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OCTOBER 2013
Transactions Respirex buysMFc Survival Legal advisor to the management team: Legal advisor to the vendor: Property & plant valuation provider: M&A advisor to the management team:
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advisor Insight A
ndrew Baird of Baird Partners initiated this transaction, and negotiated terms on behalf of Respirex. Here, Andrew speaks to us about his involvement in this deal and the challenges that arose.
Please introduce yourself and your firm.
I have been active in Corporate Development work - mergers, acquisitions , divestitures, MBO’s etc. for over 25 years, prior to which I worked in several international banks in the 70’s and 80’s. Becoming involved in the growth by acquisition of my last employer (ING), I was increasing drawn to the M & A process, and in particular the process of Acquisition Search. Today, at least 50% of our firm’s projects are acquisition searches, the balance being divestitures, MBO’s, etc. Many have an international dimension, which we are able to satisfy through our membership of the International Corporate Finance Group (ICFG).
ICFG was one of the first such international advisor groupings, being founded in 1956, and today comprises some 25 member firms, capable of providing support in the major economic centres of the world. The North American member was ranked by Thomson Reuters in the top 10 domestic mid- market advisors in 2012.
Baird Partners is a multi-discipline practise, the common factor among the partners being their deal making experience. Most have been C++ executives in industry, and experience covers IT, financial institutions, plastics, chemicals, pharmaceuticals, oil and gas, retail, electronics, transport and engineering.
Please tell us about your involvement in this deal.
Respirex is a market leader in the provision of protective clothing and footwear for hazardous environments, and sought an additional business which would enable them to exploit their existing routes to market. We approached the prior owners of MFC Survival, Mangar International, and convinced them that Respirex was well-placed to take the business forward, leaving Mangar to focus on the opportunities presented by its fast growing bathing, lifting and rehabilitation aids business.
What were the main challenges that arose?
Of course, every deal has its own challenges – in this case we had to formulate flexible but robust arrangements to cope with the separation of the part of the business which was being retained by Mangar to service their ongoing operations from the MFC rescue equipment business our clients were acquiring.
Is there any need for legislative change in your opinion that would help these types of deals?
I believe there is a case for developing a simpler form of legal transaction for the sale and purchase of smaller limited companies – often the legal processes required to fully discharge “due care” become onerously expensive and are a disincentive to a larger company seeking “bolt-ons”. Small business owners are therefore forced to consider business and assets sales, which are disadvantageous to them in terms of taxation. An alternative would be to change tax legislation to remove the double taxation impact which often occurs when a business and assets sale is made by a limited company.
What other deals have you been involved in recently?
We are mid-way through a project in the telecoms engineering sector for a client with the intention to add additional related services and grow his business five-fold, mainly by acquisition, over the next three years. Earlier this year we initiated a merger between our client and a similar business, and we are currently discussing further acquisitions.
We recently helped a Swiss client divest a UK subsidiary to management, and are helping a German client with an acquisition in the UK.
Why is this a good deal for all parties involved?
The Respirex deal was a good example of a transaction with perfect industrial logic – MFC Survival was an extremely good “fit” with Respirex’ aspirations, but the business was something of a
distraraction for Mangar’s management, taking valuable time from the development of their core business.
Is there anything else you would like to add?
Baird Partners has always focused on the industrial fit between clients companies and the potential part- ners or targets we search for, as a combination based on sound industrial logic will always achieve the best value, regardless of whether the object of our assignment is an acquisition, divestiture, MBO or a joint venture. Our Partners personally undertake the assignments and manage them through to completion - we do not win assignments then pass them to juniors for execution. LM
deal overview
on July 1 2013, Respirex International Limited announced the acquisition of MFc Survival, manufacturers of emergency rescue and survival equipment.
MFc Survival’s manufacturing will remain in tonypandy in South Wales and Respirex are committed to supporting the ongoing growth and development of the business.
contact
andrew Baird Baird Partners Ltd 123 Pall Mall, London, SW1Y 5Ea UnItEd KInGdoM
t +44 2072 650 077 M +447771881465 baird@bairdpartners.com www.bairdpartners.com