This business supplies and carries out some in-house manufacture of its own range of specialist products for the plumbing sector, predominantly via major national merchants. Satisfying a niche sector, it has a dominant market share in a number of areas, and has genuine brand recognition.
Founded by the current owners nearly 20 years ago, the company has enjoyed practically uninterrupted growth despite the economic uncertainty since 2008, developing from a small operation run from home to an enterprise with turnover now exceeding £3M and employing around 20 staff from its premises in Yorkshire. There is a management team in place to support the owners. Sales are B2B, with most products aimed at the residential housing market. A relatively newly developed commercial range offers further opportunity as does development of an online B2C platform. Currently all sales are to the UK but opportunities within the EU are being explored.
The business currently generates sales of £3M and above, delivering a sustainable adjusted EBITDA of c £530k. Organic growth forecast for the sector, coupled with opportunities being pursued, means the business is expected to deliver sales of £3.7M and an adjusted EBITDA of £685k by 2018/19.
The Base Guide Price for the business based on a sustainable adjusted EBITDA of £530k is £2.4M for 100% shares, including a debt free cash free Balance Sheet with net assets of around £850k. Over and above this figure, the vendors would expect to share in the anticipated growth for 2-3 years following Completion and are prepared to commit to an extended 2-3 year handover in order to protect that anticipated growth.
This business has grown to the point where the current owners feel it would be better served by new owners with the skills and energy to capitalise on the substantial further opportunities. It is a suitable acquisition for high net worth individuals wishing to retain the business as a stand alone enterprise, a bolt on for a larger business with a complementary product range, or for a private equity team assembling a group. The assets of the business will conservatively allow for £0.5M of debt financing.