Encore acquires TSC

Carmen Reichman
14 June 2012

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Encore Capital has acquired a majority stake in software company Technical Software Consultants (TSC).

The deal's value remains undisclosed but the GP told unquote" it has put aside a total of £6-7m in equity for the takeover, including development capital and spare capital for possible future acquisitions.

Encore bought its stake from the company's owners, David Topp and Martin Lugg, who partially exited following the deal.

The GP plans to build up a senior management team, having already introduced Maurice McBride as the company's new executive chairman, and to facilitate the eventual exit of Topp and Lugg.

The funding will go towards fostering awareness of the business and diversifying its products into other industries.

Debt
Octopus Investments contributed £3m in debt after agreeing a flexible package that will see the investor become shareholder of a very small stake in the business.

Company
TSC was established in 1984 by professors at University College London. The company developed the electromagnetic ACFM technique used to detect and size cracks in metals.

The business also owns stress-probing equipment used to measure loads and map stresses on metallic structures such as oil platforms. Although it enjoys a stronghold in the oil & gas industry, TSC also trades in the nuclear sector and others.

The Milton Keynes-headquartered business employs 25 staff and generates an EBITDA of £2.5m. The bulk of its trade comes from exports to international markets, which make up 90% of its turnover.

People
Owners David Topp and Martin Lugg will continue as directors following their partial exit. Maurice McBride will be executive chairman. Shirin Gandhi, partner at Encore, led the deal for the firm.

Advisers
Equity – Calash (Commercial due diligence); Menzies Corporate Finance (Financial due diligence); Matthew Arnold & Baldwin (Legal); Wragge & Co (Legal).