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Expansion Capital / MBO, October 2002

Background
ACIL Australia Pty Ltd is a Project Manager of foreign aid projects committed to achieving a better and more sustainable quality of life in developing countries. Established in 1968, ACIL has designed and managed over 500 development projects across 63 countries in Asia, the Pacific islands and Africa.

ACIL’s work spans a range of sectors including Education; Health; HIV/AIDS; Governance; Resource and Environment Management; and Infrastructure. In October 2002 the management team at ACIL, together with Advent undertook a management buyout of ACIL. Advent facilitated the MBO through structuring a mix of equity from Advent, vendor finance and Bank debt. An options pool was set aside for management.

Investment rationale
Advent was attracted to the ACIL investment opportunity for the following reasons:

  • Market leader for Australian aid projects in Asia;
  • Strong management team beneath founders who
    were retiring;
  • Strong cash flow generative business, enabling leveraging of acquisition;
  • Long-term nature of projects provided confidence on
    cash flows;
  • Attractive buy-in multiple; and
  • Identifiable organic and acquisition growth opportunities.

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Advent’s role
The following actions were taken by management and Advent to develop ACIL
into a strategic asset ready for exit:

  • with the two founders keen to retire, they agreed to transition out of the
    business over twelve months and two years respectively and helped find
    a replacement CEO (buy in);
  • the trust / partnership structure was changed to a company structure
    with a formal Board, helping “corporatise” the business;
  • vendor finance was paid down;
  • the growth strategy for the business was agreed, which focused on
    broadening the international base of the business;
  • the management team was strengthened; and
  • the business grew through international expansion.

Exit
An exit was achieved by way of a trade sale to a listed consulting engineering
services entity, Cardno Limited, in July 2005. The MBO team received a mix
of cash and shares in the listed company. The structuring of the MBO was
such that the MBO team won disproportionately to Advent on exit, with Advent
funds invested achieving a return of over three times initial capital invested,
representing an IRR of 54% over three years.

www.acil.com.au
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