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Smith-Cooper-Deal-Dispatch-Issue-22 (2)

Date post: 19-Feb-2017
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DISPATCH Deal ISSUE 22 DEALS A collection of our latest transactions www.smithcooper.co.uk MEL MORRIS BECOMES SOLE OWNER OF DCFC Smith Cooper advise on the deal
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DEALSA collection of our latest transactions


MEL MORRIS BECOMES SOLE OWNER OF DCFCSmith Cooper advise on the deal

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Deal Dispatch | Issue 22


“It could be considered serendipitous or strategic (perhaps both) to be writing my first introduction to Deal Dispatch at such a buoyant time for M&A across the Midlands. Since establishing the Birmingham Corporate Finance practice I have observed deal volumes increase across the Midlands with the professional community expressing how busy it has become. This increase is driven by market factors, mainly the ongoing stability of the economy combined with the gradual easing of liquidity pressures – in short the banks are lending again, are keen to lend, and this is across all transaction sizes.

The consequence is that I can say with confidence that we are seeing improved transaction values as the increased available capital chases the deals and encourages more vendors to sell. This is further illustrated by mid-market private equity having to chase deals and be more creative in how it approaches a new investment. Not only is private equity competing on price but they are now being ‘fleet of foot’ on management terms and due diligence to make sure they are ahead of the competition. This behaviour is more akin to large private equity than mid-market but exemplifies a shift change in the market that I have never previously observed.

Fragility in the economy still remains as the spectre of China looms over the global market … as yet I am not worried! My view is deal activity over the next 12 months will be high and is likely to return to pre-2008 levels – representing a significant step change in activity over recent years. This is an exciting period to be a M&A professional and I am delighted to have joined Smith Cooper at this time – it was definitely strategic and perhaps fortune favours the brave.”




Derby County chairman Mel Morris becomes sole owner of club

Two packaging deals in the bag

Starbucks consultancy

Say “cheese” - orthodontic deal

Frank Key continue to build on expansion strategy

Social enterprise

Hilco acquires leading jewellery retailer

Contact us

Darren Hodson, Corporate Finance Partner









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Deal Dispatch | Issue 22


DERBY COUNTY CHAIRMAN MEL MORRIS BECOMES SOLE OWNER OF CLUBDerby County Football Club is now under the sole ownership of Chairman Mel Morris after he bought the club from North American Derby Partners LP for an undisclosed sum.

For the purchase of Derby County FC, Mel Morris turned to the advice of Smith Cooper and Corporate Lawyers, Geldards.

Life-long Derby fan Mel Morris, a local businessman recognised as one of the UK’s top serial Tech entrepreneurs, who bought a 22 percent stake in the Club in 2014 has now become the sole owner.

The acquisition of Derby County follows Morris’ recent investments in BriefYourMarket.com, Technology Merchant Bank and Restoration Partners Limited.

Andrew Delve, of Smith Cooper, who has acted for Mel Morris for over 20 years and acted on all of his recent investments and sales of Prevx and uDate commented: “Mel is a businessman of the highest calibre and his purchase of Derby County brings together his passion for both business and football, the result of which can only be a good thing for the Club, fans and businesses of Derby.

I have worked with Mel on various investments and acquisitions over the past 20 years, but this transaction has carried additional excitement due to both its local significance, my own affection for Derby County and Smith Cooper’s longstanding relationship and sponsorship of the Club.”

Debra Martin, corporate partner at Geldards, led the firm’s legal advice to Mr Morris on the takeover.

Morris added: “Whilst I firmly believe that the club’s ownership is very much a tertiary concern to most fans, I hope together we can help steer this club back into a sustainable place in the Premier League.

“I’d like to thank Smith Cooper and Geldards for the advice I received throughout the acquisition process. The expert advice, project management, and leadership they provided throughout this process was invaluable, allowing for the seamless transition in the running of the club.”

No changes are planned in the club’s executive team who will continue to be managed by Sam Rush as Chief Executive Officer. A new board of directors is set to be announced.

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Deal Dispatch | Issue 22


A longstanding client and a successful operator of a number of global food franchises recently approached Smith Cooper for advice on the Starbucks franchise business model.

