Matt Willmott, PKF Francis Clark

What was the deal?

We advised ERS Medical on its sale/merger with Cairngorm Capital-backed E-zec Medical Transport Services. ERS provides patient transport, medical courier and GP out-of-hours services to NHS and healthcare customers across the UK. E-zec was a competitor. Combined, they serve more than 50 NHS commissioning bodies, have more than 2,500 employees, and in 2022 had revenue of more than £100m.

How were you introduced to the deal?

We advised Andrew Pooley (then ERS owner and chief executive) on the original acquisition of ERS back in 2017. US owner Stericycle wanted to divest itself of what was a loss-making part of the group. Pooley was in the right place with the right experience to take on what was quite an incredible task. Over six years, he transformed the business: he stripped away onerous contracts, built a management team and incentivised them. It won new contracts and earned a positive reputation built on quality and efficiency of service.

What were the timescales?

Post-COVID-19, having delivered the business plan almost to the letter, Pooley began to consider his options and was contemplating how he might de-risk some of his investment. There was a strong level of appetite from a range of trade and financial investors owing to a strong contract win success rate and associated longevity of revenue visibility. We helped him consider what was important and what the transactions might mean for both him and the business. From this we pursued further discussions with trade, including E-zec, which was ERS’s main competitor in the non-emergency patient transport market. There was a compelling case for the deal. The merged business could take the best bits of both to become more efficient and provide better service and improved profitability.

What was the structure of the deal?

The value wasn’t disclosed. There was cash up front and some deferred, which was not on an earnout. The management team’s share option scheme crystallised on exit. They exercised and sold them simultaneously.

Who were the advisers?

We provided corporate finance advice to Pooley – the team was me, Andrew Killick, Tom Hicks and Martin Brown. ERS took legal advice from Foot Anstey. GA Solicitors provided property advice. BDO carried out financial and tax due diligence for Cairngorm Capital and E-zec. Gowling gave them legal advice, Drystone Strategy carried out commercial due diligence, Specialist Risk Group insurance due diligence and Intechnica IT due diligence.

What were the challenges?

It’s difficult to go from a company being your biggest rival to merging and working with it. With information being shared, there’s always nervousness. It got easier as the transaction progressed and it became clear this wasn’t just a fishing expedition. Another challenge was demonstrating that the way the business had been affected by COVID-19 was more noise than a long-term effect on profitability. And then there were the broader market challenges – the cost-of-living crisis, wage and cost inflation and fuel prices for the fleet – all of which require constant management.

Finally, PE-backed acquirers do a thorough job, as you would expect, but there was a lot of work to protect our client’s position and retain the value throughout the process.