Management buy-out of Professional Music Technology

The management team of Professional Music Technology (“PMT”) has completed a management buy-out of the business, with financing provided by YFM Equity Partners and the founders of the business.

Founded 28 years ago by Simon Gilson and Terry Hope, PMT is the UK’s leading multi-channel retailer of Musical Instrument (MI) and Professional Audio products. The business operates through 15 stores across the UK and has a web presence at www.pmtonline.co.uk. PMT employs more than 200 staff across its business and generates revenue in excess of £40m per annum.

The buy-out has been led by David Black who becomes managing director of the business. David first joined PMT some 18 years ago and has had day-to-day leadership responsibility for the business over the last four years, having opened six new stores in that time.

David is supported in the buy-out by Carly Scott (commercial director) and Andrew Ball (operations director), who joined the business in 2010 and 2012 respectively. The Board will be supplemented by Peter Moss, who joins as finance director. David Garratt, former CEO of Wex Photo Video, the leading multi-channel retailer of photographic and video equipment, joins the Board as non-executive chairman. Simon Gilson and Terry Hope will continue to support the management buy-out team as founder advisors and retain a significant investment in the business.

Over the coming years, the management team plan to take advantage of the continued strong demand for musical instruments and pro-audio products from hobbyists and professional musicians alike. The business will focus both on the selective opening of new destination stores and the further development of its multi-channel proposition.

Simon Gilson commented: “Terry and I have spent nearly thirty years building PMT into the strongest and most successful business in the sector of which we are both extremely proud. Going forward we felt that some new thinking and strategies are necessary to fully exploit the many opportunities that the current market presents and that this is the ideal time to let our younger talent, led by David Black, take this amazing company into its next phase of growth”

David Black commented: “I am very pleased to complete the buy-out of PMT with the rest of the team. The founders have done a fantastic job of establishing a market leading position and we look forward to building on that in the future. YFM have impressed us from the start and quickly understood the plan to continuing opening new stores whilst growing the online presence. In choosing YFM, we have an investment partner with a wealth of experience and notable success investing in the hobbyist retail sector.”

Jamie Roberts of YFM added: “The founders have done a great job in building a market leading business in a growing niche. We are bucking the wider high street trend with the plan to open new physical stores but see huge opportunity to continue the impressive growth to date by doing this alongside investing in the existing online presence.”

Arbuthnot Commercial ABL provides £5m facility for GJB Group

Arbuthnot Commercial Asset Based Lending (Arbuthnot Commercial ABL) has supported window and door suppliers, GJB Group (including Listers in Stoke on Trent) with an ABL package totalling £5m, which is an increase of £2.4m on the facilities offered by the group’s previous provider. The core facility is accounts receivable, supplemented by plant & machinery and cash flow loans.

Sean McLaughlin, partner at corporate finance specialists, Challenge Capital LLP, who will also be joining the group board said: “While the turnover of the business had grown significantly the funding line from the previous providers had not kept pace. The facility structured by Arbuthnot Commercial ABL has provided the group with a platform for significant growth, enabling the business to make further investments in its product range and marketing.”

The business was originally established 25 years ago as GJB Developments, a fabricator and supplier of window and door systems to trade sales and new build customers, operating from Essex and (following the acquisition of Listers) in Stoke. In 2017, industry veteran Roy Frost acquired the businesses with big plans to develop them into a major force in the sector.

Roy Frost, Group MD of GJB Group, said: “We approached Arbuthnot Commercial ABL because we found ourselves constrained by sector policy limits with our previous funders. Arbuthnot has been a breath of fresh air by being willing to invest time to understand our business and the industry in which it operates. Doing that has meant that we now have much bigger and more flexible funding facilities which will support our continued growth. The Arbuthnot team have already proved themselves on the relationship front by committing senior people who listen and find pragmatic solutions to the problems that inevitably arise through a refinancing process. We are all looking forward to the journey with them.”

Caple supports management buyout at Delice de France

Alternative SME credit specialist Caple has supported Delice de France, the bakery specialist, with a fully unsecured multi-million pound eight-year loan.

