A well-equipped business, with annual sales of £1M+, offering high quality CNC turning, milling and machining centre capacity was family-owned via a Holding Company. Its weakness was a dominant customer relationship and limited management in depth. Unusually, a 2nd generation family member was working in the business on the shop-floor, leaving the business to be managed by a General Manager appointed by his father. It was the GM’s decision to retire which initiated the sale.
Shortly after the business was placed on the market, the recession hit the aerospace sector which impacted both this business and the first 2 purchasers whose offers were both 90%+ of the Guide Price. The sale was eventually made to the 3rd purchaser, an expanding MBO engineering group, seeing benefit in the high quality capacity and key customer relationship and having confidence that the recession in the sector would pass.
The agreed price, in fact, represented an excellent multiple of earnings because the vendor retained the debtor book as the headline price was for fixed assets and goodwill only. The purchaser also agreed to take a lease on the property which was owned by the Holding Company.