Baxter Engineering sold via Management Buyout

DIVESTMENT - ENGINEERING & FABRICATION

Our Client – The Vendor

Baxter Engineering is a multi-disciplined engineering business servicing private, corporate and government clients and which operates from purpose-built facilities in the ACT. For over 40 years the Business has provided a mixture of engineering, fabrication and maintenance services through three divisions: structural steel, general engineering and machine shop. At the time of sale, it was the only locally-based engineering firm to collectively offer these three services. Operations comprised a team of 40+ long-serving, skilled tradespeople – with each division being run independently and overseen by an experienced supervisor.

In 2013 Baxter’s Directors engaged Johnsons Corporate as specialised mid-market business brokers to undertake a divestment campaign on their behalf. Having trebled revenues since acquiring the firm in 1992, they were seeking to exit by way of sale to a third party in order to provide a succession strategy for the Business and to facilitate their own retirement.

The Sales Strategy

For potential acquirers the Business featured a stable, repeat customer-base that had consistently generated stable revenues over the previous five-year period. Other highlights included: diversified recurring and project-based revenue streams, a visible pipeline of 6-9 months, preferred supplier status with key clients, a strong reputation in the local market and a well differentiated added-value offer. Baxter represented a solid standalone business or a great bolt-on. In either case a new owner would have several options to pursue further growth, ranging from taking a more proactive approach to marketing and business development through to investing in capacity and resources to undertake larger projects.

Johnsons Corporate’s custom research & marketing focused on Fabricators and General Engineering businesses across Australia, while adjacent markets comprised: Civil Engineering, Industrial Engineering and Structural Engineering businesses in Australia as well as a shortlist of private equity & financial buyers. Johnsons ran a proactive direct marketing campaign that uncovered 7 qualified, interested parties. Further vetting and negotiations resulted in a firm written offer from a Sydney-based engineering company. As a result of securing the offer as well as feedback from multiple prospective trade buyers, the vendors attained an accurate indication of the Business’s true market value – which then gave rise to an internal management buy-out by one of the existing shareholders and his family members working in the business.

The Buyer

In the end, the Vendors had comfort in selling the Business by way of an internal Management Buy Out at the headline price of the written offer secured by Johnsons Corporate. Johnsons assisted the Vendors with executing the MBO, including facilitating the legal process through to settlement.

What Our Client Had to Say

"As a result of the comprehensive sale process that Johnsons ran we were in no doubt about the value of the business at the time of sale and at what price to transact… We have no hesitation in recommending Johnsons and their approach to selling businesses to anyone considering an exit from their business."Barry Hart, Director - Baxter Engineering

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