Delice de France has used the loan to complete a management buyout from parent company Aryzta AG, global suppliers to the foodservice industry.

The management buyout was led by Delice de France managing director Thierry Cacaly. It will enable the business to continue to deliver quality products, to innovate and to grow.

Thierry Cacaly, managing director, at Delice de France, said: “This bold move represents an outstanding milestone in the company’s 35-year history. We have a passionate, focused and well-seasoned leadership team who are dedicated to our customers by finding new ways to serve them. As well as supporting our colleagues through continuous development.

“This loan through Caple will enable us to make Delice de France a real independent force driving up standards in the food and beverage sector.”

Caple is the UK’s first firm to offer access to unsecured lending based on the future cash flows of the business. It requires no collateral or personal guarantees as security.

Loans originated through Caple can also sit alongside existing bank lending, meaning firms can access more funding than they would to be able to access from their bank alone. As a result, Delice de France will retain its working capital facility with NatWest without the need for inter-creditor arrangements.

Dominic Buch, managing partner and co-founder of Caple, said: “Options for unsecured debt are limited in the UK. This creates a barrier to growth and ownership and may push businesses to needlessly issue equity in their business. Few businesses completing an MBO want to consider that option.

“Our deal demonstrates how unsecured lending can form part of a blended finance package and support ambitious businesses and management teams.”

Delice de France is the largest specialist manufacturer and distributor of premium frozen bakery products in the UK. The company has a reputation as a leading supplier of continental, ready-to-bake, specialities sourced from across Europe. Delice de France has received numerous awards for its high-quality products.

Caple originates loans through a local partner network of accountancy and business advisory firms. Jason Metcalf, managing director at corporate finance firm Park Capital advised Delice de France.

Jason Metcalf, managing director of Park Capital, said: “It was a pleasure to work with the team at Caple in putting together an innovative funding solution to finance the MBO of Delice de France. The team’s commitment and professional approach was critical to the success of the transaction.”

The loans Caple facilitates are part of BNP Paribas Asset Management’s SME alternative financing direct lending platform, which enables SMEs to access funding from institutional investors. BNP Paribas Asset Management aims to provide €1bn per year in funding to SMEs across Europe.

Recruitment company targeting £10m turnover with new funding

Bibby Financial Services (BFS) has provided a £800,000 funding facility to D&A Recruitment Ltd., an independent recruitment company specialising in a range of sectors across the UK.

Based in the East of England with offices in Cambridge, Bedford, Huntingdon & Essex, D&A Recruitment offer across-the-board recruitment services. The agency provides temporary and permanent placements and has contracts with companies including Hotel Chocolat.

Established in 2012, the business has successfully grown its turnover by 20% year on year, increasing from £400,000 seven years ago, to around £4.5m today.

The funding package structured by BFS’s Corporate team will boost D&A Recruitment’s working capital operations supporting its growth ambition of achieving a £10m turnover.

Tony Clampin, corporate manager at Bibby Financial Services, said:

“D&A have a strong track record of achieving year on year growth. We were pleased to be able to structure a facility that frees up their cashflow so Dan and the team can focus on managing day-to-day business and achieving their future growth targets.”

Dan Davis, managing director at D&A Recruitment, said:

“In recruitment, the average payment terms with customers range from 30-60 days. BFS’s funding provides the working capital we need to meet payments and grow the business. It was a pleasure to work with the Corporate team who understood our commercial needs and were able to structure a facility that supports our plans for continued growth.

Manchester-based Volz Filters acquires with £500,000 funding from Santander

Manchester-based VOLZ Filters UK Ltd, a specialist manufacturer of air filter products for air conditioning, ventilation and painting applications, has secured a £500,000 funding package from Santander Business Banking to support the firm’s acquisition-led growth strategy. This latest acquisition is its fourth in the last two years and through its committed to a long-term partnership with Santander, intend to acquire further companies in the very near future.

