DEALMAKING teams from four North East professional firms successfully advised on a management buy-in, which has seen one of the region's leading business executives acquire an established Tyneside company.
Former ContiTech Beattie managing director Andrew Esson is now the majority shareholder in Quick Hydraulics, which was a family firm based in North Shields. Originally set up by Ron Quick in 1977 as a distributor of hydraulic components, it expanded its work to include service and project skills after Ron’s son Peter took the lead role in 1995.
Late last year Peter decided it was time to sell and sought help from the Newcastle office of BTG Corporate Finance.
Chris Appleby, partner at BTG, said: “A competitive situation developed with two companies from outside the region interested in buying the business too.
“But the feeling was that Andrew was the right person. The main assets in the business are its people and it was felt Andrew’s track record at ContiTech meant he would be the best to take it forward.
“We had known Ron and Peter for almost 10 years and the business was performing well in a niche market.
“Last year Peter decided he wanted to sell. Many people had put such decisions on hold since the market crash in October 2008, believing it was not a good time to get the right value.”
Chris McCourt, assistant director at BTG, said: “Andrew Esson emerged as a potential buyer almost immediately.
“We had already established a relationship with Andrew and he had a high profile at the time following his success at the business executive of the year awards.”
BTG looked at the possibility of a trade buyer, but concluded Quick is too small a company in a very niche sector, for trade buyers who are generally looking for £10m-plus deals.
McCourt said: “The costs of doing a £1m deal are almost the same as those for a £100m deal. We spoke to some private equity buyers in the sector but the one that was really interested was in the process of completing two transactions and that ruled it out. So that left us with a management buy in.”
Appleby added: “This type of deal has been out of the picture for some time. The last time I had handled one was back in 2004.
“Many fail because the buyer does not have the depth of background knowledge on the business and there is an uncertain management dynamic with new senior people coming into a business. But a lot of those obstacles were overcome with the strength of Andrew’s CV.”
Last year, Esson became the North East Business Executive of the Year for Tyneside and Northumberland – a competition which is run by The Journal and our sister paper the Evening Gazette in Middlesbrough.
Newcastle law firm Sintons advised the vendors, with lawyers from Watson Burton and Gosforth-based Tait Walker acting for Esson.
Esson said Quick, with 14 staff and annual revenues of around £3m, ticks all the boxes. He says: “It is a specialist engineering business, and a profitable cash-generating company that could benefit from some of the things I’d learned as part of a large company.”
