Axial Systems performs MBO

Networking and security reseller Axial Systems has a new boss, Ash Hussain, after completing a private equity-funded management buy out (MBO).

NVM Private Equity has taken a majority stake in the McAfee and Juniper partner. Following the transaction, Hussain has been elevated to chief executive officer, with Graham Lindley installed as financial director.

Paul Spencer, founder and former managing director and majority shareholder of Axial, will remain on board as a non-executive director. He will retain a small shareholding in the Maidenhead-based firm.

Spencer told CRN: “I started doing this 19 years ago and wanted to get to a stage where I had financial security for my family. About a year ago, Ash and I noticed that other companies in the sector were being bought for surprisingly high prices and realised that we must be worth a lot more than we imagined. After talking to a corporate finance firm, that view was confirmed.

“This has been a very good result for everyone. If I had hung around in the managing director’s role until the contemporary retirement age, it would have been limiting to everyone else.”

The deal was completed before the 6 April deadline, under which new capital
gains tax regulations would apply to share transactions.

Mark Spinner, head of the Private Equity group at Eversheds, which advised NVM on the transaction, said: “The whole deal went through relatively quickly, which was useful because it saved all the parties a lot of money on taxes. And we couldn't have done that if everyone wasn't in accord with the move.”

Spinner played down fears that an MBO could create any asset stripping by
the new private equity stakeholders. “An MBO like this will crystallise the fruits of the hard work put in by the management team,” he said.

“The company is well-placed to take advantage of the growth opportunities in this market. It makes much more sense for them to grow their assets. There is a greater emphasis on growth. If the business case is there, the new stakeholders will want to invest.”

Spencer agreed: “While the immediate plan is to focus on organic growth, we now have the financial backing to make acquisitions, should the right company come along.”