Tesla
Transaction Background
Graphite Capital backed the management buy-out of Tesla in 1995. Tesla is an engineering company whose medical division produces the gradient coils used in MRI body-scanners. Its physics division manufactures large magnets, which are used in nuclear particle accelerators for high-energy physics research.
Deal Attractions
We supported a strong management team which had significant experience in the sector and strong relationships with Tesla’s key customers. The company occupied a unique position as one of the world’s leading independent suppliers of gradient coils to the medical market. It was also set to benefit from a substantial supply agreement with CERN, the nuclear energy research centre based in Geneva, which planned to build new particle accelerators.
Achievements
- the management team secured substantial long-term contracts in both its core divisions
- the business invested in new equipment and additional headcount to increase capacity at Tesla's main production facility to cope with new contracts
- add-on acquisitions in the UK, Continental Europe and the United States contributed to growth
- turnover grew substantially and operating profit more than doubled
Exit
- as a result of the company’s strong cash generation, we redeemed our preference shares early
- the company was refinanced twice producing further substantial cash proceeds to its shareholders
- the company was sold to a management buy-out backed by Bank of Scotland in March 2005
- the sale generated a multiple of 2.6 times the cost of our investment
