1. Case Study: Engineering Company Purchase and Expansion
Crowle Wharf Engineers are specialists in turn-key services for
the rail, steel and energy industries. A ‘Buy In Management Buy
Out’ (BIMBO) has led the firm from being reliant on the fossil-
fuel industries to one enjoying additional premises and
expanding to support the engineering opportunities in the rail
aftermarket and low carbon and renewable energy sectors.
Managing director, Chris Brown shares his insights and
learnings from the process.
How it all began… with a BIMBO
Dictionary definitions of bimbos are none too complimentary, as they usually concern women, and
are always about people of ill repute and of little intelligence or scruples! There is little mention of a
“Buy In Management Buy Out” (BIMBO) in the finance industry however it is generally regarded to
mean a corporate takeover strategy whereby existing managers agree to purchase the company
along with a group of outside managers to ensure a smooth transition to the new ownership.
As part of a BIMBO, you are on the outside to begin with, and finding an engineering company worth
buying into is quite difficult. You can look in the small ads; you can keep your ear open for
opportunities or engage a corporate finance professional to look out for you. The reality is often a
destabilising period for all concerned in which abortive meetings and false dawns abound – the
professionals call this “kicking the tyres”… Those engaged in it are often in and out of work doing
various contract jobs. Often the professionals will be working on a contingent basis at this stage,
which is fine, but it means their income is coming from deals they are doing elsewhere.
Finding the right engineering company
The now Chairman was looking to extend a portfolio, the MD was looking to buy into a business
after a period in a PE backed larger company, and the FD was looking to extend his portfolio of work,
perhaps with an equity stake.
The incumbent directors were trying to concentrate on the day job whilst dealing with the instability
of knowing that the principal owner wanted to retire!
Crowle Wharf Engineers was identified by the now Chairman through a corporate finance contact
and it was the Chairman who acted as the key partner to work with the vendor during the process. A
useful piece of advice given to us was to remember that most of the parties are inexperienced in
these transactions:
 For the vendors and private buyers it can be an emotional experience; one is selling their
‘baby’ and the individual investors are investing their life savings.
 The professional investors are investing for their principals and are looking for the right
opportunities with the right returns whilst at the same time managing the risks.

2. The Process Before the Deal is Done
Potential purchasers have to build a business case and in the case of a BIMBO they have to
simultaneously build a business relationship with each other. When external funding is required, as
in the case of CWE, then the business case has to be developed and presented to outside funders.
The team of the incumbent directors plus the Chairman found Foresight and made an initial
approach using figures put together by the now Chairman and the initial teams’ corporate finance
advisor. Foresight were interested but considered that they needed to introduce a director with
sector experience, probably as an executive director. Foresight, through its network, introduced
Chris Brown to the process. The enlarged team then developed a more detailed business plan and
were eventually invited to present this to the Foresight Investment Committee as a potential board.
The business plan submitted was an amalgam of the vendor’s Information Memorandum, financial
forecasts, and a presentation giving a view to the future and, importantly, a view of the exit. Within
days Foresight approved the investment subject to Due Diligence and a number of other criteria,
including the need to appoint an FD.
The team at this stage was John Wood, Chris Brown, Ian Siddle and Mark Lifsey. A search for a part
time FD was run. Following a number of meetings John Buist joined the team.
Due Diligence to Manage Risk
Due Diligence (DD) can be a time consuming and expensive business. DD for all parties is all about
risk – trying to rationalise the risk you know about and the risks you don’t know about. Stuff will
always happen!
There is Financial, Commercial and Legal due diligence to be undertaken. All parties, the vendor, the
fund, the individuals and the team require separate legal representation. This all takes time and
money.
We deliberated long and hard about the Commercial DD that we required. There is no point in
paying out large sums of money to be told what you already know. Our view on rail was clearer than
energy so we asked for more DD in this area.
However, one aspect often forgotten is managing the seller. The seller is as nervous as anyone in
this. The business needs to continue running. Even with NDAs in place the pending sale is unlikely to
be a secret. Indeed, it is my view that it is better for the sale to be out in the open – you will need to
talk to the customers to confirm the Commercial DD and they in turn will report the information
back to your delivery drivers!
Completion
So we had the deal agreed, funding in place, the last few surveys being undertaken. The documents
have been prepared - including Investment Documents, Share Documents, Lender Documents,
Service Agreements. For some reason, known only to financial professionals and lawyers,
completion takes place late at night. And for us it took place in different places. Completion was a
bit of an anti-climax; you sign dozens of documents produced in a hurry on an industrial
photocopier. You then go out to celebrate, or in our case home to bed!

