graham Rose (Finance Director) take a majority stake in the business. 

Rob Crews, partner of Momentum, said: “Once again Momentum has successfully advised a management team throughout the complete equity life cycle, helping management to acquire the business and then complete a successful exit.  Working alongside the business from inception of the buyout through to the completion of the eventual sale is our speciality.  Simply getting a buyout completed does not create value – it needs to be a deal on the right terms, structured with the appropriate levels of debt and equity.  I’m delighted that our track record of successful deals is testament to this long term approach.”

Andy Marshall, Managing Director of Origin, commented: “Momentum delivered the result we were looking for when we first began working with them back in 2006. Since the original management buyout, they have been with us throughout the entire journey, always being available to provide advice and assistance.  The support over the last five years has been invaluable.  We wanted the personal and long term approach which Momentum offered and we would unreservedly recommend them to any management team considering a buyout or company sale.”

Alastair Boorman, partner of Momentum, added: “Following quickly on from the £75 million sale of Tocris Bioscience and the £19 million sale of Response One we are delighted to have completed another successful transaction.  Every one of our deals has two partners from Momentum assigned to it, and our clients have really enjoyed the benefits of dealing with senior and experienced professionals.” 

Please click here for the Origin deal sheet.

Momentum has advised Response One, a fast-growing data marketing business, on its sale to St. Ives plc.

Momentum Corporate Finance has advised the shareholders of Response One Holdings Limited on its sale to St Ives plc, agreeing a deal worth up to £19 million.  This follows hot on the heels of Momentum’s £75 million sale of Tocris Bioscience which was completed in May.

Established in 1998, Response One is one of the UK's leading and fastest growing data marketing businesses. The business helps its clients design and deliver effective customer and prospect communications through more intelligent use of data. Principal services include specialist media buying and sales; data quality insight and strategic campaign planning; and print management. By integrating these services into a single solution, Response One has created a unique offering that has transformed multi-channel marketing activities for organisations across the UK.

The business employs approximately 70 staff, is headquartered in Bath and has a strong client base including a number of FTSE 100 companies and household names.

Following the acquisition, Response One will operate as a subsidiary of St Ives and will continue to be managed by the existing management team from its current premises.

Patrick Sargeant, Managing Director of Response One said:

“Not having experienced a sale process before, the advice and guidance from Momentum was invaluable.  The personal service from a specialist boutique corporate finance advisor was essential and the partners at Momentum did an outstanding job.  We were particularly impressed by their commitment, professionalism and entrepreneurial approach, and we would have no hesitation in recommending them to business owners considering the sale of their business.”

In the financial year ended 31 October 2010, Response One generated underlying EBITDA of £1.9 million on revenue of £19.1 million.  Response One is expected to generate underlying EBITDA of approximately £2.5 million on revenue of £25.0 million for the year ended 31 October 2011.

St Ives has agreed to acquire all of the issued share capital of Response One, on a cash and debt free basis, for a multiple of 6.5x the underlying EBITDA of Response One for the year ending 31 October 2011, subject to a cap of £19 million.

The vendors are Patrick Sargeant and Tim Calvert-Jones, the founders and majority shareholders, together with other employees. Approximately 70% of the consideration payable will be in cash with the balance to be satisfied by the issue of new St Ives ordinary shares.

The acquisition of Response One represents a further step in St Ives’ strategy to create a complementary range of digital and marketing services, whilst reducing its exposure to commoditised print markets.

Rob Crews, partner of Momentum Corporate Finance, said:

“Response One is a fast growing entrepreneurial business that we are delighted to have worked with. This is a great result not just for the shareholders but also for the business – there is an excellent strategic fit between Response One and St Ives plc.  We were delighted to advise the team from inception to completion of the process.”

Alastair Boorman, partner of Momentum Corporate Finance, added:

“We specialise in providing best advice to entrepreneurial owners of successful businesses, and this deal vindicates Momentum’s promise to provide senior resource throughout the process.”

Click here for the Response One deal sheet.

