The Acquirer

Middle-Market Acquisition Opportunities brought to you by Benchmark International

THE ACQUIRER August 2012

INSIDE THIS ISSUE . . . M&A Industry Analysis ACQUISITION OPPORTUNITIES

Reasons for Acquisition MINIMISING RISK

M&A Industry Analysis – H1 Key Points

• Over 97% of M&A transactions occurred in the mid-market range.

• Cross-border activity accounted for over 51% of M&A volume.

• Cash continued to be dominant for of payment.

• Swiss firms deal activity at highest point in a decade.

• Acquisitions in India reached a 5 year high.

Industry Sector Deal Activity

• The most actively targeted industries in terms of deal value were Diversified Minerals, Oil Exploration & Production, and Transport Services, representing over 21% of all global volume.

• The Basic Materials and Technology sectors both experienced transaction value growth in excess of 60%.

Basic Materials - 20% Energy - 15% Financial - 13% Industrial 13% Consumer, Non-cyclical - 12% Consumer, Cyclical - 9% Communications - 7% Technology - 5% Utilities - 5% Diversified - 1%

Deal Volume - Industry

August 2012 www.benchmarkcorporate.com

North America - 39%

Western Europe - 30%

Asia Pacific - 23%

South / Central America - 4%

Middle East / Africa - 2%

Eastern Europe - 2%

Deal Volume - Region

Acquisition Opportunities


• First school-to-home communication software • Clear market leader • State-of-the-art website/ platform (£1.5m invested 2011) • Integrated payment module • iPhone App • 95% school retentions annually • 100 new schools/ clubs each month • Access to potentially 10 million parents, plus associated

payment streams. • 2012 (projected) sales - £3.6m

National energy services contractor providing loft, cavity, solid and internal wall insulation, domestic heating installations and repairs, renewable energy services, energy assessments. Distributor and producer of insulation based bespoke products.

Specialist in rental / maintenance of mains-fed water coolers

Manufacturer of industrial crankshafts and rotor shafts School-to-parent communication & payments web-platform

Supplier of sawn timber products for the fencing, packaging markets, and co-products for the UK biomass market.

• Well established. • Products sold to power industry. • Impressive UK client list. • Continual growth. • Significant capacity for expansion. • Impressive automated milling facility. • Fully equipped modern production facility. • Sale includes all machinery / equipment. • Wales. • 2012 (forecast) Sales - £4.4m, PBITDa - £1.2m

• Extensive service and product range. • Huge expected growth in UK energy efficiency market. • Low costs of expansion and diversification. • Excellent reputation. • Skilled and highly-trained labour. • National coverage. • Experienced management team willing to remain post-sale. • Sales £24.8m • Adj. PBITDa £2.1m • £6m p/a profits projected by 2015 due to momentum in UK

energy market. • Nine UK depots, plus head office.

• Award-winning and worldwide reputation for product quality, reliability and service with a very strong brand.

• Niche business with handful of worldwide competitors. • No reliance on any one customer. • Significant barriers to entry due to skill base and high cost of

capital equipment (c£5m replacement cost), 100 highly skilled employees.

• Increasing demand to manufacture crankshafts for fracking. • Increased sales in conventional markets as fall-out from

fracking demand in worldwide crankshaft industry. • Strong balance sheet. • 2013 (Projected) Adj. PBITDa £4.95m

Niche accountancy & taxation services to the freelance contractor market.

• 16 years’ experience of supporting contractors and consultants with accountancy needs.

• Highly systemised business. • Specialist niche “contractor accountants”. • Bespoke new online accounting system (imminent). • Professional skilled workforce. • Smartphone app – tax calculator. • Growth prospects. • NW UK based. National coverage. (50% within M25) • Continued growth of existing client base. • Number of teams imminently increasing from 4 to 6. • Access to untapped financial services potential. • Development into new client sectors. • Sales £2.23m • Adj. PBITDa £872,000

• Guaranteed future minimum contracted income circa £3m. • Over 90% of revenue is contracted and recurring, based on

robust 3 / 5 year contracts. • 4,500 coolers/ boilers to circa 2,500 customers growing at 500

net units pa. • Runs largely independent from management with little input

required. • No customer accounting for more than 7% of installed base. • Robust and simplistic business model. • One of the UK leaders in mains-fed water coolers. • Ideal bolt-on opportunity and easily relocatable. • 2012 (Forecast) Sales - £1.57m, Adj. PBITDa - £858,000.


Acquisition Opportunities Nationwide records management service provider, offering support and solutions for all aspects of file and data storage

Medical recruitment agency

Independent emergency and non-emergency ambulance & transport service, personnel training & recruitment

Leading online retailer of motorsports tickets

Manufacture and distribution of laboratory consumables, plus waste collection, servicing UK hospitals

Supplier of high calibre engineering personnel to the international oil and gas industry. Contract and permanent.

• Main provider of locum staff via MOD Healthcare and Dental Contract.

