The Business
Amco Group was a Special Purpose Vehicle (“SPV”) formed to acquire three businesses headquartered in Barnsley, primarily focused on specialist engineering and civils projects both in the UK and abroad.
The group included the following distinct business units:
- Amalgamated Construction – a multi-disciplinary specialist engineering company operating in the rail, energy and engineering sectors serving a growing blue chip client base across both public and private sectors
- Amco Drilling – provider of exploratory boring services across West Africa
- Amco Developments – property development company
Amco Group grew its turnover to c£100 million and its operating profits three-fold to more than £10 million during the period of Endless ownership.
Despite the general downturn in construction activity from 2008, Amalgamated continued to see a strong demand for its specialist engineering services. In 2009 Amalgamated was awarded over £95m of new work, 90% of which came from existing clients and included over £60m of work under framework agreements. By the start of 2010 Amalgamated's order book stood at over £170 million with its tenders at record levels as a consequence of its focus on long term growth sector underpinned by regulatory expenditure.
In February 2010 Amco was ranked fourth in the Sunday Times Buyout Track 100 for its outstanding profit growth.
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The Transaction
Endless acquired the businesses from Yorkshire construction and engineering contractor Amco Corporation plc (now Billington Holdings plc). The acquisition package put forward by Endless provided an all encompassing solution to the vendor, which wanted to concentrate on its core operations, and facilitated a complex buyout of the group’s non-core subsidiaries.
Value Creation
Endless worked closely with management on numerous projects including:
- Growth strategy and new market opportunities;
- Working capital management; and
- Cost reduction program.
The Endless Difference
The Amco group of companies was seen as non-core by its parent company and an area of the business that contained a number of contingent liabilities and higher risk assets – for example a defined benefit pension scheme and a self insurance scheme. By working closely with management and undertaking our own focused due diligence we were able to understand the unrealised potential within the business and the true position of the perceived risks.
Exit
In February 2011, Amalgamated Construction was sold to Renew Holdings plc for consideration of £19.8 million plus £6.2 million deferred. Renew identified Amalgamated Construction as a strategic acquisition, to expand its presence in the specialist engineering sector and open new markets. Shortly thereafter Endless sold its stake in the remaining business to management in a £14 million deal. Darren Forshaw commented: "Our investment in Amco has proved to be one of the most successful we have ever made, delivering market-leading returns that we are extremely proud of. The sale of Amalgamated Construction to Renew last month provided the platform to conclude the sale of the other Amco businesses to the management team and I know that all parties are delighted with the outcome.”
Testimonials
"For a group that is rich in history, this is yet another exciting time for the businesses involved in the MBO. We have a very healthy forward order book and see the markets serviced by the group remaining buoyant for the foreseeable future, particularly in the rail and engineering sectors."
David Jackson, the new Group Managing Director of AMCO - Apr 2008
"It is fitting that a locally-based private equity house is helping to fund the next stage of growth for Amco after nearly 40 years of spearheading engineering excellence in Yorkshire. This is a very exciting opportunity for us all, happening at a time when the market for engineering and rail services is strong."
Ian Swire, Group Finance Director of AMCO - Apr 2008