Momentum Corporate Finance wins Corporate Finance Advisory Team of the Year and Tony Kenny wins Dealmaker of the Year

Momentum has been recognised at Insider's South West Dealmakers Awards 2011, winning the Corporate Finance Advisory Team of the Year. This follows a very good year for Momentum in which it advised on the £75 million sale of Tocris Bioscience to US-based Techne Corp, structured facilities in excess of £20 million for Gloucestershire-based Alderley plc and advised the management team of The Gro Company on the acquisition of a significant stake in the business.

Rob Crews, partner, said: “We are delighted to have won this award, which reflects the success of Momentum’s commitment to working with its clients over the long term. The award also vindicates Momentum’s decision to invest senior resource into each deal, guaranteeing at least two partners’ involvement in every process.”

Momentum had double the reason to celebrate on the night as Tony Kenny, partner, was named Dealmaker of the Year in front of about 300 fellow professionals at the Grand by Thistle, Bristol. Tony Kenny was praised in part for seeing through the sale of Tocris earlier this year. Tocris is a Bristol-based supplier of chemical products for life sciences research and was sold to Techne Corporation for £75m in May. The deal was notable for the higher-than-normal multiples paid by the US-based acquirer.

Tony Kenny commented: "Following several unsolicited approaches for Tocris, we initiated a discreet international auction process for the business. We built a relationship and spoke with a number of parties. I think we ended up doing about 15 trips to the US, as that’s where many of the main players in this industry are.”

Momentum Corporate Finance has advised the Shareholders of Tocris Bioscience on its £75 million sale to Techne Corporation.

One of the largest South West based deals for 2011 has been announced with the £75 million sale of Bristol based Tocris Bioscience to US based Techne Corporation.

Bristol based Momentum Corporate Finance conducted an international auction of Tocris following the receipt of a number of unsolicited approaches for the business. The sale represents a bonanza for the management team who bought the business for only £14 million in 2006 in an all debt deal structured by buyout specialists Momentum.

Sales at Tocris reached £11.7 million in 2010 and its Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) approximately £7.4 million. The purchase price represents an EBITDA multiple of over ten times, and a turnover multiple of about 6.4 times.

Tocris produces chemical compounds for pharmaceutical research, including cell signalling and neuroscience. Exports represent more than 80% of sales for Tocris with the US and Japan among its key markets. 

Techne, through its subsidiaries, R&D Systems, Inc. and R&D Systems Europe, Ltd., is a leading developer, manufacturer and distributor of products sold to biomedical researchers and clinical research laboratories.

Tocris Chief Executive Officer, Laurence Ede, said "Strategically, the fit is excellent, as both Tocris and R&D Systems have many customers in common and yet our product ranges are entirely complementary. Consequently, the combined business will represent far more of a one-stop-shop for life scientists and be ideally placed to compete in the global market.  In addition, there are many similarities of culture between the two companies, not least a commitment in both cases to providing novel products and services of the highest quality."

Laurence Ede also noted that “Momentum Corporate Finance have been our advisers since structuring our original management buyout deal in December 2006. Since then they have worked closely with us to build the international profile of the business. Tony Kenny from Momentum also joined our board as non executive Chairman. When we received approaches for the business they were able to quickly and confidentially sound out international purchasers and run an incredibly effective auction of the business. We are absolutely delighted with the deal that they negotiated on our behalf. We were particularly impressed with Momentum’s ability to gain access to the most senior people in large multinationals as easily as if dealing with smaller companies. I am sure that this is substantially assisted by their approach of having multiple partners working on the deals that they are involved with.

We would not hesitate to recommend Momentum to any management team considering a management buy out or the sale of their business particularly where international buyers are likely to be involved.”

Tony Kenny, partner at Momentum Corporate Finance commented, “This deal proves that our business model of working over the long term with our clients is a recipe for success.  Since advising on the original buy out four years ago we are pleased to have worked closely with the management team.  We are delighted to have achieved a valuation of £75 million, representing an EBITDA multiple of more than ten times.”

Rob Crews, partner at Momentum added “Our unfettered access to large international purchasers was a key factor in the success of this transaction.  This is a great result not just for the management team but also for the business – there is an excellent strategic fit between Tocris and Techne.”

