Client profile: ES Global Ltd
Living life on the events circuit has taken staging specialists, Olly Watts and Jeff Burke, on a tour of some of the world’s most spectacular occasions. But, when they wanted to organise a management buyout, internationally-renowned ES Global (ESG) – which has staged events from Live Aid to the London Olympics – faced some major hurdles. Thankfully, having pensions helped get them over the line.
The decision to buy out the company where they had worked for 15 plus years, when their fellow directors decided to hand over the reins, required a large amount of due diligence, confidence in the company’s brand and a solid tranche of finance. However, with a funding requirement of several million pounds, Olly and Jeff needed some serious financial support.
Their bank was prepared to offer a significant part of the funding, but more was required, so they turned to Clifton Asset Management for help. “To some extent, we wanted to be masters of our own destiny and invest in ourselves,” explains Jeff. “We thought we would have to sell a substantial part of the equity in the business to fund the buy-out and had no clue where to get the money. But, there was something in the back of my mind about being able to use our pensions to fund our business, and Clifton provided the details of how this could work.”
Both in their early 50’s, Jeff and Olly had to think about their futures, both with the company and in retirement. According to Jeff: “Our main thought was that, with current low interest rates, our pension fund could work harder using pension-led funding to back our business. We were confident in the business itself and had a strong pipeline of future work.”
The conversation with the team at Clifton was enlightening. “We were really happy with their speed of reaction and the ideas they came up with which would allow us to release and invest the money into our business.”
Olly and Jeff were advised by Clifton to establish a SSAS for their existing pen-sion pots and arrange an independent valuation of the company’s Intellectual Property (IP). “We knew the business had value,” Jeff states, “and the valuation confirmed what we thought.”
In fact, the ES Global brand has an international stage – literally. Some of the largest event structures, including the legendary Live Aid Wembley stage in 1985, the Chanel Mobile Art tour and, most recently, structures at the 2012 London Olympics and 2014 Winter Olympics in Sochi, have all been designed and built by the company.
“Because of our reputation, the whole valuation process was very smooth, but incredibly thorough. We had to provide patent, trademark and a lot of other business information. But we understood what we were being asked for and, because of the way we run the business, we could find it all fairly easily.”
The pension scheme bought and leased-back the highly valuable ESG trademark and, using this to top up the bank funding, Jeff and Olly became the proud owners of ES Global. Equally importantly, with the SSAS funding being paid back directly into the scheme at a healthy interest rate, their business is also boosting their pension.
The two owners have already seen a healthy growth in the business. With 22 staff and a new storage facility in Nottingham to complement their East London headquarters, turnover more than doubled in 2013/14 from £3.5m to £8m and 2014/15 should see a further 50 per cent increase.
According to Jeff, the ES Global team has a clear vision: “We want to be running a very successful, profitable, well-organised business with clear value.” While there is little doubt they are already on track to achieve this, ironically, Jeff and Olly rarely get to see the fruits of their labour: “We’re at the events for at least a year in advance, often more, and then back again to break it all down, but we don’t often see our structures in action,” says Jeff.
But one thing is certain – they do see a very clear return on their pension investment.
From Live Aid to the 2012 Olympics, ES Global has provided temporary structures for events and exhibitions across the world since 1974, using its patented construction system.
Directors Olly Watts and Jeff Burke wanted to implement a management buyout. While Coutts bank could partly assist, they required further finance from complimentary funding.
A new SSAS was set up for Olly and Jeff and money from their pension funds was used to buy the ESG trademark, valued at £405,000, which the company is leasing back, benefitting the business and pension.
Olly and Jeff now own the company they helped build into a world leader. They continue to build fantastic structures for clients across the world, from Formula 1 to Chanel and are exploring other financial services with Clifton.