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Industrialists.
I coin the phrase 'bread-and-butter' alot. It means simplicity. Businesses that are straight-forward and practical. Businesses which are easy to understand and demonstrate the material effect of it's activities.
Technology is deflationary: meaning it makes things cheaper, quicker, it increases output and quality (the inverse of inflationary). This broad and far-reaching term has applied to traction engines in place of horses and Archimedes' screw. Now it seems to have become synonymous with computing. The barrier to entry in this realm becomes continually lower. No man or woman has a monopoly on ideas; meaning ‘pure’ tech-businesses will become more-and-more volatile, less noticeable, more saturated, with diminishing, shortened reward for increasing risk. Avmoric’s raison d’etre is bridging the gaps between bread-and-butter companies and technology in all respects; the latter firmly in service to the former.
Simplicity also means long-term for me. I like overlooked businesses. Seemingly unglamourous, bread-and-butter operations hide impressive P&Ls. The slicker the website, the more boujie the reception room, usually the higher capital intensity and more active management approach; which typically is unattractive to us. That's a bit tongue-and-cheek but ultimately clear, practical opportunities in simple & time-tested business models with actionable targets and careful metrics is our guiding credo.
Finlay Sam Ward-Leggat. Managing Director. 13/X/2024.
Nigel Goddard
>former corporate banker
>board member
>forensic financial analysis
Finlay Sam Ward-Leggat
>MD of Avmoric
>deal lead
>Sylinco CEO, Corpus CEO
Murray Armes
>Chartered Architect
>Chartered Arbitrator
>expert industry advisor
William English, CBE
>CDir; CMI; MSc; applying
PhD student
>Governance & Strategy
>Business owner,
Adviser & INED
Initial approach.
Direct and owner-to-owner works best. It is usual however, that our initial contact is always out of the blue!
Information is requested at the front-end of a process to see under the bonnet. Only with full financial disclosure and a well-rounded understanding of the firm and it's situation can Avmoric proceed to a formal offer. The quicker the process at the front-end, covering as much as possible, asking many questions, aligning expectations with reality, the less barriers there will be in the closing stages and the more likely a deal actually transpires. The deal is usually made or dead before any legals.
It is also always important to understand the reason for selling. Sometimes vendors will want a free valuation with no intention of actually proceeding. With understanding of motivations, we can put time and resources into a deal comfortably; we should never have to compensate for the other sides lack of enthusiasm. Takes two to tango.
We will also want to set-up a face-to-face quickly too. We seek clarity from meetings. Meetings not only set the precedent for all the subsequent meetings and how the deal will likely go, but the relationship after a deal is done. To this end, they are informative and important to us.
Making & Funding Offers.
With the appropriate level of info, we will put out a headline figure.
We do not set arbitrary metrics for our offers. Calculations like EBIT/EBITDA are helpful benchmarks, but ultimately a two-dimensional approach on its own. Many blue-chip companies have trouble with acquisition projects because rules and protocols in place impede their ability to meet in the middle, and re-position themselves effectively as the deal evolves. The terms surrounding a deal are always just as critical as the number itself.
We look at reasons for buying. One great piece of simple advice is 'what are we actually buying?' Without goodwill, assets slip into becoming depreciating liabilities. Are we buying contracts, or unrealized goodwill? Are the assets valuable on their own merit, that can be easily liquidated? Is it a distress case, or are the owners looking to become ex-pats, or are there obvious new routes for the business to take? Are bad debts or personal debts attached to the business? Is there litigation at play? What does a quality of earnings report show? Not always so simple.
Our offers are usually share-purchases; smaller asset-purchases are usually dealt with on subsidiary-level by management boards. We also separate acquisitions to safeguard them and Avmoric pertains to our M&A activity only. We are independent and not affiliated with private equity; we use leveraged buy-outs.
Numbers are essentially a stress-test for a deal, but to find real-terms risks, you need to look at the situation practically. Producing offers can become quite complicated and extravagant; but there is no magic money. It all has to be paid for. Owners can sometimes be delusional to put it bluntly (although not often) but usually they understand that there is a point where a company cannot tolerate a certain level of debt. Deals can become second-rate when trying to be too scientific; going with your gut is fine so long as it is not contradicted, but supported by key financials and with full-disclosure. Valuations are rather subjective but that can fall into a box of objectives and with clear reasoning to back-up our decisions.
We take our time to conduct a forensic sensitivity analysis - but we are not shy making a decision.
Completion; Day-1.
Partnerships are standard. Meaning Avmoric wants to work with the people we do deals with; often it's a covenant from banks/financiers. This is what often bridges the gap between a frank and sometimes tentative negotiation and forming long-term, cordial and conciliant relationships after a deal is struck. Ultimately we want to work with companies and add-value to make our participation worthwhile. How? What could this look like?
- Targets are key. Joining a company with fresh-eyes allows us to quickly identify new routes for the business.
- What gets measured, gets managed.
- People. Folk pay lip service to 'people first'; often this is bullshit. Without recruitment solutions, industry will decline and ultimately die inside-out; this is an example where being spread industry-wide can be advantageous. Broadening employment opportunities - people want to feel they have options; especially as someone develops as a professional, opportunities should open-up to them.
- First 100 day roadmap: working with owner/managers in advanced stages of a deal on simple changes and system updates, taking away complexity and overheads, implementing helpful synergies.
- Not to touch anything unless certain of improvement.
- Cash-reserves. We are very comfortable in not receiving dividends in the interim for the sake in long-term profitability. There are plenty of mercenaries who will carve-out cash, strip-and-burn, buy-and-flip. The whole philosophy of bread-and-butter is long-term investment.
- Preserving autonomy allows for effective decision-making.
- Industry-wide: Good businesses all have fundamental principles and similarities. You'll find we have numerous active targets in several different industrial sectors; but often they compliment and feed into each other.
- Non-disclosure. We protect new acquisitions by keeping quiet. It's business as usual. Changes are devised as a deal progresses to final stages in concert with the owner as mentioned.
- We have sophisticated systems that allow businesses we buy to remain lean and nimble, but afforded all the advantages of a multi-national conglomerate. But the business will keep it's heart and soul. We are respectful about brands and company culture.
Most businesses never sell.
The Firm.
Our firm is limber with an outstanding track-record. Avmoric is independent and well-connected, with a variety of ongoing affairs; organic growth, business development, acquisition projects, start-ups and joint-ventures. It's the central nervous system of our group.
Avmoric is considered and reflective, but does not stand-still. It's taken years to build up our team, who reflect our values and priorities. They are trusted and respected, hence we do not delegate negotiations to external advisors. Discussions are always director-led, relationship-led - everything in-house.
Avmoric is neither old nor young. Tradition meets new-thinking, experience with new horizons, and continual pivoting &
exploration - never stasis. Action is deliberate and swift; but thought slow and dispassionate. We know what we want, what works best for us and what falls within scope.
Contact~
5 South Charlotte Street, Edinburgh. EH2 4AN.