• Substantial year on year financial growth. • Excellent fill rate. • Significant potential to become sole provider of staff for the

MOD • Database of over 2,000 high quality candidates. • Guaranteed charge rates until August 2014 with one year

option for extension. • Significant scope for development into NHS and private

hospital sectors and to expand operations abroad. • Debtor days currently 16 days. • South East UK based. • 2012 (Forecast) Sales - £18m, Adj. PBITDa - £3m

• Quality customer base. • Turnover doubled within last three years. • Profits more than trebled within last three years. • Boxes in storage have grown by 187,000 within last three

years. • Formally contracted customers. • ‘Pay as you go’ arrangements on storage space and very

low property/ space cost. • Extensive nationwide growth potential. • Excellent reputation built on exceptional service levels. • Investing in new technologies. • Strong management team with experienced and loyal staff. • ISO 9001:2008 accredited. • Adj. PBITDa £411,000

• Established ambulance service provider. • Valuable NHS ambulance trusts agreements. • Highly regarded UK trainer. • Specialist services including disaster relief. • Substantial bank of c. 400 highly-trained ambulance

personnel. • 26 UK front-line ambulances and 20 rapid response

vehicles. • Internationally regarded. • Highly accredited and quality focused. • Strategic foreign government contracts. • Recently introduced clinical recruitment business. • UK, some overseas. • Sales £4.26m • Adj. PBITDa £600,000

• Well-established. • Excellent web presence. • Circa 100,000 registered applicants on mailing list. • International customer base. • Ticket sales increased by 40% in 2011. • Ideal bolt-on due to low staff dependency. • Scope to develop international sales with multi-lingual and

multi-currency website. • Potential to expand product range including bolt-on services,

merchandise, additional events and experience days. • South UK • Sales £3.83m • Adj. PBITDa £358,000

• Supplies and collects from nearly all UK hospitals. • Clear leader in a niche market. • High barriers to entry. • Robust financials and cash generation. • Highly focused on service and quality. • Excellent reputation throughout industry. • Well-developed operational processes. • North Yorkshire based. • Sales £3.19m • Adj. PBITDa £633,000

• Long-established with growing market presence. • Large client base. • Stand-alone management structure. • Comprehensive internal systems. • Scotland based. • Growing UK market presence. • Growth prospects, including overseas contracts. • 2013 (projected) sales £22m, EBITDa £900k-£1m

www.benchmarkcorporate.com August 2012

Reasons For Acquisition To say that companies seek acquisitions in order to increase their rate of growth is somewhat overly simplistic. Whilst the sentiment is true, there are many more specific reasons why a company may seek an acquisition.

Synergistic Benefits A merging of two companies can often enable significant savings through reduction of overheads. Broader Geographic Coverage It is often quicker and cheaper to acquire an operation in a different location than set one up from scratch. Reduction of Competition Through the acquisition of a direct competitor a company can benefit from improved economies of scale resulting in increased gross profit. Reduction of Customer Dependency A successful acquisition can grant a company a broader customer base, reducing risk should a high proportion of turnover come from a small number of customers. Expansion of Products and Services In order to expand upon the number of revenue streams many companies seek acquisition rather than investing in R&D.

Better Use of Cash Reserves Large numbers of companies sit on significant cash reserves that are not generating meaningful returns. The right acquisition can often bring better returns. Enhance Shareholder Value Larger companies often gain higher sale multiples than small companies in the same sector. Buy and build strategies are popular for business owners thinking of a sale further down the line. Increased Growth Rate In the current market, high levels of organic growth are difficult to achieve. Acquisitions can provide enhanced growth levels in addition to placing the company in a better position for organic growth in the future. Repositioning a Business Companies within certain sectors gain higher multiples upon sale than others. Through acquisitions companies can reposition themselves so as to gain enhanced sale value.

Seeking an Acquisition? Benchmark International’s reputation for delivering successful outcomes for our clients means that we are contacted on a regular basis by clients looking to sell should the right opportunity present itself. These opportunities are not currently being marketed and are available exclusively to Benchmark International clients.

For more information regarding acquisition opportunities please call us on 0845 246 2626

www.benchmarkcorporate.com August 2012

Contact Us

Call us: 0845 246 2626

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ACQUISITIONS - MINIMISING THE RISK Acquiring another company will always be considered a risky strategy when such large sums of money are involved. It is very important that a thorough and diligent planning process is embarked upon in order to reduce the levels of risk involved. The following 9 points outline the primary areas which should be considered prior to any decisions being made regarding an acquisition: Organisational fit The target of acquisition must represent an appropriate fit in terms of organisational structure and culture. This is extremely important to ensure a smooth transition post-sale. Take the time to asses and develop your acquisition strategy and criteria. Experience is key Be sure to engage an experienced company sale specialist. Their knowledge of the process and its potential pitfalls enable a smoother process for all parties. Reduce risk through deal structure Structuring an earnout can be a good way of minimising the risk of acquisition. The deal must be structured carefully however so as not to inhibit the business. Conduct appropriate due diligence Due diligence is a vital stage in this process. Ensure it is given the time it deserves – appropriate to the size of the business. Consider all vulnerable parties Customers, suppliers, employees can all be affected by the sale of a company. Consider involving a commercial due diligence specialist.

It’s got to feel right If you are not 100% about pursuing a deal, take the time to consider all of your options. It will be far more cost effective to write off the time and expense than to pursue with the acquisition and for it to fail. Communicate early Acquisitions can often cause uncertainty within an organisation. Be sure to quell the uncertainty by showing clear leadership and direction from the start. Make changes quickly Where changes are necessary, be sure to make them immediately following the acquisition when they will be expected rather than later on when they might be faced with resistance. Completion is not the end Do not make the mistake of believing that the completion of a deal represents the end of the process. Be sure to enter the next phase of controlling the company with sufficient planning and strategy outlined.

The Acquirer

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