Avingtrans sells Peter Brotherhood for 10x multiple of operating profits

Buy-and-build engineering group Avingtrans has sold Peter Brotherhood for a total consideration of £35 million, a more than 10x multiple of the £3.3 million in operating profit the company delivered last year.

The Peterborough-based business is being acquired by Howden, a group specialising in air and gas handling equipment. Of the £35 million enterprise value, Avingtrans will receive net proceeds of around £30.6 million prior to costs.

Peter Brotherhood specialises in the design, manufacturing and servicing of steam turbines and turbine generators and operated in Avingtrans’ Process Solutions and Rotating Equipment (PSRE) business.

Avingtrans acquired Peter Brotherhood in 2017 as part of its £52.7 million takeover of the Hayward Tyler Group. Peter Brotherhood represented around £9.3 million of this acquisition, meaning the sale has generated a return of around 3.7x the original investment.

The disposal forms part of Avingtrans’ Pinpoint-Invest-Exit (PIE) build-and-buy strategy, through which the group generates returns by acquiring companies before restructuring and selling them.

With Peter Brotherhood, Avingtrans undertook a rapid restructuring and strategy reset, before embarking on a recruitment and training drive focused on the firm’s sales force, sales agents and aftermarket team.

This drove a recovery at the once struggling firm, which generated revenues of £25.7 million in the year ending May 31 2020, contributing £3.3 million to the group’s operating profit. Prior to its acquisition by Avingtrans, Peter Brotherhood's year-end accounts for March 31 2017 show it making a pre-tax loss of £2.1 million on turnover of £16.2 million. This increased value prompted Avingtrans to decide to sell the business.

Avingtrans Chief Executive Steve McQuillan said: "This well executed exit of Peter Brotherhood once again demonstrates the success of the Avingtrans PIE strategy. Peter Brotherhood was in poor shape when we acquired it in 2017, but it has been turned around to make it attractive to specialist Groups in its sectors. The result is enhanced value for Avingtrans shareholders and the potential opportunity to repeat the PIE model elsewhere."


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