Background

ECS is headquartered in Norwich and is one of the leading providers of specialist integrated control systems in East Anglia and across the UK. The owners of the company had appointed our Corporate Finance team in their acquisition of the business through a management buy-out (MBO) in 2014. The team subsequently provided ongoing strategic advice to the owners, including implementing a management succession Enterprise Management Incentive share option plan, ahead of an expected vendor-initiated MBO (VIMBO).

Action

Our team planned, designed and implemented the VIMBO structure, meeting all of the aspirations of both the controlling shareholders and the incoming management shareholders. Additional input included preparing a detailed financial model, overlaying the deal structure, and providing clear and in-depth explanations of the structure to the management team as the carefully managed process progressed. Effective tax planning was central to the structure and the process overall, and the team also obtained all of the necessary tax clearances and provided associated tax advice.

Outcome

The transaction resulted in the successful completion of a structured MBO. Existing shareholders were able to maximise the value of their interests at very attractive tax rates through a combination of immediate and deferred considerations, while also retaining a significant minority stake in the new structure, alongside the management team. The management team became majority owners of a business that was well positioned for further growth at a very attractive entry cost.

“The whole team were fantastic. I can honestly say that their clear, hands-on advice and pro-active management of the process was totally fundamental to its success and was really appreciated by all of our team.” Russell Scotter, Managing Director of ECS