In April 2010 Martyn Moody and Alistar Dunk were smiling and very relieved. They had just completed the sale of Lectec Services Limited for a sum in excess of £4 million. The mechanical engineering firm specialises in the design, installation and maintenance of electrical and instrumentation systems to the oil, gas, chemical food, power generation and steel processing industries. Lectec, based in Lincolnshire, also has an impressive client base including Siemens, Alston and Lindsey oil refinery with an annual turnover of £11m.
Concluding the deal from when the heads were signed took eight months and in that time things were never certain. Tim Ward who led the deal on the part of BPE commented, “both the buyer and the sellers were comfortable with the deal they had agreed and just wanted to get on with it, however the big issue was getting funding. The buyer, whilst owned by a well respected entrepreneur in the field, was in effect a new company and most of the cash was to be raised from banks. This was in the middle of the deepest credit crunch and at a time when the answer from banks to a funding proposition was overwhelmingly NO – I knew this aspect was not going to be easy”. The Sellers, having built up their business from scratch, knew it intimately, how contracts operated and most importantly when the profit was made. However, like many entrepreneurs, the paper trail was not all there and they needed to convince a banker that the contracts were secure and there was recurring income and a secure future order book. One of the many commercial issues to be resolved was to understand potential claw backs and retentions as these could have big impact on cash flow.
BPE was able to provide reassurance to the sellers on costs and agreed a fixed fee irrespective of the time taken and how the deal was structured. Liaison with Lectec included visits to their site in Grimsby, telephone conferencing and emails.
BPE’s approach to all deals is to focus on getting it done, not at any cost but to deal with the key commercial issues and move it forward proactively. As another of Tim’s clients confirms, “BPE has always managed to deliver the deal within our timescales. Tim has excellent commercial judgement and is very solution orientated. He focuses on the key commercial drivers and issues that are important to us and does not allow the process to get bogged down in unnecessary detail which matters to the lawyers but not their clients – this is vital.”
Given these conditions, everyone need to work collaboratively, convince the funders that the deal could be funded and ensure that the Sellers remained committed and did not become frustrated about the delays and ongoing questioning of their business, Tim had to explain to them the process and, whilst of course protecting the Sellers interest, needed to be alert to the funders and buyers concerns and reflect that in the deal terms. This situation required Tim spending time to completely understand how Lectec operated so the BPE team could work with the buyer’s teams to close the deal.
As Alistair after the deal commented “We would like to thank you and the BPE team for all your support and endeavours during the Lectec sale process. We would have no hesitation in recommending the services of BPE to any would-be client. The professionalism and support from you and your team for Martyn Moody and me; which as you observed was `not the smoothest of rides` was I considered quite exceptional. I am convinced, if it had not been for yourself and your team’s patience and efforts, the deal completion process may well have faltered. There was much comfort to be had by ourselves during the DD and Final Acquisition stages of the sale process knowing we had yours and the BPE team’s support. During the sale process there were times when it was felt that it was only the BPE team who maintained and had a complete grasp of the complexities of our business operations and practices. I consider it was the BPE team headed by you that remained focuses with clarity throughout that won the day. As stated earlier, it was reassuring during periods of uncertainty.”
Lectec has gone from strength to strength and the relationship between the Alistair and Martyn and the buyer remains good; despite a deal which took much longer to close and involved revisions of bids.
The success of the deal showed that Tim and the wider BPE team’s view that it is vital for lawyers to work with the advisers collaboratively, be proactive and innovative and remain focused on the key objective of getting the deal completed.
