Private equity investment flourishes in the North East
March 04, 2014
Deal values and volumes in the North East region over the last half of 2013 have been encouraging. This partly reflects an increase in the level of investment made by private equity firms. Organisations generally look to private equity investors as a strategic partner to provide a cash injection to support a future growth strategy or to offer a more flexible financing structure than debt financing.
We’ve continued to advise a number of local organisations to help them get investment to support growth. A recent example in the second half of 2013 was the sale of Ideal Stelrad Group (ISG) to Bregal Capital.
Headquartered in Newcastle, ISG is a leading manufacturer of boilers and radiators. ISG’s boiler division operates under two main brands: Ideal and Keston. It has production and distribution facilities in Hull. The radiator division operates under three brands: Stelrad, Henrad and Termo Teknik. Stelrad has production and distribution facilities in Mexborough in South Yorkshire and in the Netherlands. Henrad has production and distribution facilities in Belgium and Termo Teknik has a head office in Istanbul with production and distribution facilities in Turkey. ISG also has distribution centres in Poland and Russia.
We supported ISG in their sale by preparing a comprehensive vendor due diligence report that was made available to a number of interested buyers leading to the eventual transaction with Bregal Capital. Vendor due diligence is an effective component of a sales process as it allows the vendor to commission an independent due diligence assessment of the business to be divested and provide a copy of the report to interested bidders. Then the preferred organisation typically completes a “top up” due diligence exercise to cover any further areas that are of specific interest to them and to update the report for latest available trading results.
This means that the detailed due diligence process is effectively completed once in a timetable that works for the vendor rather than multiple bidders seeking to commission their own detailed reviews with the associated disruption to the vendor and its management team whilst they continue to run the business.
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