Their latest acquisition; Midland Filter Products Ltd, located in Northampton is well-established manufacturer and distributor of associated products to that of the VOLZ Group. They are a producer of energy efficient air filters which improve air quality and reduce pollution. The firm specialises in air filtration solutions to remove harmful particulate matter from the air that we breath, delivering clean air in indoor environments. The firm has grown rapidly, in part, by offering free site surveys so clients get the optimum performance from its filters. This follows the acquisition of Swan Enviro Limited, 2019 – Kitchen Extract and Canopy Manufacture, M&W Precision Engineering Limited 2017 – a specialist toolmaking company and Pressed Parts Company Limited 2018 – a specialist precision press parts manufacture.

VOLZ Filters UK Ltd’s parent company, VOLZ Luftfilter GmbH & Co. KG, was established in 1966 in Germany by Manfred Volz and his wife Ella, with the UK arm set up in Manchester in 2006. The group now has over 700 employees and owns factories in Germany, Slovakia and the UK. In line with its growth-led expansion plan, VOLZ aims to acquire additional businesses in the UK on a select, long-term basis that complement its UK product and service proposition.

The £500,000 in funding from Santander Business Banking was instigated through the Business Banking Switch, an incentivised switching scheme launched in February 2019 to reward eligible Royal Bank of Scotland customers who switch their business current accounts to participating banks such as Santander. The scheme has been designed to provide offers that are better than those normally available on the market, such as cash incentives.

James Marsh, group finance director at VOLZ Filters UK Ltd, said: “We are delighted to be able to secure the acquisition of Midland Filter Products Ltd, and the funding from Santander has been central in helping us realise this exciting growth opportunity. Our aim is to continue to acquire businesses on a select basis which will support our current product suite and aspirations in the UK market.”

Danielle Simpson, relationship director at Santander Business Banking, said: “VOLZ Filters UK is right at the centre of the wider social and business drive for healthier working environments and clean air solutions and we are delighted to be supporting the Manchester team to expand its footprint in the UK. Santander Business Banking’s aim is to support growth-focused businesses to meet their aspirations through what we believe is the most competitive range of products and services in the SME sector.”

Marketplace lender provides £950,000 to Wirral property development

Assetz Capital has supported WGJ Properties with a £950,000 loan for the development of 14 two-bedroom apartments in New Brighton, on the Wirral.

The apartments include two bedrooms, a bathroom and reception area as well as an integrated kitchen. The properties also boast private parking with a Church, library and health centre all nearby. This project is WGJ’s second property development of this scale, and its first site on the Wirral.

The loan will be used for the construction of the entire facility which is based on Magazine Lane – Wallasey, New Brighton. The average price of one apartment is £120,000, with the build due for completion in February 2020. The deal was introduced to Assetz Capital by John McNamara, CEO at Focus Commercial.

Since establishing in 2013, Assetz Capital has lent over £900m to UK SMEs, funding projects such as commercial properties, housing developments, care homes and purpose-built student accommodation (PBSA). The marketplace lender funded new housing projects last year representing the equivalent of 1 in every 100 new homes built.

William Roscoe, managing director of WGJ Properties, said “Working with Assetz Capital and Focus Commercial has been an efficient process, aided by the speed of the payment process which really benefited the smooth running of the build. This is our second major development and we are proud to be increasing the availability of homes in the Wirral with this project.”

Mark Davidson, relationship director of Assetz Capital, said: “Funding the construction of this development has been an exciting process and one that we were keen to support. We felt that this site would not only benefit the area of New Brighton, but also support us on our mission to positively affect the UK housing market.”

John said: “Working with Mark at Assetz has been excellent. The lender drawdown and terms of lender due diligence were agreed within six weeks, meaning we achieved an incredibly quick turnaround. This shows the true value of an excellent working partnership between broker and lender, and Mark and his team have been fantastic.

