The deal saw Synseal’s management, led by Chief Executive David Leng, take a significant equity stake in the business.
Private equity firm HIG also put a substantial amount of its own money into the deal, along with a debt package led by Yorkshire Bank.
At the time David Leng said: “We have maintained our competitive advantage over the past few years and look forward to maximising the growth opportunities that the market will present going forward. This is an exciting time for our business, staff and existing customers.”
Andrew Steel from HIG said: “Synseal has been a stand-out performer in a difficult market during the past two years. We are delighted to back the current management team plans for expansion.”
Synseal’s management buy-out stands proud for one notable reason: the deal was hatched before the private investors were contacted.
Business leaders seeking this sort of opportunity typically attach themselves to a private equity house before the deal is done with the hope of securing a management buy-in. In the case of Synseal, David Leng convinced the then chairman of Synseal, Gary Dutton, that it was possible to make Synseal more attractive to buyers.
“It was an open secret that Gary was trying to sell Synseal, but it was following the credit crunch of 2008,” David said, “and he wasn’t having much success.
“I presented a business plan to Gary that was a combination of organic growth and acquisition. I also told him that the business needed a certain amount of restructuring.”
At first, Leng said, Dutton thought the idea ridiculous — Synseal was one of the most profitable businesses in its sector — but the increased profitability generated by a programme of efficiencies, together with David Leng at the helm, made it attractive to private equity investors.
The MBO, backed by HIG Capital, an international private investor, went through in February 2010, and Leng became Chief Executive.
The deal attracted a significant amount of attention in the world of finance, with the details discussed at length in magazines and Sunday supplements.
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