Tom Oland, President and CEO of Techne, said "Tocris has a business model which mirrors that of R&D Systems with comparable financial metrics. Its strong market position has been earned through the development of a well-respected brand, a diverse and high-quality product line, an innovative product development pipeline and excellent service.  The acquisition will enhance and supplement the depth and breadth of R&D Systems' product offering and will augment our ability to serve research scientists, as well as leverage our marketing, sales and distribution capabilities with this important product class."

Alastair Boorman, partner at Momentum noted, “All three partners were heavily involved in the deal process and this is a real vindication of our business model to provide clients with very senior resource.  The personal involvement of Momentum’s partners has added value from the inception of the buy out through to the eventual realisation.”

Mr. Ede and the management team and employees of Tocris will continue its product development, marketing and sales activities from Bristol, U.K. They will also coordinate with R&D Systems and its related European and Chinese entities to expanded product distribution into the world-wide market.

Please click here to see the Tocris deal sheet.

Momentum Corporate Finance has structured a transaction where the management team of The Gro Company have bought a significant stake from the owners, Rob and Ouvrielle Holmes, who will continue with the business. The Gro Company, based in Ashburton, Devon, produces innovative products which help children aged from 0 - 5 get a good night's sleep.

The Gro Company is a great example of a British business being successful at home and abroad. It sells the market leading brand of baby sleeping bags, 'Grobags', in the UK and internationally, with an emphasis on quality, safety and innovation. Since 2000, over 3 million Grobags have been sold around the world, establishing the Gro brand as the market leader in safe sleep. Other leading products include the Gro Anywhere Blind and the Gro Clock.

The financial terms of the deal have not been disclosed, however the new equity structure means that both the owners and management team are now aligned and are focused on continuing to drive the business forward. In particular the equity investment made by the management team will assist in funding the rapid growth seen by the business in the last twelve months.

Rob Holmes, Managing Director and majority shareholder of The Gro Company commented, 'With a reshaped management team, which has now bought a significant stake in the business, we are ideally placed to capture the potential in our products and markets. Momentum Corporate Finance has provided clear strategic advice over the last twelve months which has allowed us to refocus the business and execute the transaction. We are looking forward to a long term relationship with Momentum and are delighted to welcome Rob Crews to the Board as non-executive Chairman'.

Rob Crews, partner at Momentum Corporate Finance noted, 'We have been delighted to work with the Gro Company over the last year. The advice given to The Gro Company is an excellent example of how we work over the long term with our clients, to build value in their businesses and shape deal structures which meet the interests of all the stakeholders. This is also further evidence that deal making in the South West is alive and well - and of Momentum's commitment to working with exciting entrepreneurial businesses'.

Please click here for the Gro Company deal sheet.

Facilities in excess of £20 million have been agreed with Lloyds Banking Group which will be used principally to fund working capital within the business.

Based in Wickwar, Gloucestershire, Alderley plc is a multi-disciplined engineering company operating in the oil, gas and petrochemical industries. The Group provides metering solutions for both on and off shore applications. It has a significant presence in Aberdeen and also in the Middle East with operations in Dubai and Saudi Arabia. It employs 200 people in the UK and a further 140 overseas, generating over £50 million of revenues.

Rob Crews, Partner at Momentum, said, 'Alderley is a great example of a British engineering business punching above its weight in the world market. It is an export led business successfully operating in the technically demanding oil and gas engineering sector. We are delighted to have worked with the team and to have structured the bank facilities to enable the group to continue its strong international growth.'

John Medcraft, Group Financial Director, commented 'Momentum Corporate Finance provided clear and commercially valuable advice from the very start of their engagement. The high level of partner input was invaluable given the complex nature of our international group.'

Alastair Boorman, Partner at Momentum, said 'This again demonstrates how Momentum's model of providing high levels of senior resource is highly effective in complex scenarios. We are looking forward to working with the group going forward.'

Please click here for the Alderley deal sheet.

The Hospital Medical Group, a leading plastic and bariatric surgery group, is the latest firm to utilise the debt advisory services of Momentum Corporate Finance.

In the face of stiff competition from other lenders new facilities were agreed by Momentum with Barclays Bank. These facilities will help to fund the continued growth of the Hospital Medical Group.

