Cursor Controls Case Study
Maven supports MBO and enables the business to complete the acquisition of a key customer to fulfil its growth ambitions
Revenue to Over £9.5m
to over 30 countries
Cursor designs and manufactures human to machine interface products for a wide range of applications in the medical, industrial and transportation sectors. Cursor offers one of the world’s largest and most flexible range of feature rich industrial trackballs, trackpads and unique Hybrid Technology Solutions, supporting over 1500 product variants, many of which benefit from leading edge patented technology, distributed to over 30 countries.
Cursor Controls can trace its roots back over 75 years, being a direct descendant of the Marconi Company who first developed trackerball in the 1940s for integration into their Military Radar systems. The business was sold by Marconi in 1990 and has continued to operate as a successful independent company, with over 90% of its sales now going to international markets.
Maven’s involvement started when two of the founding owners of Cursor Controls felt the time was right to plan for a full exit. Succession had already been considered, with the business having appointed a number of experienced executives into key positions. The vendor had also overseen a stable period of year on year increase in turnover, leaving Cursor with a range of possibilities for its future direction.
The existing management team, led by Managing Director Neale Sutton, chose Maven to help fund the MBO and support the business as it embarked on growing its footprint in new and existing markets. Since Maven backed the buyout, Cursor has grown consistently, both organically and through acquisition, and revenues have doubled to over £9.5 million.
The key to a successful business relationship is aligned values
Flexible financial structuring enables management to complete buyout as well as make a key acquisition
Following a ‘beauty parade’ the management team was unanimous in its decision to progress with Maven. “We found the discussions with Maven to be very constructive, and arguably the most valuable Maven contribution during the early stages of investment was their experience and flexibility with respect to the financial structuring of the buyout. Prior to the buyout we had been cultivating a key acquisition opportunity for a significant period, which was also a key element underpinning the accelerated growth plan for Cursor, so it was critical that the structuring of the MBO did not restrict our ability to move forward with this strategic opportunity,” says Neale.
Maven discussed the potential acquisition at length with the management team and agreed to overfund the MBO transaction with the intention of having cash on the balance sheet with which to make the acquisition within 6 to 12 months of completion. An equity investment of £4.5 million was agreed, enabling the business to hit the ground running from day one.
“Maven proved very supportive, joining negotiations with external debt providers to secure the best terms possible and structuring their own investment to allow us to effectively prefinance the acquisition,” Neale explains. “This approach demonstrated their commitment to backing the management team and allowed us to move forward with the proposed acquisition immediately following the MBO.” Within a year Cursor had acquired their largest customer, Belgium based NSI. The acquisition of NSI proved to be a success, enabling the enlarged group to adopt a collaborative relationship in developing new products and expanding its footprint business in mainland Europe.
Building a sustainable platform for future growth
The best companies are almost always led by the best people, but as a business continues to grow it often needs to attract new skills and expertise to help achieve its ambitions. Neale and his senior executives had been instrumental in the growth of Cursor to date and Maven was able to utilise its extensive network of contacts to supplement the team with further talent to enable Neale to focus on more strategic areas to allow Cursor to continue to grow. “Maven played an important role in the process of bringing on board a new Finance Director and Chairman who complemented our existing team perfectly,” says Neale. “These additions not only brought significant board leadership experience, and provided invaluable guidance and support, but it also meant that we were well positioned from the outset to deliver on our strategic objectives.”
Success brings interest from prospective buyers
In the three year period of Maven’s investment Cursor won a number of significant contracts, modernised its manufacturing facility and more than doubled profitability. With the business continuing to trade strongly and moving towards its next stage of growth it was agreed with Neale and his senior team that an exit should be sought. “When the time came to consider a potential exit process, Maven’s experience, sector knowledge and strong contact network once again proved invaluable,” says Neale. “Maven not only assisted with the appointment of professional advisors for the transaction, with whom they had worked previously, but were also happy to join the more challenging face to face negotiations with the eventual buyer.”
The preferred buyer was the listed electronics business DiscoverIE which had a highly complementary proposition and provided an excellent platform for the continued growth of the Cursor business. The sale also rewarded Neale and his team for their hard work in helping establish Cursor as one of the leaders in its field. “Maven ensured that the interests of all parties remained aligned on the core principle of maximising value,” says Neale. “In our experience, their reputation as one of the UK’s leading private equity managers is deserved and their measured approach was crucial in enabling us to deliver strong shareholder returns.”
The sale to DiscoverIE Group realised a 2.7x return for Maven in just over three years.