Arbuthnot Commercial ABL backs MBO of MDS Civil Engineering with £4.5m facility
Arbuthnot Commercial Asset Based Lending has provided a £4.5m facility to support MDS Civil Engineering’s management team, Darren Chaston, Richard Pullen and Matthew Pratt, in acquiring the business from its founder.
The total funding package in support of the Management Buyout (MBO) includes a £2.5m receivables financing line, secured primarily on a borrowing base of uncertified applications, a £1.5m amortising plant & machinery loan and a £500k cashflow loan. Founder Roy Marfleet begins a phased exit as a result of the deal.
MDS is a specialist groundworks and civil engineering company which provides services to major blue-chip developers across Essex and East Anglia. The group operates predominantly in the housing sector and clients include Bellway, Redrow, Cala, Linden, Taylor Wimpey and Persimmon.
Since its inception in 2000, MDS has grown to become one of the region’s leading contractors. Operating from a purpose-built facility in Halstead, Essex, the firm employs approximately 150 people and carries out contracts ranging from £100k to £15 million.
Commenting on the transaction, Matthew Pratt, Finance Director of MDS Civil Engineering, said: “Prior to our initial meeting with Arbuthnot Commercial ABL, their team called us to request further information and demonstrated a good understanding of our sector and its specific working capital cycle. This level of expertise immediately put them in a strong position to secure the mandate. To have the involvement of key decision-makers at Arbuthnot at the first meeting demonstrated a real commitment to our business. They were personable, pragmatic and asked insightful questions about the business, enabling them to structure the right financial package for our needs.”
He continued: “MDS has grown its annual turnover from £15m to £25m in the past five years. We have a strong order book and any plans for further organic growth can be underpinned by Arbuthnot’s revolving receivables facility. We are very pleased to be working with Arbuthnot and are currently in the process of moving our transaction banking across to them as well.”
Andrew Rutherford, Commercial Director at Arbuthnot Commercial ABL, said: “MDS is a growing, well-established and profitable company with a strong client base, run by a very experienced management team. This transaction underlines the flexibility of asset-based lending in providing the capital to support the acquisition of a business by its management team as well as a dynamic supply of ongoing funding that will grow with the company’s sales. We look forward to developing a lasting relationship with the MDS team.”