"We hear a lot of rhetoric about difficulties faced by businesses seeking funding in the credit crunch. This is completely at odds with our experience," commented Momentum's partner Tony Kenny. He added "lending is always available for high quality businesses. The extent of the competition to provide funding for the Hospital Group demonstrates that the best businesses will always attract funding whatever the market conditions may be."

Founded in 1992, The Hospital Medical Group now has 16 clinics throughout the UK, and further clinics in Ireland and Spain. These facilities include a clinic in Bristol's prestigious Queen Square. Most procedures are carried out at the luxurious, state of the art, Dolan Park Hospital in Worcestershire.

As part of the finance raising a shareholding restructuring was arranged for the Hospital Medical Group which resulted in managing director David Ross increasing his shareholding and finance director Gerard Barnes joining the share register.

David Ross commented "Momentum Corporate Finance not only helped us to select and negotiate with our new funding partner but they provided invaluable strategic advice which will assist us in delivering further growth. We have asked the Momentum team to continue their involvement as we roll out our expansion plans."

As well as providing a very wide range of plastic surgery procedures The Hospital Medical Group is a leading provider of bariatric (weight loss) surgery. Indeed, it undertakes more weight loss procedures each year than the entire National Health Service! It also has a successful hair transplantation business, a growing cosmetic dentistry practice and provides a range of non surgical treatments such as Botox.

Further information

Momentum Corporate Finance LLP is the West's leading firm of independent Corporate Finance advisers. Founded by ex PwC partner Tony Kenny in 2005 along with fellow partners Rob Crews and Alastair Boorman, the firm is well established as the region's leading adviser on Management Buyouts. Other services undertaken by the firm include advising on the sale of businesses, acquisitions, and both equity and debt fund-raising. It focuses on advising mid market businesses, principally those with profits of between £1 million to £20 million.

What is accelerated M&A?

Accelerated M&A is used to describe a sale process where the usual timescales involved in selling a business are dramatically reduced.

A typical sale process can take between 3-6 months but an accelerated process is usually measured in weeks and in extreme cases only days.

Why use accelerated M&A?

Accelerated M&A is usually appropriate for situations where value needsd to be realised in a short timeframe in order to avoid the possibility of an unplanned insolvency.

More value can be typically realised through a controlled disposal exercise as opposed to an unplanned insolvency. As such in the vast majority of cases acting early will lead to a better result than a forced sale in insolvency.

The act of entering administration will itself destroy a significant element of value within any business and this is why accelerated M&A is often a better solution to maximise stakeholder value.

What causes the need for accelerated M&A?

Accelerated M&A is usually triggered by a change in market conditions which leads to financial stress in a business or where a stakeholder of the business experiences a change in circumstances.

Stakeholder changes may include:

•  A need to use capital elsewhere
• Change in strategic direction
• Change in personal circumstances

Market and business changes may include:

• Alterations to banking arrangements or withdrawal of facilities
• Loss of a major customer
• Changes in foreign exchange rates
• Dramatic reduction in demand
• Increases in input prices
• Increased requirements for working capital

What does an accelerated M&A process typically involve?

Each process will be different and should be individually tailored to the company's specific circumstances and the stakeholders needs. However there are four key steps which are common to most accelerated processes:

1. Gather information on the business, prepare marketing materials and generate a list of likely purchasers
2. Contact prospective purchasers, or possibly investors/bankers in the case of a refinancing
3. Receive offers and report to stakeholders
4. Legal and commercial negotiations and completion

What are the typical outcomes following an accelerated M&A Process?

The typical outcomes of an accelereated M&A process are:

1. Sale of shares of the business
2. Business and assets sale
3. Refinancing, involving new debt or equity
4. Sale of indebtedness
5. Other restructuring process

Why use Momentum?

Momentum only operates teams of highly experienced professionals.

In situations of business stress and accelerated timescales experience is vital, which is why every Momentum engagement has at least two partners working on the deal. Each of the partners has more than ten years of relevant M&A experience with a proven track record of implementing creative solutions to maximise value.

Momentum has no conflict of interest with regard to insolvency proceedings.

Momentum is a specialist provider of lead advisory services. It does not provide insolvency advice and as such can be entirely focussed on realising maximum value for the stakeholders.

Unfettered access to national purchasers.

Momentum has an excellent track record of identifying and transacting with both UK and overseas based purchasers.