THE DIVESTMENT CAMPAIGN
Our Client – The Vendor
The Business comprised the Mechanical Engineering Division of a larger engineering company, SRO Group Pty Ltd. SRO’s Mechanical Division (SMD) operated from industrial premises located near Newcastle with approximately 35 staff. It provided tailored designs and custom manufacture of Light Vehicles & Service Trucks as well as selling proprietary products to OEMs in the Construction & Mining Machinery industry. SMD’s corporate customer-base spanned multiple sectors including mining, construction, contractor, civil engineering and fleet management. The Division positioned itself as a “vehicle compliance specialist” offering complete turnkey solutions at competitive prices and within responsive timeframes.
At the time of sale performance was on track to reach budgeted sales growth of 25% with EBIT of almost 15%. The future was supported by a forward sales pipeline of approximately $10+ million in works. SRO Group engaged Johnsons Corporate – as a specialist in mid-market business sales – to undertake a divestment campaign of its Mechanical Division in order to release capital and facilitate the retirement of one of its two shareholders. The non-retiring shareholder would continue to operate the second Division, specialising in Electrical Engineering.
The Business Sales Strategy
SMD presented an attractive acquisition as a rapidly growing and well positioned business run under management with a stable of proprietary products and complementary services. Some key features of the Business included an escalating demand environment across multiple growth markets, long term contracts and high switching costs for existing customers. Future growth opportunities included: extending product lines, entering adjacent markets, building recurring repair & maintenance revenues and/or undertaking the wholesale distribution of custom-made product lines.
Johnsons Corporate’s custom research & marketing focused on Manufacturers & Modifiers of custom service vehicles as a primary target segment. Secondarily it identified targets operating in related sectors – including Mechanical Engineering, Metal Fabrication, and Light Engineering – as well as selected private equity & financial buyers. Johnsons ran a proactive direct marketing campaign that uncovered 40 qualified, interested parties. Further vetting and negotiations resulted in the selection of a preferred buyer as well as a backup buyer, with Offer and Acceptance secured within 9 weeks of going to market.
(Read more about how using a Specialised Mid-Market Business Broker Approach to selling your business could get you a better outcome – just like our client).
The Strategic Trade Buyer
The purchaser, Wallenius Wilhelmsen Logistics, is a global company that delivers innovative and sustainable global shipping and logistics solutions for manufacturers of cars, trucks, heavy equipment and specialised cargo.