What was the deal? 

We advised Busch (UK) on its acquisition of Vacuum Furnace Engineering (VFE) from Longacre Group, which had owned the business since 2015. The deal was completed in August 2021, for an undisclosed value. VFE had around 80 employees at the time. It carries out maintenance servicing for heat treatment industry equipment and had successfully changed its business model under Longacre ownership, and (prior to COVID-19 affecting turnover) grown its revenue to £16m. Busch is a global engineering business owned by a German family – it’s had a UK subsidiary based in Telford for 50 years. 

How were you introduced to the deal? 

Busch is a retained audit client of Crowe and its UK general manager (effectively MD), Tim Hulbert, asked us to look at VFE – he wanted us to tentatively explore whether it might be for sale. We contacted the managing director at Longacre, Elliott Nicholson – a long-standing contact. He told us a process was about to be started and introduced us to Arrowpoint Advisory, which had been engaged as corporate finance adviser to market the company. 

What were the timescales? 

That call with Tim was in March 2020, just before the first COVID-19 lockdown. Information was exchanged and a preliminary assessment was made of the business. But it was a false start. By May 2020 all parties, quite rightly, put the process on hold, given the impact COVID-19 was having. Servicing and site visits were at best severely restricted and commissioning of new machinery was largely paused. Some VFE clients saw a downturn in performance. In 2020, VFE’s turnover halved to around £8m.  

After a year-long pause, we re-engaged with Arrowpoint in March 2021. Updated sales materials and forecasts were provided, as well as a refreshed information memorandum, and we made a revised offer. Busch was given a limited period to complete commercial, legal and financial due diligence. Heads of terms were agreed upon in July and the transaction was completed in August 2021. 

Who were the advisers? 

We provided Busch with corporate finance advice and some tax advice. Commercial and financial due diligence was conducted in house. Buy-side lawyers were Ansons Solicitors. The sell-side advisory came from Arrowpoint, and legals from Pinsent Masons. 

What were the challenges? 

Assessing value at a time of unprecedented uncertainty in the market was a huge challenge. Pre-COVID-19, under Longacre ownership, VFE was on track to deliver record performance, having pivoted towards the adoption of a service model. The focus of the diligence when the deal was restarted was less about historics and more on the strength of recovery – how much business had been lost and how much had simply been put on ice. However, VFE has a young second-tier of commercial and operations management which had stayed intact throughout COVID-19, and had a market-leading reputation that held it in good stead when the recovery came.  

What were the lessons learned? 

If everyone pulls in the same direction, deals can be done quickly, on sensible terms and in line with expectation – even at times of uncertainty. That’s perhaps a good lesson for what is on the horizon now. Busch delivered on pricing and structure and, from an early stage, gave a clear picture of the longer-term integration strategy for VFE management. We fought Busch’s corner when we needed to and dissected issues so as to understand the commercial and financial impacts, while maintaining sensible and professional dialogue with all parties. The deal definitely worked for everyone. 

The CV 

Andy Kay is a Birmingham-based corporate finance partner at Crowe. He joined Crowe in 2009 from Barclays Commercial Finance in Birmingham, where he was a director providing asset-based lending solutions to support M&A. Prior to that he spent 13 years with PKF, where he qualified as an ACA. He also has the ICAEW diploma in corporate finance.    

Recent deals 

• Allcures plc acquisition of The Hub Pharmacy Group from Bridges Ventures in June 2022 
• Future Advance Manufacture sale to Carmichael Capital in November 2021
• Volpi Capital and Moving Intelligence BV acquisition of Stockport-based Phantom Tracking Systems in October 2021 

First published in Corporate Financier, Issue 247, November 2022