The business
Hickton Consultants (“Hickton”) was a UK market leading provider of Clerks of Works to the construction sector when its founder sought to market the business for sale. As a consistently profitable business, in a niche market, which had been run by a high-quality, non-shareholding Managing Director for a number of years, we felt it was an excellent opportunity for our investor clients.
The Transaction
A deal was negotiated with the vendor’s advisors and equity terms agreed with the Managing Director, with the transaction completed in early 2016. Since then, we have identified several acquisition opportunities for the company in related / complementary fields, with three acquisitions completed between May 2017 and March 2021. The largest of these was the purchase of Cook Brown Building Control in 2020, which also involved the founders of that business joining the enlarged Hickton Group Board as significant shareholders in the combined entity. The Board was also strengthened by the introduction of a high-quality Finance Director, who has also become a significant investor in the Group. Acquisitions have largely been funded by Hickton’s cash reserves, along with external bank debt.
The outcome
Throughout the hold period, investors have received an attractive running yield on their largely loan-note based investment, whilst the opportunity was also taken to offer investors the opportunity of a cash exit (or re-investment) at the time of the Cook Brown acquisition. The minority who exercised the exit opportunity realised a total cash return of circa 3.5 times their initial investment in just over 4 years. The Group continues to prosper, with profitability having risen over 300% since the original investment.
