Debt Advisory

Hawco

Advisor to Bay Tree Private Equity on its leveraged buyout of Hawco from Diploma PLC.

The deal

Our Debt Advisory team has successfully advised lower mid-market investment specialists Bay Tree Private Equity on its buyout of Hawco Limited, a specialist value-added distributor of heating, ventilation, air conditioning and refrigeration components.

Based in Bolton, Hawco provides over 26,000 components to a customer base including engineers, R&D designers and procurement managers. The deal will see the £31 million annual turnover business and its 80 employees carved out from current owners Diploma PLC.

Bay Tree Private Equity specialises in supporting UK businesses generating underlying profits between £1.5 million and £10 million. The deal was supported by Triple Point Private Credit, and the firm’s investment in the business will offer the necessary flexibility to support its continued growth under private ownership.

Our Debt Advisory team was instructed to support Bay Tree identifying a suitable lender to raise the acquisition finance and to subsequently manage the negotiation process. Led by Partner Tom Cox, the team delivered and negotiated detailed term sheets with multiple lenders to secure fully credit backed offers in a short timetable, with a view to executing the transaction in line with vendor requirements.

By highlighting Hawco’s technical expertise and history of robust cash generation, we secured two fully credit sanctioned offers, with several other parties also interested in supporting the deal. Ultimately, the debt financing was delivered within two weeks of the final credit sanction, allowing the deal to be executed swiftly.

Tom Cox, Debt Advisory Partner at FRP Corporate Finance, said: “Despite recent political and economic uncertainty resulting in a more cautious credit market, there remain opportunities for businesses operating in industries with clear demand trends and the potential for a longer term, positive ESG impact.

“This deal is a perfect example of this, with Hawco’s technical expertise, loyal customer base and history of robust cash generation making it an ideal candidate for investment. We wish the employees and new shareholders the best of luck as they continue to grow in the future.”

Mike Simmonds, Partner at Bay Tree Private Equity, said: “Deals such as this are best executed quickly. The team at FRP were efficient and flexible, and their hands-on approach allowed us to secure a favourable financing arrangement within a short timetable.”

Ed Cottrell, Partner at Bay Tree Private Equity, added “Hawco is well-established business in a competitive industry, and we look forward to supporting the team as they continue to support the industry’s adoption of ESG standards and requirements through the provision of an unrivalled range of specialist components.”

CMS provided legal advice to Bay Tree Private Equity, whilst HCR Law supported the lender. Financial due diligence was completed by the team at HMT with commercial due diligence completed by RPL.

Deal summary

Date:

March 2023

Sector:

Industrials & Manufacturing

Deal type:

Management & leveraged buyout financing

Deal size:

Undisclosed

Despite recent political and economic uncertainty resulting in a more cautious credit market, there remain opportunities for businesses operating in industries with clear demand trends. Tom Cox Debt Advisory

Related team

Tom Cox

Tom Cox

  • Partner
  • Debt Advisory
  • London West End