Our extensive experience in a variety of Quick Service Restaurant Franchises, Costa Coffee and Starbucks itself made us the obvious choice to provide consultancy advice on Starbucks’ terms, conditions and business model, and its comparative standing with other major coffee brands’ offerings. The client was delighted with the output describing it as “exceptionally valuable, in-depth market intelligence, delivered with great professionalism”.

Starbucks is credited with leading the growth of the coffee house culture and accounts for around 25% of UK sales, behind Costa at around 48% and ahead of Nero. In the UK

it operate around 850 stores, turns over approximately £470m and employs 9,000 staff. For the last few years it has been restructuring its store portfolio by transferring up to half of its estate to independent franchisees.

Smith Cooper are leading advisers in the UK food and drink franchise market having completed over 50 assignments in the last decade or so.”

Smith Cooper’s Nottingham CF team wrapped up two deals in the same sector on consecutive July days. This brings the firms total to 12 deals so far this year, building on our record performance in 2014.

The July completions were in the flexible packaging sector, a sector in which the firm has deep experience and many long-standing connections. The first created a major new force in the Midlands, supplying innovative packing solutions for the multiple retail chains as well as other sectors, the second a strategic diversification to add new capabilities to an already substantial and fast-growing packaging group.

The packaging market as a whole has seen a real surge in M&A since mid-2014, with larger cross-border activity now filtering down to the UK

mid-market. Notable deals include ESNT International’s acquisition of Clondalkin for £286m and Amcor’s three deals in rapid succession since December 2014 for a total value of $56m.

Multiples also appear to be on the rise, now being commonly in the range 8-9 (EBITDA) for larger deals, positively impacting on mid-market pricing which is now above 6 times for attractive, strategic targets. Capital IQ, which records industry data, reports that multiples in 2014/15 to-date are now some 10-15% above pre-recessionary levels.

It’s not only trade buyers who have had their cheque books to hand: private equity house Sun Capital continues to support the growth-by-acquisition of Coveris (two deals in the mid-market since May 2015) and Strategic Value Partners paid $250m for their investment into Linpac.

There is clear, strong evidence to indicate renewed impetus to sector consolidation.

The resurgence of M&A activity has been in part facilitated by the availability of debt finance with a variety of banks backing transactions.The packaging sector is a major employer in the UK, with some 50,000 working in the industry, generating annual sales of some £5bn, so it is a strategically important to UK PLC.

Commenting on the trends Ed Wesson said: “It’s no surprise that the sector is now highly-active again, as the consolidators have been pretty quiet through the recession. But with improving financial performance, supported by greater funding liquidity the sector is once-again in consolidation mode. Our contacts tell us that our two completions are indicative of pent up demand, and



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Deal Dispatch | Issue 22


FRANK KEY CONTINUE TO BUILD ON EXPANSION STRATEGYSCCF worked with Frank Key Group Ltd on its recent acquisition of Banson Tool Hire Ltd and Charles Watson (Ironmongers) Ltd.

Frank Key was established in 1907 and is a privately owned, independent supplier of building and timber materials across Nottinghamshire and Derbyshire.

This latest acquisition further strengthens and complements Frank Key’s business in the Yorkshire area, and also opens up new geographical areas. Banson Tool Hire Ltd has ten branches across Yorkshire and Lancashire, whilst Charles Watson (Ironmongers) Ltd has depots in Halifax and Leeds as well as a large online presence.

James Norton, Group Managing Director of Frank Key said “This is a very exciting acquisition for the Frank Key Group, expanding our branch network further north into South & West Yorkshire and Lancashire. The purchase increases our number of tool hire depots to 14 and the addition of the specialist ironmongery branches, adds to our builders merchant network.”

Funding for the transaction was provided by Lloyds.

The Derby based Corporate Finance team at Smith Cooper have advised a newly incorporated Newco, set up by 2 West Midlands based brothers and orthodontist practitioners, on its multimillion pound acquisition of a multi-site orthodontics business.

The brothers behind the acquisition have over 20 years’ joint experience in the dental healthcare profession, with three established practices.

John Farnsworth and David Crump provided full project management

services, working with a team of lawyers from Gateley Plc, who provided legal advice on the deal - Corporate Partner, Chris Reed leading the team.

