Post MBO Strategy
Servelec Controls were the subject of an MBO and there were a number of financiers offering to fund it. The business traditionally focused on the design and construction of automated control systems for large industrial plants. Recently they had found more business helping companies with their on-shore control rooms and real-time data. Was there a way to unlock value potential?
The initial engagement was by the funder who wanted to perform commercial and technical due diligence. Servelec Controls, the target, was a strong, cash generative business that held a number of contracts to design, install and service control systems for industrial plant critical to operations in the oil and gas, nuclear and electricity generation sectors. Their customers thought highly of them and the business was robust, producing steady cashflows at reasonable margins in a market that was reluctant to change supplier.
My experience in the oil and gas sector led me to believe that businesses they were selling to were changing. Their customers were becoming more digital with a desire to make more use of the data generated by their plants. My interviews of their customers confirmed this view.
I helped the funders and management team to re-frame their proprietary software components and to help them see another way of interpreting the demand surfacing among customers. This led us to conclude that there was an emerging buying influence in their market in addition to the normal engineering procurement cycle. Large companies were beginning to rely on Servelec systems to deliver data direct to the on-shore operations centres and as the basis of management decisions. This led the funder to be able to consider the upper limits of their valuation range in light of the growth opportunity.
After the transaction completed I helped the management team to identify the software opportunities that lay within their existing work and helped them to create a plan for commercialisation and market engagement.