Case Study: Corporate Finance team supports sale of Isocom Components to Foresight Group

Background

North East-based Isocom Components 2004 is a well-established manufacturer and supplier of electronic components, with a niche specialism in optocouplers and optoswitches (components that allow an electrical signal to be transmitted between two isolated circuits using infrared light and a photo-sensor). With more than 30 years’ experience, the business supplies companies worldwide, using its global network of distributors and agents, from its base in Hartlepool.

Foresight Group, a UK private equity and infrastructure investment manager, has supported hundreds of growth companies since it was founded in 1984 and in  2022 launched its North East fund. Foresight partners with growth companies to achieve their vision, enabling them to create high-quality sustainable jobs that will power tomorrow’s economy.

How we helped

David Wilson, Armstrong Watson’s Corporate Finance Partner for the North East and Cumbria, was appointed to find a potential buyer by Isocom Components’ shareholders in February 2023 after some decided they wanted to exit the business. He identified that one of the shareholders who was still involved in the business was looking to continue in the business, so the opportunity leant itself towards potential PE investment.

A business valuation was undertaken so the shareholders understood what the expected value of the business was. David then created a detailed information memorandum to help present the business to any potential acquirers. Using his large pool of contacts David shortlisted a small group of potential acquirers and approached them to ascertain levels of interest. Foresight Group was one of the parties who put an offer forward and this was accepted.

The offer asked that the shareholders, with the support of David, made a short presentation of the business to Foresight’s investment committee. They also confirmed the different strands of due diligence required in order to reach a successful completion.

Armstrong Watson supported Isocom Components through all strands of the due diligence process and advised on the financial and tax due diligence. The Corporate Finance team also helped advise and negotiate on the commercial aspects of the legal documents including the SPA and investment agreement alongside the shareholders other professional advisers.

Results

Armstrong Watson project managed the deal to a successful completion following a lengthy process supporting the shareholders in overcoming many challenges along the way. Isocom Components is now part of Foresight’s growing portfolio of clients and, supported by Sales Director Justin Elvin, who will continue in the business, will look to grow the business off the strong platform which has been built over the last 40 years.

Tony Hemming, Chairman of Isocom Components 2004, said: “The shareholders had reached a stage in life when it was apparent a company sale was required. They approached David Wilson who was very responsive in finding potential buyers. Agreement with the first potential buyer chosen did not progress due to the final terms of their offer being insufficient. In reaching this deal there was a long due diligence process which required considerable tenacity and astute negotiation to navigate. David and his team were admirable throughout and successfully concluded the sale.”

David Wilson said: "I was delighted to work with the Team at Isocom Components 2004 to deliver this significant, regional transaction. The business has an exceptional reputation in the industry and a strong, global presence and I have no doubt that the investment by Foresight will enable Isocom Components 2004 to deliver its ambitious growth plan.”

Corporate Finance Manager Michael Stewart added: “Isocom Components 2004 is well-established in the optoelectronic components industry and stands to benefit significantly from its integration into the Foresight Group portfolio and we believe this move will only enhance Isocom’s growth trajectory. I’m excited to see Isocom achieve new heights within the Foresight Group.”