20.03.2007

MBO at MSD

Maurice Johnson, funded by venture capital company NEL and Yorkshire Bank and advised by Tait Walker Corporate Finance, has completed a Management Buy Out of the crane hire division of MSD Darlington Ltd.

Johnson joined MSD 18 months ago as managing director in order to help turn the company round and was incentivised with a 50 percent share of the crane hire business. After securing two lucrative contracts with Amec in Hull and Scotland, Johnson convinced owner, Peter Stephens, to sell the entire business for an undisclosed sum.

MSD Darlington also includes a property and steel erection division, which will continue to trade. The crane hire business will now be transferred into MSD Lifting, retaining the company’s two depots in Darlington and Gateshead. The company owns and operates 20 cranes ranging in size from 15 to 200 tonnes and employs 35.

Johnson said “Initially when I commenced the management buyout process I was working with a company from Scotland but they were unable to source funding. However, it was very different once Tait Walker came on board. The team is very knowledgeable with an extensive network of contacts and because of this were able to arrange the necessary joint funding to complete the deal successfully”.

“I am confident that the business will grow successfully and expect to increase the present £3million turnover to £5million in three years. We are already in the process of looking at purchasing additional cranes in order to meet demand which will in turn create employment which is good news for the region.”

The company has said that it is adding two 50 tonners at £320,000 each and two 100 tonners at £600,000 each. Johnson also says that he is considering some bolt on acquisitions, most likely for next year.

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MSD has a mixed Demag fleet

Vertikal Comment

This is not the first MBO that Maurice Johnson has been involved with, he led the buyout of the Taylor crane group after it got into trouble, with JD Crane group, reportedly with backing from Roger Taylor.

JD crane group which also owned Taylor crane company which in turn owned Quigley crane hire, soon ran into trouble and was placed in administration. The business was eventually purchased by a new company funded by the Bank of Scotland - GBK crane hire, which has now settled down under Roger Quenby to become a solid operation.

Hopefully this Management Buy Out will have none of the unusual business practices that caused grief at Taylor crane group or JD crane group.

The UK crane hire market is going through a positive period and with crane deliveries limited to a pace below required replacement levels there is no reason why any hirer should not do well by just running a straightforward business.

It is also good to see funding being made available for crane hire buy outs. One hopes that this MBO will build confidence in the finance sector for more such acquisitions
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With the owners of many crane hire companies reaching retirement age, there will be demand for more such buy outs so MSD Lifting will be setting an example for the future.