In an alliance forged to deliver growth in new and existing markets, global investment firm Battery Ventures – a company focused on technology and innovation worldwide – recently acquired UK-based Mecmesin Limited, a specialist in the design and manufacture of force and torque measurement and testing equipment for quality control.
On completion of the deal in October 2018, Mecmesin joined Battery’s Physical Property Testing (PPT) group, a portfolio of test-and-measurement companies, which includes James Heal, a key player in the design, development and manufacture of precision testing solutions and support services within the global textile industry.
Established for over 40 years, the Mecmesin brand stands for quality, reliability and peak performance. Its tensile testing, compression testing and torque testing machines are used in R&D and quality control laboratories and manufacturing plants across the globe to assess and ensure the quality of raw materials, components and finished products.
In partnership with its acquirer, Mecmesin will continue to provide testing solutions for quality control through the development of their new Vector hardware, including up-to-the-minute electronic vehicle networks and engine control units (ECUs), as well as via optimised software technology platforms.
Overall, the vision of the PPT group is to create a multi-branded global platform that offers testing solutions across all manner of standards, materials and applications. Furthermore, with the availability of Battery’s significant resources, investment in new product development and complementary acquisitions will drive further growth.
Lead adviser to the shareholders of Mecmesin during the acquisition was audit, tax and advisory firm Crowe U.K. LLP, which secured 10 offers for Mecmesin from across the globe – both strategic and financial buyers – many of whom were as excited about the extent of the business’ product development as the vendors themselves.
“The price we achieved for Mecmesin was reflective of this excitement,” says Matteo Timpani, a partner at Crowe. “The competitive tension we were able to develop in the process saw the eventual sales price deliver a multiple close to double that which would, by some, be considered market ‘norm’ in the sector.”
Essentially, the acquisition of Mecmesin adds significant scale and expertise to Battery’s UK foothold in the testing instrument space. “The two businesses complement each other well and coming together should genuinely drive opportunity for both,” believes Mr Timpani. “Battery has a rich history in the sector and was able to see the strategic value of bringing Mecmesin into the group. Leveraging Mecmesin’s new product developments across its wider portfolio will hopefully be of significant benefit to the Battery companies and speaks to why Battery was so keen to secure this deal.”
Equally enthused is Bates Wells Braithwaite, legal advisers to the shareholders of Mecmesin. “The deal brings Mecmesin into the portfolio of Battery Ventures companies, which already has a number of members in like-minded sectors and industries”, says Mark Tasker, a partner at Bates Wells. “Battery will be able to use these relationships to further grow, gain access to larger markets and grow operations both in territories where it currently has a footprint and in new markets.
“Our M&A team acted for the shareholders of Mecmesin, and was directly engaged by the company’s founder, Robert Oakley,” continues Mr Tasker. “The way in which the deal was structured provided a clean exit for Robert Oakley who had grown the company from a single entity start-up to its current group comprising subsidiaries in the UK, the US, Europe and across Asia.”
While the acquisition of Mecmesin by Battery – an experienced and knowledgeable investor in the test and measurement market – has ultimately resulted in a highly effective test-and-measurement platform, the acquiring process was not without its challenges.
“Mecmesin is a collection of nine subsidiaries, many in far-flung jurisdictions in Asia, so collating and producing the necessary legal information to provide comfort to an acquirer was challenging,” admits Mr Timpani. “However, the legal teams on both sides of the deal were exceptional, and fundamental, in getting the deal over the line. Battery took a very pragmatic approach to due diligence and it is their focused approach, and willingness to take a commercial view in several instances, which contributed significantly to us getting this deal over the line.
“In this business, we often sit across the table from opposite advisers and lock horns, with point scoring and bravado often taking precedent over pragmatism and the client’s best interest,” he continues. “In this deal, it was a genuine pleasure to work with Battery and their suite of advisers.”
For Mr Tasker, key to the success of the transaction is Bates Wells’ ability to work on complex and time critical international M&A transactions, as well as its strength and expertise in the technology sector. “This deal further emphasises our footprint and experience in the non-destructive materials testing sector,” he says. “An additional highlight was working with the excellent corporate finance team at Crowe who, in our experience, went above any beyond their role in the transaction – further cementing our strong relationship”
Further testifying to the relatively harmonious nature of the acquisition, Mecmesin’s existing board of directors continue to lead the company under its new ownership. Moreover, as part of the deal, James Heal chairman and director Don Templeman joined Mecmesin as chairman and director.
“While negotiations were often tough, they were always fair and the end result was a transaction which delivered a market topping valuation multiple for the vendors and a highly strategic bolt-on for Battery,” says Mr Timpani. “Mecmesin will benefit from the guidance of a truly global operation in its sector and, crucially, Battery should allow the business to accelerate its growth plans into the US market.”
Ultimately, Battery’s acquisition of Mecmesin showcases not only the drive of the firm’s themselves, but also the skill and expertise of the transaction’s advisers. “We were able to use our experience to address problems before they arose,” concludes Mr Tasker. “Where issues were highlighted, everyone adopted a pragmatic approach to ensure positive, practical and workable solutions were achieved.”
Keywords: Industrial Technology