Fabrikat deal lights the way
The two owners of leading steel fabrications business, Fabrikat, the UK’s leading independent designer and fabricator of lighting columns and guardrails, recently sold the business to a management buy-out (MBO) team in a deal funded by Duke Royalty Limited.
Sutton-in-Ashfield based Fabrikat (Nottingham) Limited was formed in 1985 and has grown to become one of a handful of UK providers of street lighting columns, with an estimated 20% UK market share, and to command a near 50% UK market share of BS-approved guardrails. In recent years it successfully diversified to win around 50% of the UK’s market in decorative lighting poles and architectural metalwork for cityscapes and leisure-oriented settings and to provide local authorities with asset-management services (lighting-pole testing, geo-mapping and monitoring services).
Having a turnover with local authorities, wholesalers, OEMs and developers in excess of £12m per annum, the business has been skilfully and decisively managed to deliver steadily increasing, robust profitability, even through the global pandemic. The business employs around 80 people across its design, manufacturing and marketing divisions and is well-known internationally in its key product segments, as well as being a familiar landmark in the North Nottinghamshire area.
The sellers, Martin Hopkins and Matthew Wass, have each worked in the business for around 25 years, taking ownership in 2013 through a secondary and subsequent tertiary management buy-out. The just-completed deal sees the two, who will retain roles as consultants, transfer ownership to a senior management team funded by Duke Royalty, the innovative royalty financier that has provided a £6.2m royalty financing package and who has also taken a 30% equity interest.
In the years leading to this transaction, trusted incumbent solicitor David Kaplan of Nelsons, who had been involved in the two previous transactions involving Fabrikat, advised the sellers to take corporate finance advice, introducing John Farnsworth and David Crump of Smith Cooper Corporate Finance (SCCF) who provided pre-sale preparation advice and project-managed the deal from inception to completion, whilst Gary Devonshire advised on the tax aspects. The sellers received legal advice from Nelson’s partner David Kaplan and associate Liz Mills who provided corporate advice, as well as Mary Gharmount and Sarah Burnswho provided property advice at Nelsons.
Commenting on behalf of the sellers, Martin Hopkins said “Working with Smith Cooper since 2019 and Nelsons since 2011, brought into focus the long-term objective of our exit from the business. Smith Cooper’s advice carefully considered all available options, and timing of the deal was crucial. The advisors were supportive at every stage of the process, making the transaction smooth and straightforward”.
David Kaplan of Nelsons commented “I have worked closely with the management at Fabrikat since 2011 when it was still controlled by Graphite Capital, following an MBO in 1999. I advised the then management team, of which Matthew and Martin had become part of, on taking control of the company and then, a few years later, advised Matthew and Martin when they bought out the other members of the management team.
I have found it very rewarding watching the evolution of the business and to be a key advisor throughout. It has been a pleasure working with Matthew and Martin and the team at Smith Cooper over the last few years in order to fulfil Matthew and Martin’s plans to sell the company to the senior management team. I am confident that under the control of the new management team and Duke Royalty, the company will continue to be innovative and successful and I wish them all the best for the future.”
John Farnsworth, partner at SCCF, paid tribute to the sellers saying “Martin and Matt recognised from the early days that the key to developing the business lay in setting a strong strategic plan and empowering the talented senior management team; few owners are able to get the balance of control and devolved responsibility right, but in this case, it has produced an extremely strong business and the talented management team that is now taking ownership.”
The buy-out team, with a 70% equity stake, comprises the financial director Paul Allen, general manager Mick Scott and technical manager Melvin Batty who, together, have clocked-up over 70 years with Fabrikat.
They plan to further develop the business in its traditional and new markets.
The management team were advised by corporate finance partner Martyn Brierley of Flint Bishop, who commented “It was a pleasure to be introduced to, and to advise, the management team on this successful buy-out. The team’s wealth of experience with Fabrikat, alongside Duke’s investment, places the business in a strong position for onward growth, with the continued support to be provided by the sellers”.
SCCF director, David Crump, added “This is the second deal SCCF has structured which involves the innovative royalty-style funding offered by Duke; in the right circumstances – where there’s a good business and a strong management team – this can be the optimal solution for all parties. Certainly, in this case, the Duke proposal emerged as the best deal for the sellers and the management team alike”.