What happens when an MBO hits targets well ahead of schedule? Jason Sinclair speaks to WestBridge about how Alpine Fire Engineers went back to the drawing board, added M&A to its plan and set about getting a funding line.
There are many things that every business needs, and one of those is fire protection. With a client list ranging from Tesco to DHL to BAE to GSK, Alpine Fire Engineers has built its business providing water, foam and gas fire suppression systems covering 13 million square feet over three decades, since it was founded in 1992. Core Capital Partners (now Soho Square Capital) backed a management buy-in (MBI) in 2018, and two years ago WestBridge invested £18.7m for a majority stake in the company. And with a funding line for acquisitions, the Greater Manchester-based business is now looking to implement a strategic growth plan involving M&A.
Steve Nanda joined Alpine Fire as CEO following the 2018 MBI of what was a family business: “I was asked to help raise private equity as part of the owners’ succession plan, almost acting as a consultant on their behalf. Then, after the transaction, I was asked to stay on by the PE house to help grow and professionalise the business.” Nanda, who has qualifications in chartered surveying and law as well as a track record of running M&A and strategy for mid-sized corporates, guided the firm through to the secondary MBO process completed two years ago. That sale saw Soho Square achieve a 4x exit.
“We grew organically and invested in a professional sales team and general support services around the delivery team. We upskilled everywhere around commercial and financial: every part of the business was either supplemented or reinvented,” he says. It was at this point that WestBridge came calling but, says Nanda: “You may remember that at this time, the country was in a bit of disarray.” It was autumn 2022, and Liz Truss had taken up her brief tenure as prime minister.
Past to present
1992 Alpine Fire Engineers founded by Ted Smith in Bury, Greater Manchester
May 2018 MBI backed by Core Capital Partners (now Soho Square Capital)
May 2018 Steve Nanda appointed CEO, Ted Smith’s son David Smith MD and Stephen Graham FD
May 2018 Mark Thewliss joins as operations director
October 2018 James MacLeod joins as CFO
December 2018 Louise Plant joins as business development director
December 2022 £18.7m MBO from Soho Square, backed by WestBridge
October 2024 £70m refinancing facility provided by Shawbrook Bank and HSBC for expansion and acquisitions
October 2024 Alpine acquires DAS Fire, marking the start of the company’s buy-and-build strategy implementation
Poised for growth
Despite the national situation, Alpine Fire still represented an opportunity and WestBridge was quick to move. Tom Dutton, senior investment manager at the private equity firm, explains: “What we liked about Alpine Fire was that there was a regulatory underpinning to the market. Clearly, they are the leading fire suppression system for complex markets, which was a niche, and what we typically like is a niche player within a fast-growing market. Alpine ticked both of those boxes because there’s not really any other player that concentrates on the same markets. Therefore they can compete more on quality than price. And obviously we feel the market has got good growth in it.”
What we typically like is a niche player within a fast-growing market. Alpine ticked both of those boxes
The growth was such that a five-year plan Nanda wrote for WestBridge prior to the deal was jettisoned after three months. “Against the £9.4m of EBITDA that we said we would deliver by 2027, we delivered £9.2m by early 2023,” Nanda says, “so there was a bit of a hiatus. I think it’s fair to say we were asking what we were going to do next as a team. What do we need to do? How can we achieve it?”
The plan was redrawn and presented to WestBridge. “We are very fortunate,” adds Nanda. “With WestBridge, we’ve got a fantastic, best-in-class stable of consultants. So we’ve worked with Sustainable Advantage on environmental, social and governance (ESG) and with Dow Schofield Watts from an M&A perspective. We gave them the mandate and the brief, and we were very clear on what we wanted, which was to find an equally niche provider within our space, which potentially extended our geography, our diversification and our product range. Targets had to be non-dilutive to margin and hopefully operate as top decile within their sector of expertise.”
