Catalyst acted as Lead Advisor on the management buy-out of itmsoil.
itmsoil is the UK’s largest geotechnical and structural monitoring business primarily offering instrumentation and monitoring services to the civil engineering sector. This typically occurs in a number of different civil engineering environments including railways, tunnelling, excavations, landslips, earthworks and dam monitoring. Key projects undertaken include the Channel Tunnel Rail Link, Dublin Port Tunnel, Jubilee Line Extension, Heathrow Express Rail Link, Heathrow Terminal 5 and London Crossrail.
Revenue of the business has grown rapidly from £8 million in 2008 to forecast sales of over £30 million in 2012.
What difference did we make?
Catalyst was appointed by the management team of itmsoil in August 2011 to deliver a deal structure that allowed the founding shareholders to realise a significant amount of their existing value whilst retaining a share in the future upside of the business.
Following an initial period of negotiation, Catalyst facilitated the agreement of an up-front deal structure acceptable to all parties that involved finding a hybrid debt and equity structure. We were able to quickly identify a shortlist of potential private equity funders who would want to support the opportunity based on sector knowledge, fund size, fund life cycle and the ability to invest for a minority stake with a blended debt/equity return. Catalyst delivered these objectives and presented a detailed business plan to the shortlist while at the same time protecting confidentiality by limiting the distribution of company information.
A private equity house was initially selected as the preferred equity provider to invest for a minority stake in the business. However, the founders subsequently changed their objectives due to an appetite to retain a greater share in the future upside of the business than was originally agreed. As a result we created a solution whereby a revised deal structure was derived to allow the founder shareholders to step into the shoes of the private equity investor and to deliver a vendor funded buy-out on similar rollover terms. This allowed the existing shareholders to maintain a significant equity stake and to introduce a revised tax efficient equity structure that incentivises the management team to grow the business and to maximise shareholder value on a future sale to a strategic trade buyer.
The key to delivering the transaction was the up front investment of time committed to the business planning process and developing a detailed understanding of the objectives of the respective shareholders.
What our client said
"Catalyst was a key part of the team that delivered this deal. Throughout a difficult process they were highly professional and I couldn’t have asked for better support and advice."
Mark Kirkbride, Group Chief Executive