ONSIDE / DEAL PROFILE
M
anagement buyouts are rarely straightforward
and there are normally many challenges and risks
that need to be overcome to deliver a successful
outcome. The MBO of Utiligroup was no different, the
parent company, Bglobal plc, was listed on AIM and had
well publicised issues at board level and a core business in
smart metering that was burning cash at a rate of knots.
We were confident there would be a sale of the Utiligroup
business at some point but the biggest challenge was to
avoid it being sold to trade in a long drawn out process. Our
role was to ensure management were in the best possible
position to achieve a successful outcome by preparing them
for the journey, introducing them to the most appropriate
funding partners that could work with us to achieve the
right outcome and ensuring we brought all our tactical nous
and deal experience to the table.
Utiligroup provides data management software and services
to the energy sector and under the leadership of Matthew
Hirst (CEO) and Drew Green (Operations Director) had
performed strongly despite its parent company troubles.
I had known Matt and Drew for many years and they had
always had a burning desire to complete a buyout at some
point. The team were both ambitious and capable, they
had built a really good platform and a strong reputation
with new entrants in the energy supply market. The market
opportunity was exciting as energy has increasingly become a
political issue with a drive for increased competition opening
up opportunities for new entrants both large and small. In
addition, the UK Government’s plans for large scale roll-out
of residential smart metering is beginning to finally become a
reality and Utiligroup is well placed to benefit in the future.
We used our experience to target potential funders that
were prepared to work closely with management over the
course of several months and the firepower and appetite to
write a cheque for the full amount as confidentiality and
deliverability were critical issues for the vendor. In the end,
it was NorthEdge Capital who stepped up to the plate
and they became an instrumental part of the deal team.
We kept a close eye on things as events unfolded at Bglobal:
the Chairman and Finance Director were ousted in Summer
2013 and shortly before Christmas KPMG were appointed
to conduct a strategic review of the entire business.
We decided it was time to make our move and approached
the new Chairman at Bglobal, John Grant. Whilst the
Bglobal Board were open to the idea of a MBO, they were
obviously keen to ensure shareholders got best value and
KPMG were instructed to carry out a market testing process
where we understand they approached around 25 trade
buyers and private equity houses.
A tense few weeks followed but management were in a good
position and sufficient pressure had been applied to the
vendor to tilt the deal in our favour whilst allowing them to
achieve their objectives. Our clients had funding and could
move quickly, management were strong and determined
to make the deal happen and reluctant to commit their
future to a trade buyer. We collectively judged it well and
the MBO offer was accepted ahead of the trade buyers and
progressed swiftly into the diligence process. Again the
MBO team were well prepared and the deal quickly moved
towards legal completion.
Along the way, the MBO team was strengthened with
several new directors joining the board including former
founder Martin Evans, John Furness and Finance Director
Steve Gosling. In addition, Ian Kelly became Chairman,
bringing a wealth of experience in software and private
equity to the table.
A successful MBO takes time and endurance. We worked
with management for several months preparing them for
the moment. They were given the best possible chance of
getting a deal over the line, a chance they grabbed with both
hands. These opportunities are often “once in a lifetime”
and you only get a single chance to get it right. The deal is
evidence of our capability to deliver high-quality deals to
the mid-market and our strength in delivering on a mandate
some advisers may have shied away from given the initial
challenges.
Contact - Gordon Lane
[email protected]
01942 271 746
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