• Thu. Dec 7th, 2023

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RGCF predicts growth in MBO activity as it enters its 10th year in operation

RG Corporate Finance (RGCF) is predicting a rise on Management Buy Out (MBO) activity in the second half of 2020 on the back of a successful ninth year in operation.

Part of Newcastle-based advisory firm Ryecroft Glenton (RG), RGCF has experienced growth in both the size and number of transactions the corporate finance boutique advised on during the 12 months to 31 March 2020, with a notable increase in the number of MBOs, including corporate carve outs, with overseas corporates and Private Equity houses disposing of their interests in UK based, non-core businesses.

Among them was the acquisition of County Durham battery manufacturer Alexander Technologies Europe Ltd by its incumbent management team from US-based private equity house Woodside Capital Partners, which was part-funded via a £9.2m senior secured unitranche facility provided by Shard Credit Partners.

Another international MBO advised upon by RGCF was the acquisition of a power generation and aerospace solutions division of a multinational organisation by its North East-based management team to create GadCap Technical Solutions Ltd.  This transaction was also supported by funding from London-based Shard Credit Partners.

More recently RGCF supported the vendor initiated MBO of international specialist technology staffing company, Venturi Ltd advising the existing management team on the acquisition of the business from two of its shareholders. Funding for the deal was provided by Caple.

To meet the growing demand for its advisory services, RGCF has continued to recruit, with a number of significant appointments announced in the past six months including the appointment of Corporate Finance Senior Manager Rhiannon Nightingale, Corporate Finance Manager Connor McBride and Corporate Finance Assistant Ben Kain.

Carl Swansbury, Partner and Head of Corporate Finance at RGCF, said: “We have delivered another strong year, further strengthening our position as a leading corporate finance boutique, advising on transactions across all industry sectors in the £5m-£50m equity value range.

“The market for MBOs has grown considerably and we expect that to continue throughout the rest of this year and into 2021.  With fewer trade acquirers in the market, both privately owned businesses and large UK and overseas corporates are looking to sell businesses to incumbent management teams that are keen to take control of their own destinies and deliver scale to their operations.

“With the level of liquidity in the market, largely from debt funds and Private Equity houses, this is a great time for management teams to consider acquiring the businesses they run, via an MBO.”

“As well as advising on a number of high profiled MBO’s during the past 12 months, we have also advised on a number of other transactions, including the £20m sale of tenant referencing provider, Van Mildert to Rightmove Plc, the sale of Yorkshire’s most historic steel business, Pulman Steel to private equity firm, Breal Capital, along with the sale of specialist property business, Austin Newport Group to French-based project management, engineering and consultancy organization, Artelia Group.

Carl added: “Of course, we are currently going through a unique time in business. While there is still a strong pipeline of transactions ahead of us, we have also been working closely with clients on other issues.  A large proportion of our time in recent weeks has been spent providing strategic advice to our clients and helping businesses secure the funding they need to trade through a period of softer performance and then move to scale-up at the appropriate time.

“This has included our effective collaboration with RTC North’s Scaleup North East programme, which provides our clients access to part-funded advice and support on areas such as preparing financial forecasts and securing funding.

“This initiative reflects our commitment to working with existing and new clients to weather this storm, be well-prepared for green shoots and take advantage of pent up demand that will enable them to deliver to their true potential.”