3. The First 100 Days of Ownership
Immediately after completion is a key time. All stakeholders need to feel part of the ongoing
business so effective communication is critical. We had a detailed 100 day plan and this was the
focus of the board meetings. We had core sections on Communications, Management, Finance, HR,
Insurance, Legal and Due Diligence actions. In all, ninety activities to complete in addition to running
the business.
Communication is probably the most important activity. Meet the employees, meet the customers
and talk to them. No-one wants surprises. We put a lot of emphasis on cultural change as well as
investing in individual and group coaching and awareness.
Under the new regime, and with support from Foresight’s investment, we started a process of
continued improvement throughout the business to better serve client requirements, motivate
employees and maximise efficiencies. During this period we:
 Improved gross margin through reviewing process flows and engaging a time study engineer
 Invested in training and development of people at all levels
 Refined processes throughout the organisation, from management communication to health
and safety (evolution not revolution)
The Expansion Move to Worksop
CWE already owned two buildings in Crowle and leased one in Staveley so we initially considered
two basic options: a small base that would minimise disruption or investing in a larger base of
strategic importance to the long-term future of the company.
The CWE management team opted to build a large
part of our strategic business in Nottinghamshire,
which reflected the ambitions of the Management
team and Foresight. This transaction was funded by
the Foresight Nottingham Fund, despite CWE not
having a facility in Nottinghamshire at the time of
the investment. It’s true that Foresight’s
investment mandate targets businesses within
Nottinghamshire but the often overlooked part is
their focus on inward investment. Accordingly, we
needed a Nottinghamshire base.
We engaged an agent to find the ideal building and
spent 6 months looking. With a little luck we found
the property at Shireoaks. The building in which we
have two units is owned ultimately by HCA and is
sub-leased to Nottingham County Council and then
to ourselves. Getting a lease in place, getting the
incumbents out and moving in was a fairly lengthy
procedure. The previous tenants had made
improvements to the building that we wanted to

4. keep but the terms of a lease force you to take the building back to how it was when you took it over
– and here agents can have a field day with dilapidations!
Building and Delivering a Strategy for the Medium Term
However, whilst the expansion move was ongoing, we still had to run and build a business. The
BIMBO team’s strategic approach to doubling the size of the business centred on 3 core strands of
business; Rail, Energy and Steel and we pursued the following process:
• Defined our Industry
• Understand our markets and customers
• SWOT (Strengths Weaknesses Opportunities Threats)
• Determined our Mission
• Developed the company’s Vision, that includes: Finance, Markets, Internal Processes and
People
• Sense Checked
In the medium term we believe that the rail aftermarket will be a growing business, hence our push
to move a substantial part of it to a larger location in Worksop. We have worked to develop an
approach to the newer aftermarket business and plan to move forward with this with one of our
major customers.
In Energy we had a problem to resolve; our business has been built on fossil fuels – so our challenge
is to transform it so that it is based on fossil fuel plus low carbon and to include wind and nuclear.
The following table shows how energy was being generated one sunny morning in August 2015. It
shows that over 60% was from fossil fuels, over 20% from nuclear, wind was just 2%. On 28th
August
wind was 2,807MW at 10.30am 8% of total consumption.
Electricity Generation in UK 14
th
August 2015 (Source www.ukenergy
watch.org)
Combined Cycle Gas Turbine 11,303 MW 36%
Coal 7,814 MW 25%
Nuclear 6,660 MW 21%
Wind 763 MW 2%
Pumped Storage Hydro 301 MW 1%
Non Pumped Hydro 318 MW 1%
Interconnect - France 2,000 MW 7%
Interconnect - Ireland 33 MW
Interconnect - Netherlands 811 MW 3%
Other 856 MW 3%
Total 30,859 MW
Investment in Engineering Innovation & Technology
The change to renewables will take time. The need for fossil fuels will reduce and with sufficient
renewable capacity the base load may well move to renewables. Whilst the need to burn coal will
reduce, the need to burn it efficiently and control its use increases. CWE has therefore designed and

5. patented an enhancement to the standard coal feeder that will enable carbon usage to be measured
and controlled more accurately.
Moving to having a capability in renewables has
involved an investment in technology with the
aim of being able to service wind turbine parts.
The new machine, installed in Crowle, is a
horizontal boring machine capable of machining
components of 2m x 2m x 2m to a tolerance of
0.025mm or 0.001”. It is shown machining a
valve be for the nuclear industry.
Moving into the Worksop Facility: Phase 1
In October 2014 CWE began the move to Worksop and in the process of a week, we moved the CNC
Machining business from Staveley to Worksop.
Phase 2: Moving Couplers
Unfortunately, Phase 2 had to wait until the power for the washer was completed. This was a
particularly frustrating time: we had negotiated with the staff who were moving; we were recruiting
new staff in Worksop and had no date for when we could start. The machines we had bought lay idle
through their warranty period…
However, In July 2015 we complete the move of the coupler business to Worksop. This took around
6 weeks in total and was done with minimum disruption to deliveries.
None of our achievements could have been made without the support of our people. CWE now has
18 of 54 people working out of our Worksop unit. We attended the Nottingham jobs fair in
September and are looking to expand, possibly to two shifts.

6. Lessons Learnt
 Make sure you have a robust plan in place before you begin a BIMBO process.
 You need to be realistic about timescales; 2 years from looking out for businesses to finding
one, getting finance in place and moving through to completion.
 Make sure some of the steps are either easy or within your comfort zone; willing buyer,
sector knowledge, strategic planning, financial modelling.
 Develop and start to deliver a medium term strategy.
 Focus on the team and the team dynamics.
 Try to enjoy the ride!
Conclusions
Well was it worth it? Only time will tell but we think it will be. We have an exciting and forward
looking business focused in two plants and three sectors – Rail, Energy and Steel. The business is set
up to work on site in the relevant sectors and it is this sector that poses the next challenge for CWE.
The business has new investment and is now well placed to take advantage of the Rail and Energy
markets. It is ready to move its Energy business from being fossil fuel based to a low carbon and
renewable base.
All that remains is to develop and nurture the growth in two interesting and topical markets. Herein
lies a further challenge, if anyone knows where the UK energy and rail sectors are really heading
then can they please apply for a job!
C Brown
October 2015