In switching from organic to inorganic growth, Nanda says: “We kissed a lot of frogs and we turned down more opportunities than we went for. That’s why the process took time.” Alpine Fire’s first major acquisition, of DAS Fire, began with a management meeting in November 2023 and took eight months to completion. “We took some time because we’re very clear on the strategic intent and the type of business we wanted,” Nanda says.
Deal number one
The acquisition of Hampshire-based DAS Fire has helped Alpine Fire diversify its service sectors into the fast-growing data centre field. Alpine’s CEO Steve Nanda sees opportunities to grow recurring revenues for service and maintenance with a purchase that WestBridge’s Tom Dutton describes as “supplementing Alpine’s existing offering and opening up a new sector of the market”.
DAS was founded by Stuart Parker (above) in 2013, and he will remain with the company along with the DAS senior management team. Parker says he is “looking forward to the benefits that come with being part of a larger organisation” and to “combine the extensive experience of both of our organisations in order to offer expertly designed fire detection and suppression systems to our customers within the complex sectors we specialise in”.
DAS will maintain its own brand and identity, says Nanda, who adds: “The only kind of issue that we have, like many businesses, is finding talent. It’s always tricky, but we’ve rolled out a good ‘grow your own’ initiative within Alpine – taking on adult trainees – and we hope that we can adopt a similar programme within DAS to support this.”
For Dutton, the acquisition is the next step of a journey on which WestBridge “doesn’t typically have a standard amount of time we hold things for,” he says. “We very much take a partnership approach, so we’ll work closely with Steve and the team, and understand their desires as well as the performance of the business and the opportunities before us. Five years seems sensible: it’s probably around that time, essentially, but we’ll see how the new businesses are integrated and how the trading continues.”
Fuelling the fire-fighting
This buy-and-build strategy has been funded by £70m of financing provided by Shawbrook Bank and HSBC; there is still plenty of dry powder left for what Dutton describes as “finding the right fit” rather than just bolting on for scale. “We wanted to make sure there was alignment in the businesses,” he says, “and, importantly, cultural alignment too: as we grow the business and scale, we want the culture to stay the same, as well as adding complementary services in the same market.”
The lending capacity of Shawbrook, with which Alpine Fire had a previous relationship, was capped at £30m, “so we needed a partner”, says Nanda. “We worked with Clearwater debt advisory firm, which ran the process on our behalf, and we were talking to a number of banks and debt clubs. One of the issues we had was that we had to transact very quickly. Staying with Shawbrook absolutely made sense, given how supportive it was. HSBC was the other provider that could move quickly and had some preferential terms, enabling us to negotiate with Shawbrook, so it just worked for everybody involved.”
We’re kind of looking, but within strict parameters. We would like a springboard into mainland Europe
Using the rest of the facility, Nanda says there have been “early-stage conversations” with potential targets: “We’re kind of looking, but within strict parameters. We would like to see if there’s anything out there that would give us a springboard into mainland Europe.” While the firm’s organic growth has been good, he says, “what would really move the dial would be the acquisition piece”.
Dutton adds: “There are plenty of opportunities out there from an acquisition point of view.” WestBridge’s stable of consultants, including marketing specialists Bridge F61, is supporting Alpine Fire’s ESG strategy, including the launch of a campaign to reduce water waste by recycling the liquid used in fire suppression (sprinkler) tests.
“We hope to get some legislation changed,” says Nanda, “and we’ve done a lot of work around ESG and changing processes on water scarcity. This approach seems very much a part of the DNA of WestBridge’s portfolio of companies.”
The advisers
For its DAS acquisition, Alpine Fire Engineers’ advisers were Dow Schofield Watts for corporate finance, Pinsent Masons for legal counsel advice, PMSI Strategy for commercial due diligence and BDO for tax due diligence.
The advisers to WestBridge for the MBO were Grant Thornton for corporate finance and debt advisory, Pinsent Masons for legal advice, BDO for financial due diligence and Armstrong Transaction Services for commercial due diligence.
Soho Square Capital’s advisers on its exit were Clearwater International for corporate finance advice, Addleshaw Goddard for legals, Grant Thornton for financial due diligence and Strategy& for commercial due diligence.
