Project Description

HMT advised the shareholders of London-based smart home technology solutions provider SM Contracts Limited (“SMC”) on a partial exit of the three founders by way of MBO. The deal was funded by an 8-year term loan from funding specialist Caple International.

SMC is a long established, profitable business with a prominent market position in the expanding premium in-house entertainment, lighting, security and surveillance market in the UK. The company designs, programs, installs and maintains technology in the fast-growing audio-visual, ITC, building control, security & connected home programming market. They serve select UK developers and HNWIs and have extensive connections with the design market engendering a high level of referral business.

Two longstanding members of the senior management team had the opportunity to purchase an increased share of the business from the original founders to facilitate a medium-term exit. The transaction has both enabled the founders to realise part of the value they have created and fully incentivised management, who are tasked with driving much of the future growth, through increased equity ownership of their business. As with all businesses supported by Caple, the loan required no personal guarantees, floating charges or any other form of security.

Partner Andrew Thomson and Director Ricky Lane acted as lead advisors to both the founding shareholders and the management team on the transaction which included assessing the strategic options for the shareholders and management, identifying suitable funding partners, negotiating detailed investment terms, tax structuring, financial modelling and project managing the deal to a successful completion. HMT worked within the Caple platform to deliver detailed information and an efficient process which resulted in a timely completion.

David Smith, SMC, commented:

“HMT were mandated to find the right funding partner to support the management buyout of the company but also one that will allow SMC to accelerate its growth plans and enter new markets over the coming years. Andrew and Ricky spent time with the founders and the management team to understand SMC’s value proposition and ran a competitive process to optimise the funding terms. At various stages of the process they provided invaluable support and valuable commercial advice.

 The founders and management are now fully aligned to take the business forward and we look forward to working with HMT again when we the founders are ready to exit in full.”

Ricky Lane, Director at HMT commented:

“We are delighted to have advised David, his fellow founders and the management team on this transaction. David and his team have successfully grown SMC over the past 10 years and the funding structure provided by Caple will allow the business to realise its growth ambitions and solidify its leading position in the connected home market.”