Cork Industries was set up as a holding company in June 1996 to create an engineering group through leveraged build-up. Venture capital backing was provided by Candover, which specialises in management buyouts.
‘It seemed like a real opportunity to acquire businesses, to weld together and create something of real value,’ Nigel McCorkell, Cork’s chairman recalls.
The group started by buying an aerospace engineering firm, Baxter Woodhouse & Taylor. Engineering group Wellman was selling six non-core engineering businesses ‘which looked like they had potential’, McCorkell says. These were added to the Cork group.
Subsequent acquisitions were bolted on to the core aerospace activities. Group turnover was £55m by the end of 1997, and there are now 10 firms in the group. The LBU route has meant carrying high levels of debt. ‘You have to be sure of business performance,’ explains McCorkell.
‘You must have a coherent plan, and a financial structure that meets that plan. It is no secret that venture capital organisations need to make a profit and exit, and that is always in the back of our minds. But for this group, the exit has not been decided yet.’
McCorkell admits that when Cork started, there was no clear idea of where it would end. But the strategy is clearer now, he says. As well as aerospace, Cork has significant power transmission businesses. ‘We see opportunities and benefits in having a third leg,’ he says. ‘We will have no trouble getting finance. Candover has made a real and tangible commitment.’