Fabrikat deal lights the way
The owners of the Nottingham-based steel fabrications business, Fabrikat, have sold the business to a management buyout (MBO) team in a deal funded by Duke Royalty Limited.
Fabrikat, the UK 's leading independent designer and fabricator of lighting columns and guardrails, was formed in 1985 and has grown to become one of a handful of UK providers of street lighting columns, with an estimated 20 per cent UK market share.
In recent years, Fabrikat have successfully diversified to win around 50 per cent of the UK 's market in decorative lighting poles and architectural metalwork for cityscapes and leisure-oriented settings and to provide local authorities with asset-management services (lighting-pole testing, geo-mapping and monitoring services).
The sellers, Martin Hopkins and Matthew Wass, have each worked in the business for around 25 years, taking ownership in 2013 through a secondary and subsequent tertiary management buy-out.
Taking advice from trusted solicitor David Kaplan of Nelsons, as well as corporate financiers John Farnsworth and David Crump of Smith Cooper Corporate Finance (SCCF), the two owners were able to take the deal from inception to completion.
The buy-out team, with a 70 per cent equity stake, comprises the financial director Paul Allen, general manager Mick Scott and technical manager Melvin Batty who, together, have clocked-up over 70 years with Fabrikat. They plan to further develop the business in its traditional and new markets.
Duke Royalty has provided a £6.2 million royalty financing package and has also taken a 30 per cent equity interest.
Hopkins and Wass will retain roles as consultants.
Commenting on behalf of the sellers, Martin Hopkins, said: “Working with Smith Cooper since 2019 and Nelsons since 2011, brought into focus the long-term objective of our exit from the business.
“Smith Cooper 's advice carefully considered all available options, and timing of the deal was crucial.
“The advisors were supportive at every stage of the process, making the transaction smooth and straightforward. ”
John Farnsworth, partner at SCCF, paid tribute to the sellers, saying: “Martin and Matt recognised from the early days that the key to developing the business lay in setting a strong strategic plan and empowering the talented senior management team; few owners are able to get the balance of control and devolved responsibility right, but in this case, it has produced an extremely strong business and the talented management team that is now taking ownership. ”
SCCF director, David Crump, added: “This is the second deal SCCF has structured which involves the innovative royalty-style funding offered by Duke; in the right circumstances - where there 's a good business and a strong management team - this can be the optimal solution for all parties.
“Certainly, in this case, the Duke proposal emerged as the best deal for the sellers and the management team alike. ”