An independent business for 200 years, Hill & Smith, a provider of solutions to the infrastructure and built environment sectors, received the much-coveted corporate development award at last year’s Annual Reception. Marc Mullen talks to Joel Whitehouse, group head of corporate development at Hill & Smith, about its M&A strategy.
Everything to do with acquisitions and disposals is based on Hill & Smith’s operating company and financial frameworks, says the business’s head of corporate development Joel Whitehouse, who has been with the company almost 20 years (see ‘Experience counts’ box) and sits on the Solihull-headquartered business’s executive committee. The overarching company target is 10% annual revenue growth and operating margins of 18%.
“We expect 5%-7% of that 10% growth to be delivered organically and the balance from M&A. That means we ideally look to bring at least 5% growth in our revenue from M&A. The other two key metrics are cash conversion – everything we acquire must have 80%-plus cash conversion – and return on invested capital, where we target 22%-plus.”
He adds that how M&A fits into Hill & Smith’s strategy is quite simple: “We know we need to spend at least £70m a year to deliver that growth, and that means executing on between three and five transactions in the £10m-£50m range.” During the period under review for the faculty’s Corporate Development award, Hill & Smith completed four deals (see ‘Deals add value’ box).
Hill & Smith’s three divisions – US engineered solutions, UK and India engineered solutions, and galvanizing services (which has operations in the UK and the US) – serve customers in construction and infrastructure. Family-owned businesses adjacent to these areas, in the £10m-£50m range, are the sweet spot for acquisitions. “Targets must hit our financial criteria as well as increasing our exposure to higher-growth, less cyclical markets if we want to add them to our portfolio.”
Experience counts
This October, Joel Whitehouse will have spent two decades at Hill & Smith. After graduating from the University of Warwick in 1995 with a first-class honours degree in pure maths, he joined Touche Ross (which became Deloitte & Touche and then simply Deloitte).
He trained as a chartered accountant in the firm’s audit team in Birmingham, then spent some time in the corporate finance team before joining Old Mutual, becoming a stockbroker for four years and adding the CISI qualification to his ACA.
He spent four years in commercial banking with HSBC in London and internationally, before returning to Birmingham and joining Hill & Smith in 2006. “My first role was as project director, overseeing the group’s biggest acquisition to date – €145m for a galvanizing and substation businesses with operations in America and Europe. It was a disclosable Class 1 transaction. Post acquisition, I became its FD, managing its integration into the group.”
He became group tax and treasury director in 2009, then group head of corporate development in 2013.
Work together
Whitehouse has five experienced professionals in his corporate development team – four in the UK and one in the US. Their different, complementary skills (see ‘A team game’ box), add to the group’s regional resources in the UK and the US.
“We have two strategies for M&A and origination,” he says. “To identify bolt-on targets, we work hand-in-hand with our regional group presidents and the MDs of our principal subsidiaries. We always think about who the best person is to make the approach. Often it’s the MDs who can make the peer-to-peer connections.” But if a target is less adjacent – and off an MD’s radar – either the corporate development team or the regional team will start a process, following initial research. Although target research is normally conducted internally, Hill & Smith may “on an ad hoc basis” decide to employ a third party to carry out research into certain specific areas.
Whitehouse says advisers bring them many opportunities that need filtering. Targets are most often identified via proprietary knowledge, although they will, on occasion, participate in auction processes, conducted by boutiques selling smaller family-owned businesses.
Maintaining financial discipline means private equity-backed exits are not often considered. “With private equity the price multiples are generally higher, and the more structured processes give us less opportunity to build relations with management.”
When Hill & Smith makes an acquisition, the vast majority of the due diligence – the financial, tax, commercial and legal work – is outsourced. “We have trusted advisers who know what we want,” he says. Whilst they rarely take external advice on a deal as a whole, they draw on the extensive internal knowledge of the CEO, CFO, group presidents, MDs and the group board.
Timeline: Deals add value
Click on the dates in the timeline below to find out more:
The outlook
In November, Hill & Smith, which currently has a market cap of £1.8bn and employs more than 4,500 people, issued its regular trading update. While UK activity continued to be more challenging, the US performed well, buoyed by infrastructure demand. “We’ve got some very well positioned businesses in transmission and distribution, composites and galvanizing that all feed into that,” says Whitehouse.
So, how does M&A play into that? “M&A allows us to reposition the group into higher-growth, higher-margin businesses. We take an active approach to portfolio management with the intention of improving the quality of the group with each iteration, ensuring that all of our portfolio businesses are backed by strong long-term growth plans.
“We will often look to sell businesses that cannot meet our financial framework into higher-growth markets and invest in areas with higher levels of organic growth,” he says. “As for those businesses that underperform financially, we first look at what actions we can take internally to improve them, before considering a sale.”
At the beginning of 2025 two businesses were sold – one in the UK and the other in Australia. “All our subsidiaries are standalone autonomously managed businesses. That’s always been our business mantra. So when we want to sell them, it’s relatively straightforward.”
Any decision to acquire or sell is made by the executive board, on which Whitehouse sits, alongside the two group presidents (one for the UK and India and the other for the US), the group CEO, and the company secretary.
In advice we trust
In terms of acquisitions and disposals, Gowling WLG and Vorys are the go-to UK and US legal advisers, Deloitte are used for tax and Grant Thornton and KPMG for financial diligence.
When it comes to selling, Hill & Smith looks for sector expertise in that market. “BDO have acted on several deals, and we have a great relationship with their Birmingham team. We have also used PwC’s industrial team. We don’t have to educate anybody,” he says.
“Last year we did four acquisitions, and two disposals – six live deals – so you do need advisers who know what you want. You can’t be re-educating your advisers every time. It’s about efficiency and excellence. When we are either acquiring or selling a business, we don’t like mistakes or surprises – we want to know all the issues and be able to present them. And when we buy, a thorough diligence exercise is critical.”
A team game
The Hill & Smith corporate development team, alongside Whitehouse, includes three corporate development directors, a strategic development director and a corporate development manager.
Mark Kimak joined from Elkay Manufacturing in 2022. He trained as a CPA with Deloitte & Touche’s tax team in Chicago, before spending four years with Lighthouse Investment Partners in Florida.
Ben Griffiths joined in 2014 from Zolfo Cooper in Birmingham, where he worked in restructuring. Prior to that, he spent eight years with EY in the West Midlands.
Ollie Devine joined in 2023 from Phenna Group. He has held various UK M&A roles in industry since 2016 and qualified as an ACA in KPMG’s deal advisory team in Birmingham.
Tabu Chanda is the group’s strategic development director, who joined in 2019 from Interserve. He supports operating companies, as appropriate, on organic capital expenditure projects and restructuring activities. He also carries out research.
Jacob Harris, corporate development manager, joined in 2023 from Hill & Smith’s internal audit team. He qualified as a chartered accountant with KPMG in Birmingham.
