Bucking the trend of British businesses being acquired by overseas competitors, in April 2019, UK-based TSL Professional Products Ltd acquired US firm DNF Controls – an icing on the cake transaction for the remarkable turnaround success story that is TSL.
A leading designer and manufacturer of audio, power and control broadcast workflow solutions, TSL’s acquisition of DNF – designer and manufacturer of a wide range of human-to-machine and machine-to-machine solutions – provides the small-to-medium enterprise (SME) with the opportunity to expand its North American presence, its largest single market across all product ranges.
While the deal to acquire DNF (which is registered under the name Universal Control Solutions Corporation) represents a considerable UK SME manufacturing and export success story, the transaction followed a tumultuous period for the wider TSL Group.
In a journey which encapsulates virtually every stage of the business lifecycle, after 27 years of solid growth under founder-management, in 2011 TSL Professional Products Ltd was spun out from the original professional services company. This spin-off manufactured innovative new products for the TSL Group’s broadcast customers’ projects. However, after experiencing year-on-year growth, the Group encountered cash flow problems and had to be restructured and turned around.
Ultimately, while the original services company was damaged beyond repair by the impact of Carillion’s collapse, among other things, and entered formal insolvency, the products company was successfully stabilised and turned around, recording record quarterly results and outperforming competitors despite the broadcast industry stagnating as a whole. This growth has continued with the deal to acquire DNF.
Supporting TSL throughout the turnaround and acquisition process – with liquidity management, turnaround management, restructuring, fund-raising, due diligence and deal structuring, completion and integration – was Matthew Quade, managing director at BM&T. “TSL Products has invested in focused R&D around ground-breaking new product lines, allowing it to steal a march on competitors and capture market share,” he says. “The firm is a UK SME that has recognised the need to expand and has not been scared to invest even during uncertain times.”
With TSL led by a well-balanced and entrepreneurial management team that has been prepared to seek expert assistance, Mr Quade is confident that the transaction will provide TSL with a raft of benefits. “TSL has a global sales reach which will open up new markets to the DNF product line, which has traditionally been North American market-focused. DNF, in turn, provides a physical US base for TSL to expand its growing North American business and extend the customer support coverage capabilities.
“The two companies have differing technical strengths in both hardware and software development, which working together will provide powerful and creative solutions for customers in the future,” he continues. “In addition, there will be synergies in back office functions, procurement and manufacturing processes, and logistics, which can help improve margins and customer solution delivery capabilities moving forward.”
And while it is true that broadcast industry spending has been somewhat stagnant in recent times and experiencing limited growth, the combination of TSL and DNF is expected to be very well-placed to provide the industry leading solutions broadcasters will require to adapt to ever-changing new technological developments.
“The essential steps toward ensuring prospective gains become reality are in the post-acquisition financial and operational integration stage – something that a number of acquisitive companies too readily ignore as they move on to the next deal,” says Mr Quade. “As a result, value can be lost. However, the combined management team, together with our assistance, has the right priorities, focus and skills to deliver on a plan we were careful to ensure existed, was realistic with sufficient flexibility and had buy-in on both sides, even before completion.”
In Mr Quade’s view, the success of the acquisition is due to TSL recognising the value of external expertise to supplement their team. “Maintaining focus to deliver on expectations is a key part of our role at BM&T and ensures there is real drive around integration implementation,” he says. “This allows TSL’s own team to ensure they do not lose track of their existing responsibilities, while fulfilling their roles in the integration project.
“This is a transaction the broadcast industry customers have universally welcomed and provided positive feedback on,” concludes Mr Quade. “So, prospects are undoubtedly bright.”
Keywords: Technology, media & telecommunications