Arbuthnot Commercial ABL supports EA-RS Fire Engineering’s acquisition of Circum with £2m facility

Arbuthnot Commercial ABL, the specialist asset based lending arm of Arbuthnot Latham, has completed a £2m asset based lending (ABL) transaction in support of the strategic acquisition of Circum Ltd, a fire protection services specialist, by EA-RS Fire Engineering Ltd. (“EA-RS”). The facility comprises a flexible confidential invoice discounting line and a term loan.

EA-RS, is a leading regional specialist in fire detection, alarm, gas suppression and electrical services. For over 20 years the business has provided support to the UK’s construction and facilities maintenance sectors and blue-chip corporate clients, whilst developing manufacturing partnerships which drive long term stability and maximum operability.

The acquisition has enabled EA-RS to become a certified provider of sprinklers; a product which they are often asked to deliver as part of a total fire safety solution.

Mark Wheeler, managing director of EA-RS Fire Engineering Ltd, said: “It was only when we discussed the acquisition with Arbuthnot Commercial ABL that we got traction on the deal. As a team they are phenomenal to work with, offering an entirely different experience to that of other providers we have worked with in the past. Their team sought an in depth understanding of our business and what we wanted to achieve, while ensuring we arrived at a pragmatic solution that worked well for both parties. This is very much the beginning for our business. We look forward to making further acquisitions as we further our geographic expansion and product offering.”

Cardiff-based S3 Advertising completes MBO with help from Caple

Alternative SME credit specialist Caple has supported S3 Advertising, a national full-service advertising agency, with an eight-year unsecured loan. This deal with Caple will enable the current S3 Advertising management team to complete a management buy-out and retain independence.

Following the MBO, S3 Advertising plans to pursue more national business by demonstrating its commitment to creativity and to delivering results to its clients. Managing director Mike Webb, business director Rebecca Campbell, HR and operations director Mel Matthews and finance director Louise Evans acquired the business from founder Matt Jones.

This unsecured loan has helped S3 Advertising solve the equity dilemma. Without this deal, the new owners would have had to consider giving up equity to fund growth.

Like many creative businesses, S3 Advertising found access to secured lending an issue because its business is based on intangible assets. It therefore lacked the tangible assets such as stock to put up as security to banks.

Sean Brophy, country manager, Caple, said: “S3 Advertising is a profitable, well-managed and successful business. However, because it lacked physical assets to use as collateral, traditional lenders were unable to offer financing. With our deal, the agency can implement its growth plans without having to give up equity and while retaining full control of the business.”

Mike Webb, managing director, S3 Advertising, said: “We have grown significantly since we started in 2010 and that’s down to our creative culture and disruptive approach. But finding the right funding partner was a challenge as many lenders were unable to flex to our specific needs.

“That’s where Caple came in. The team understood our business and recognised that we are a profitable and successful agency, despite not being asset-rich. This deal with Caple enables us to retain our independence, our culture and ability to implement ambitious growth plans.”

Cardiff-based S3 Advertising is a full-service advertising agency that works with major clients including Airbus, Deliveroo, NHS Wales, S4C and the University of South Wales. Now employing some 39 people, S3 Advertising champions bold ideas and seeks ambitious results.

Caple is the UK’s first firm to offer access to unsecured lending based on the future cash flows of the SME. It requires no collateral or personal guarantees as security. Loans originated through Caple also work alongside existing bank lending, meaning firms can have access to more funding than they would get from their bank alone.

Caple originates loans through a local partner network of accountancy and business advisory firms. Craig Blackmore, director at corporate finance firm Verde Corporate Finance advised S3 Advertising.

Craig Blackmore, director, Verde Corporate Finance, said: “The solution that Caple provided for the transaction was a great fit. S3 Advertising is an exciting business which has already risen to great heights, but the nature of the revenue streams provided challenges to the funding structure. Verde was delighted to be able to work with Caple to achieve the desired outcome and support S3 Advertising on its growth plan over the coming years.”

The loans Caple facilitates are part of BNP Paribas Asset Management’s SME Alternative Financing direct lending platform, which enables SMEs to access funding from institutional investors. BNP Paribas Asset Management aims to provide €1bn per year in funding to SMEs across Europe.