ADC started as a specialist contract research organisation (CRO) focusing on antibody drug conjugates for cancer treatment. Established in 2010 and based in Deeside, the company has developed a niche and profitable CRO offering, and in recent years has also raised significant capital to invest in a state-of-the-art drug manufacture and supply facility. The business was backed by over 20 angel investors and a number of well-known venture capital trusts (VCTs) as well as the Development Bank of Wales, who over the years have invested more than £17 million.
Unfortunately ADC failed to secure its manufacturing licence from the Medicines and Healthcare products Regulatory Agency (MHRA), and a genuine risk of insolvency and subsequent administration existed. With investors unwilling to put more money into the company, and the business continuing to use its cash reserves, the company appointed FRP to carry out short-term cashflow management advice, provide ongoing strategic advice to the board, and undertake an accelerated M&A process.
FRP was appointed as lead M&A and restructuring advisers to oversee the process and manage the company’s cashflows and secured lender. We provided our services and support in a fully integrated manner, with our Corporate Finance team leading the accelerated M&A and our Restructuring Advisory team supporting with the short-term cashflow review and management of the secured lender.
The transaction was carried out virtually during the COVID-19 restrictions and involved managing multiple stakeholders including four institutional funds, numerous finance houses and over 20 minority investors. In addition, ADC had received significant Welsh Government grants and support, so this had political relevance involving keeping senior Welsh Government representatives abreast of the situation.
The nature of the sector and the reasonably niche service offering of the company added to the complexities of the accelerated M&A process, which resulted in a significant global buyer and investor list being contacted.
Despite the complexities, FRP was able to complete the accelerated M&A process in nine weeks from commencement. Ultimately one stand-out offer was received from an established contract development and manufacturing organisation, that ensured the continuation of the company, and the commitment of significant future capital and resources to secure the MHRA manufacturing licence and grow the business. The agreed two-phase deal was structured to allow the buyer to initially invest new equity in order to stabilise the business whilst they finalise their due diligence and planning ahead of formal completion of a 100 per cent purchase.
The offer ensured the continuation of the company and the commitment of significant future capital and resources.Heath Snyder Corporate Finance