Investment Strategy

Transforming British Precision Engineering Businesses

Cyrus Investment Management LLP invests in and actively manages British precision engineering businesses. Through the injection of new working capital, new management, new enhanced growth and profitability strategies Cyrus will seek to enhance the value of its investments with a planned exit after 3 years.

The Market

CIM invests in and actively manages British precision engineering businesses.

 

Manufacturing processes are advancing rapidly, becoming more sophisticated and automated, hence increasing the need for high precision component parts able to function on a repetitive basis, often under extreme conditions and always to a high degree of accuracy. Precision engineering companies fulfil this instrumental role by being able to create and replicate parts, to the highest of standards, necessary to anything from operating drilling platforms, to submarine engines.

 

Manufacturing is an integral part of the UK industry sector contributing ca. £140 billion to the economy, employing over two million people. There are currently about 1500 British precision engineering companies, of which the majority are small to medium sized companies that service a single client or sector such as the automotive industry and Aston Martin or the aerospace industry and Rolls Royce.

Investment Strategy

The Target Companies

Out of the ca. 1500 companies operating in the British precision engineering sector, the majority are of small to medium size with turnovers between £2-5 million. CIM believes that the over dependence on single clients, the inability to access debt, and need to acquire expensive equipment has pushed many well established companies into financial difficulty. In addition, the absence of corporate buyers for single companies of this size, means there is an opportunity to make growth investments in distressed companies. We believe there is strong value in the exclusive engineering and security accreditations, specialist equipment, and highly trained engineers within each company.

 

CIM has identified a significant pipeline of undervalued and/or distressed assets suitable as growth investments and will seek to leverage its profound understanding of the business sector and business components constituting the business’ value, including management, existing machinery, stock technical accreditations, land and customer base. In addition, all companies in the CIM investment portfolio will provide additional value and synergies to other companies under management through collective sales, and maximising the use of machinery, designs and facilities.

The Investment Process and Case Studies

The Investment Process

In the immediate aftermath following an investment, the CIM management team will work with the Trading Subsidiaries to renew their management structures by appointing a new Managing Director and Finance Director, whilst existing middle management can be retained and promoted. Where necessary interim management support will be provided, often in the form of an independent executive chairman able to provide a steady hand during this period of dramatic change. The CIM management team has an extensive network of senior executives able to fulfil this role as well as provide an independent view in the negotiation of better terms from their suppliers and customers. The CIM management team is also able to advise on a possible relocation of a business to an area where that business could qualify for government grants and support, and will encourage Trading Subsidiaries to outsource their common back-office and administrative costs to a single supplier so to achieve overhead efficiencies.

Case Study: Taylor and Sons

Taylor and Sons, the historically important Welsh engineering company, was acquired out of administration by Cyrus-RW Group in 2009. The company, trading since 1850, has been a key supplier of parts and machines to Welsh Heavy Industry since the industrial revolution and was a key manufacturer of Spitfire shells during WW2.

 

Following the acquisition, Cyrus introduced new management, modernised the factory, installed CNC machines and has continuously re-invested in the company. As a result Taylor and Sons has grown their workforce from 15 prior to acquisition to 45 employees post-acquisition, and is once again profitable.