Pothole vehicle manufacturer deal runs smoothly with UNW
Business advisers and accountants, UNW, has played a central role in Newcastle-based Reece Group taking control of pothole repair specialist Velocity.
Reece Group, which includes Pearson Engineering, took a 50% interest in Velocity last summer and has now acquired the remaining 50%. Pearson Engineering has been very successful in recent years and the Reece Group now has a strategy of diversification through acquisition.
Commenting on the deal, Steve Lant, a partner with UNW, said: “It was assumed after the initial 50% acquisition in 2011 that at some time in the future the Reece Group would acquire the balance of the business. So when Phil Kite was appointed as group FD and we discussed the group’s forward acquisition criteria, Velocity was highlighted as the first target.
“Velocity’s pothole repair vehicles are market leading and there is an opportunity for worldwide sales. However to fulfil Velocity’s potential it was clear that further investment would be needed as well as assistance in scaling up its manufacturing capacity and development of its overseas business. Reece Group has cash to invest to develop the right businesses, experience of manufacturing complex vehicles and, over the years, has built up significant overseas sales.”
Mr Lant continued: “This was an unusual transaction in many ways. The shares were initially not up for sale and our role was to open discussions with the other shareholder, create a win-win scenario and then see the transaction through to completion.
“Together with Phil Kite, we had lengthy discussions with Richard Jackson, the other 50% shareholder, about the future potential of the Velocity business and how this might be achieved. This led to the consensus that it was in everyone’s best interests for Reece Group to take full ownership but with Richard staying involved to provide the benefit of his extensive experience. Having reached this consensus, the next challenge was to reach agreement on terms.
“Rather than simply proposing a price and then negotiating, we explicitly acknowledged and discussed with all parties that for the deal to happen there had to be a win-win outcome. We explored with Richard what the components of the right package might look like for him and we shaped the deal to achieve this.”
Phil Kite added: “An unusual feature of the negotiations was that if the deal broke down we would still have to work with Richard going forward. However by investing a lot of time in assessing the business requirements and how they could be best met going forward, we had a good platform to agree a deal that worked for everyone.
“We are grateful to Richard for letting us take full ownership of Velocity and we look forward to continuing to work with him going forward.”
Iain Pritty of Dickinson Dees led the legal advice to Reece Group and Katherine Hay-Heddle of Ward Hadaway advised Richard Jackson.
This was posted in Bdaily's Members' News section by Lisa Kelly .