Financing for the deal was provided by Santander with the advisers working closely with Sally Beavan (Deputy Regional Director – Education & Healthcare). Anne Barker of Mediestates, the Derby-based leader in dental broking in the UK, initiated the transaction.

John Farnsworth commented: “The dentistry market has shown almost continuous growth over the last 20

years, with an uplift in the demand for orthodontic treatment and a 23% increase in adults looking to this type of dental provision.”


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Deal Dispatch | Issue 22



Newest member of the Smith Cooper Corporate Finance team, Darren Hodson, announced his first project at Smith Cooper - a strategic review on behalf of a new client to the firm.

The client, who operates in the public sector, is seeking to expand its earnings from commercial activities; the principle being that by generating commercial profits it can use those profits in the future to provide more effective public services, particularly at a time where government funding is being reduced. The client was assessing an investment in the Education and Healthcare markets and also seeking to transfer newly acquired commercial skills into the public sector, to help improve the quality of life in the community it serves. The concept is

to develop a forward thinking social enterprise – a concept that Darren is personally interested in and believes will bring its own commercial success. Philanthropy and social responsibility can be important commercial differentiators – as observed by Innocent drinks which donates 10% of its profits to charity.

Darren’s role was to provide a strategic review on a potential target which incorporated an assessment of capabilities, profitability and valuation. There is an ongoing role with the client and additional targets are also being assessed.

The client commented: “Darren provided an excellent service in assessing a target business in the Healthcare and Training sectors.

His insight into both sectors was invaluable. He was able to articulate the key commercial terms clearly and concisely. There were a number of challenges in the target business and Darren developed creative methods and solutions to address these issues. We are definitely going to use him in the future, and we are already in discussions on another project.”

It is good to see that even the perceived capitalist environment of M&A can be involved in ensuring social enterprise succeeds.

Upon reflection Darren said “I am proud to be providing ongoing support to my clients in this area and there should be more to announce in the future”.

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Deal Dispatch | Issue 22


HILCO ACQUIRES LEADING JEWELLERY RETAILERIndependent, specialist designer outlet jewellery chain Chapelle has been sold to investment firm and owner of the HMV entertainment retail group, Hilco Capital in a deal managed and initiated by Smith Cooper.

Chapelle Jewellery, which operates 24 stores in designer outlet villages and a successful ecommerce website, is the largest jewellery retailer specialising in selling end of season jewellery and watches at discounted prices.

Smith Cooper’s Corporate Finance team members John Farnsworth and David Crump acted as lead advisers to Paul and Margaret Mortimer, founders of Chapelle Jewellery. Legal advice was provided by Ran Oren and Martyn Brierley of Flint Bishop, whilst Natasha Smith, Partner at Smith Cooper provided tax advice.

John Farnsworth commented: “This transaction is a significant milestone for Chapelle Jewellery, which comes after a long and successful period of ownership. The sale to Hilco Capital and the opportunities it will generate will position the business for many more years of growth. We’re delighted that Paul and Margaret engaged us to assist them in the sale of their business.”

David Crump added “This transaction completed in in just over 5 weeks from agreeing heads of terms, which was a real achievement.”

Following the sale of the business, Paul and Margaret Mortimer will maintain operational control of Chapelle, which they have been building for the last 20 years.

Paul Mortimer commented: “Both

Margaret and I are proud to have been the owners of Chapelle Jewellery for the last twenty years.

I think I speak for both of us when I say that we’re thoroughly looking forward to working with the Hilco team to develop the business even further. Hilco have extensive experience that will allow for continued development and growth.

We also cannot under-state the regard which we have come to have for both the teams advising us throughout the sale process. Professional, supportive, high quality, aware, focussed – in fact there are so many superlatives I could use.”

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Deal Dispatch | Issue 22


For impartial, confidential, expert advice please make contact with a member of the team:

[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

Darren Hodson

David Nelson

David Crump Ed Wesson

Chris Taylor

James Bagley

John Farnsworth

A: St Helen’s House, King Street, Derby, DE1 3EE

T: 01332 374 419

A: 2 Lace Market Square, Nottingham, NG1 1PB

T: 0115 945 4300



A: 158 Edmund Street, Birmingham, B3 2HB

T: 0121 236 6789

[email protected]

Andrew Delve

[email protected]