A long term approach to our investments

Meridian Equity was first introduced to Chris Stewart in 2010. He was then a consultant to IWJS which at the time was a small waste-water network services provider operating out of two sites in the east of England. Its EBITDA that year was approximately £700,000.

The business was deemed non-core by its owner Adler and Allan Limited and Chris, along with the incumbent management team, were given the opportunity to participate in an auction to buy it. At that first meeting the management team impressed us with a thorough, sensible and well-considered forecast as to how they would grow the business into a leading independent player with national coverage. Given their obvious potential, Meridian Equity was delighted to back the BIMBO team to complete the purchase and also to fund their ambitious growth plans. The management subsequently won the auction and finalised the purchase in the spring of 2010.

In the nine subsequent years, the team has more than delivered on its plan. By 2019, as a result of a combination of our funding and the management team’s expertise, the business made two bolt-on acquisitions, now operates out of six sites around the UK and provides a broad range of services into its market. It is also generating annual profits in excess of £5.5 million of EBITDA.

Whilst we had no intention of selling the business, we received an unsolicited approach for it from M Group Services Limited, the national infrastructure maintenance business. Having decided to sell, the deal was completed in March 2019. The terms of the deal were not disclosed. However, we would like to thank the team, led by Chris Stewart and his Finance Director Dale Storrer, for their outstanding contribution in creating shareholder value and wish them well in their future careers with in M Group.

Meridian Equity financed an MBO of Shaws in April 2009 from the Administrator. This niche manufacturing business was one of only a handful worldwide that provided maintenance/repair services to terracotta buildings, as well as manufacturing handcrafted fireclay sinks. It was part of the Irish group Qualceram Group Plc, which specialised in the supply of bathroom furniture. Shaws became distressed simply because its group was distressed.

Having been impressed with the incumbent CEO of Shaws and recognising the long-term prospects for the business, Meridian Equity provided funds in a very short time to acquire the business and fund the business’s working capital requirements. We partnered with the CEO and acquired the business from administrator.

In 2017, having tripled the profits in the 8 years under our ownership, we successfully sold the business to Fortune Brands Inc., the NYSE-listed home and security products business. The management team, led by CEO David Dare, were outstanding in their ability to manage and patiently grow the business thereby not placing undue risk into it and thus our capital.

This investment also provides further evidence of our ability to take a “long term” view of our investments. Having no external funders to place any exit pressure on us, we slowly grew the business, purposefully taking the time to make it attractive to trade buyers by creating a solid platform upon which they could leverage.

The business was acquired from its founding owner managers in May 2006. The company specialised in providing unique photography at theme parks and other attractions. It had a market leading position in the UK and Europe, and had a small presence in the US and Asia.

Prior to purchasing the company we identified several changes that could be made to the business that would increase profits and shareholder value. This included (but was not limited to) the improvement of the service offering to customers, proper control of overseas subsidiaries and enhancement of the sales function. We recognised that the new owners of the business had a different risk profile from the original founders, but we also had the experience, contacts and vision in addition to partnering up with like-minded, ambitious management that meant we were able to execute a number of changes that we felt were necessary to improve the company’s profits.

Under Meridian Equity’s ownership profitability grew substantially and the quality of the company’s earnings improved through securing the longest contract in the business history with its biggest customer.

The business was sold to a financial investor in July 2008, generating a very significant return for Meridian Equity and its investors. The senior management of Picsolve also generated very significant gains from the sale, reflecting their contribution to the success of the investment

Axis Elevators is a London-headquartered lift installation and maintenance business. In 2005 Meridian Equity backed the incumbent management team to buy the business from its shareholders BancBoston Capital.

Over a period of 10 years, Meridian worked closely with management to improve shareholder value. This was achieved through appropriate investing in the business, namely recruiting the right people, professionalising the operations, and also successfully integrating a bolt-on acquisition made in 2008 which gave the enlarged business a far greater geographical presence.

In 2015, having more than tripled Axis’ profits, the management team expressed a desire to realise their investment, having felt that they had taken the business as far as they could. The entire business was sold to Otis, part of the NYSE-quoted group, United Technologies Corporation.

The disposal enabled both Meridian Equity and the management to generate significant gains and we wish to thank the entire management team for their consistently outstanding performance during the time of our involvement.

Tersus is a highly niche property maintenance business specialising exclusively in asbestos management.

In 2005, Meridian Equity acquired the business from 2 brothers, one of whom wished to sell his entire stake and live overseas whilst the other saw the opportunity to de-risk his investment by selling some of his shares but wanted to continue to run the business, with us as fellow shareholders, and to participate in its ongoing growth.

Upon acquisition in 2005, Tersus was a single-site business. However, under our stewardship, Tersus grew to 5 sites and became one of the largest independent asbestos consultancies in the UK.

During this time, we expanded and improved its service offering, broadened its customer base and de-risked the business by exposing it to different markets. We also invested heavily in the company’s infrastructure thereby streamlining its operations, and also merged the business with one of its main competitors.

With our guidance, the highly-capable management team achieved their goal of making a huge success of this business, eventually selling it, in October 2015, to Laboratoires Protec S.A., the French-listed environmental services group.

In April 2016, Meridian acquired Valldata Services Limited and immediately thereafter, acquired and merged into it, Rapidata Limited.  Both businesses provided various out-sourcing services to the charity sector, for example inbound call-handling, donation management, and operational assistance for clients’ campaigns.

For separate reasons both transactions needed to be completed within four weeks of us being introduced to them. Working closely with management prior to completion, we were able to differentiate ourselves from all other potential funders by successfully navigating two complex simultaneous due diligence processes – and quickly. We completed both deals within the short timeframe demanded by both vendors, and both without the need for any external debt funding.

As part of our due diligence, management presented to us a clear case as to where we should focus our efforts in the enlarged group. With our support, they ably executed the plan, doubling group profits in the two years under their stewardship. Furthermore, they positioned the business such that we were able to extract strategic value on disposal which occurred in 2018 in two separate deals to trade buyers, namely The Woods Group and The Access Group.

As part of the disposals, senior management shared in the significant gains generated, reflecting their strategic and operational abilities that they consistently demonstrated throughout the investment.