Arbuthnot Commercial Asset Based Lending has provided a £4.5m facility to support MDS Civil Engineering’s management team, Darren Chaston, Richard Pullen and Matthew Pratt, in acquiring the business from its founder.
The total funding package in support of the Management Buyout (MBO) includes a £2.5m receivables financing line, secured primarily on a borrowing base of uncertified applications, a £1.5m amortising plant & machinery loan and a £500k cashflow loan.
MDS founder Roy Marfleet is to begin a phased exit as a result of the deal.
The company was founded in 2000 as a specialist groundworks and civil engineering company to provide services to major blue-chip developers across Essex and East Anglia.
The group operates predominantly in the housing sector and clients include Bellway, Redrow, Cala, Linden, Taylor Wimpey and Persimmon.
Operating from a purpose-built facility in Halstead, Essex, the firm employs approximately 150 people and carries out contracts ranging from £100k to £15m.
Andrew Rutherford, commercial director at Arbuthnot Commercial ABL, said: “MDS is a growing, well-established and profitable company with a strong client base, run by a very experienced management team.
“This transaction underlines the flexibility of asset-based lending in providing the capital to support the acquisition of a business by its management team as well as a dynamic supply of ongoing funding that will grow with the company’s sales. We look forward to developing a lasting relationship with the MDS team.”
Matthew Pratt, finance director of MDS Civil Engineering, said: “Prior to our initial meeting with Arbuthnot Commercial ABL, their team called us to request further information and demonstrated a good understanding of our sector and its specific working capital cycle.
“MDS has grown its annual turnover from £15m to £25m in the past five years. We have a strong order book and any plans for further organic growth can be underpinned by Arbuthnot’s revolving receivables facility. We are very pleased to be working with Arbuthnot and are currently in the process of moving our transaction banking across to them as well.”