Deal summary

McNicholas is a leading provider of engineering services to the UK’s utility sectors, including telecommunications, gas, power, water, renewable energy and rail. Working across the UK, McNicholas employs over 1,800 people and has a client base which includes Virgin Media, Network Rail and UK Power Networks.

McNicholas had been in family ownership for nearly 70 years and with an ageing shareholder base, the key objectives were to maximise value and find a buyer who would support the growth of the business under the continuing leadership of the CEO.

We were introduced to the business through the company’s Chairman and worked closely with the management team over a 12-month period to prepare the business for sale.

What difference did we make?

We initially performed a comprehensive strategic options review to identify the most likely buyers and advise on optimum timing to market the business. The review also included an appraisal of the key value drivers to enable the most effective presentation of the business. We recommended several areas for the business to focus on in the short term and developed a robust business plan with management to present McNicholas in the best possible light.

The plan was underpinned by long-term Tier 1 framework contracts, with an attractive, attributable revenue pipeline of around £1bn. We also performed detailed analysis of possible synergies for potential buyers whilst managing various streams of vendor financial due diligence to maintain control of the process and manage competitive tension.

After testing buyer appetite and approach to valuation, we identified Kier plc (Kier) as an optimum buyer based on deliverability, their highly complementary service proposition and client base, the approach taken to valuing synergies and other items impacting equity value. We engaged with Kier and were able to present sustainable earnings and a defensible business plan, supported by third-party due diligence.

We negotiated detailed heads of terms which secured favourable treatment for the shareholders in a number of areas, including treatment of working capital and the company’s defined benefit pension scheme. Kier’s offer was accepted after initial price negotiation and the price was maintained between initial offer and completion.

The deal enables the family shareholders to realise value whilst providing a supportive platform for McNicholas’ continued success under Kier’s ownership.

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What our client said
"We are excited by the opportunities that joining a larger group gives our teams to expand and grow. We are very grateful to Catalyst for their strategic advice and support throughout this process." Barry McNicholas
Chief executive, McNicholas