Leading manufacturer of electrical and mechanical safety switches
Montagu led and structured the £31 million Management Buyout of EJA Engineering Limited (« EJA ") from the majority shareholders and founder of the business. The total institutional investment of £10.1 million was underwritten by Montagu with the balance of the funding provided by Bank of Scotland by way of term loan and working capital facilities together with the rollover of a minority stake held by management.
EJA was a world leading manufacturer of electrical and mechanical safety switches designed to shut down when a door or guard is opened to ensure safe operator access or prevent access to a dangerous area altogether. Its major brands include Guardmaster, Sigma and Nelsa.
The company was founded in 1976 as a distributor of electrical products. In 1979 it commenced manufacture of safety switches. It had evolved into a business selling into a rapidly growing international market where demand was driven by new legislation of EC standards. In other countries, particularly the US, demand was driven by the frequency of litigation which can be more effectively defended where proper safety systems have been installed.
EJA exploited growth in the market by establishing an extensive distribution network and developing new patented products.
EJA represented a typical management buyout of a successful privately owned business. The founder and majority shareholder had taken a step back from day to day operation of the business, and had passed responsibility to the next generation of management. The founder decided to fully retire and to realise his investment. He invited incumbent management to bid for the business.
Management were keen to drive EJA through its next phase of growth and they chose Montagu to fund their bid and to support them in negotiations with the vendor.
We were keen to invest in EJA because it represented a profitable business in a growing market with a strong and experienced management team. Additionally, its product range was protected and it had an excellent track record in new product development.
In January 1999 EJA Engineering was sold to Rockwell International for £50 million.