£1 million investment helps fund management buy-out at Forest Traffic Signals

Forest Traffic Signals Ltd is headed for renewed growth following a management buy-out (MBO) backed by a £1.05 million equity investment from Finance Wales and additional funding from Centric Commercial Finance.

Forest Traffic Signals Ltd has been acquired from Forest Support Services plc by Caswell Support Services. Brothers Ross and David Williams established Caswell for the MBO and have been involved with Forest for over 15 years, most recently as Managing Director and Group Operations Manager. The newly-acquired company will continue to trade as Forest Traffic Signals Ltd and be headquartered in Newport.

Richard Coppock of RCA Corporate Finance advised the management team on the acquisition.

Commenting on the transaction Ross Williams explained: “Although we’d seen a substantial increase in our turnover - from £1m in the year ending March 2001 to £8.8m in the year ending March 2010, this was never reflected in the company’s market capitalisation or share price. Taking the company into private ownership means we won’t incur AIM-related costs in future and this will significantly improve our profitability and cash flow. Finance Wales’ investment will now provide us with the financial strength to implement our growth plans.”

Forest Traffic Signals, which was first set up in 1968, has grown into South Wales’ largest traffic management company. The company employs 123 people and has additional operations in Bristol and Winchester. The company provides temporary traffic management services for civil engineering projects for a range of clients including the Highways Agency, the Welsh Assembly Government, local authorities and utility companies.

Nick Larcombe, Investment Executive at Finance Wales said: “Forest Traffic Signals is now well-placed to achieve substantial growth over the next few years. Finance Wales is pleased to be able to invest in this MBO. The company has an experienced management team and now has a strong financial base from which to achieve its business plans.”

David Ashton, Director of Business Development for South West and Wales for Centric, said: “Centric Commercial Finance is delighted to be associated and to be working with a business that shows great success in its key business sectors and which demonstrates clear opportunities for further growth.”

David Williams added: “There is substantial scope to develop our Bristol and Winchester operations. Both operations have secured recent contract wins and this provides us with a firm footing on which to build.”

Advisors on the deal were Berry Smith (legal to Caswell Support Services), Kilsby Williams (financial due diligence), PBD Consulting (commercial due diligence), Diligencia (management due diligence) and Geldards (legal to Finance Wales).