A family-run water treatment company has been acquired by the founder’s daughter in a seven-figure deal backed by Mercia’s SME Loans fund.

The buy-out of Yorkshire-based Excel Water gives control of the business to Emma Armitage, the current Managing Director, and allows for the partial retirement of her brother Darren Field. Emma now aims to increase turnover by 20% in the year ahead and create four new jobs as the company targets growth resulting from opportunities including water deregulation.

Excel Water, which is based in Allerton Bywater, manufactures and instals commercial water treatment systems for businesses throughout the country – typically those producing goods such as food, pharmaceuticals, automotive and cleaning products which require a higher quality of water for production purposes.

It is one of the few companies of its type that can provide a full range of services from initial water analysis and borehole treatment to servicing and maintenance of plant. The company has installed plants for organisations including Astonish cleaning products in Bradford, the BMW plant in Oxford and the Royal Bolton Hospital.

Excel Water was established in 1992 by Brian Field who had previously worked in the water industry. It currently employs nine staff including Darren’s son James Field. Emma joined the company in 2004 after working in the waste management sector and has been Managing Director since 2014.

Emma Armitage said: “I am proud to be taking over the family business and plan to make the most of the opportunities ahead. The deregulation of the water industry in recent years has given companies greater control over their water supply, enabling them to save on their utility bills. At the same time there is greater focus on saving water for environmental reasons. I look forward to working with our loyal team to take the firm to the next stage of its development .”

SME Loans is one of the few funds able to support the management buy-out of a smaller firm using solely debt funding.  Andy Heaton of Mercia added: “Emma is a very impressive leader who has built a strong team. We are pleased to be able to back the buy-out of this successful family business in a deal that will help secure its future and the jobs of its staff, and position it for future growth.”

Paul Grace of YBFA provided fundraising advice to the company. He said: “It’s been a pleasure to work with Emma and structure the funding for the management buy-out.  Since we first met, her passion and enthusiasm has shone through, and I have full confidence the business will go from strength to strength. Mercia demonstrated a thorough understanding of the business and provided a unique funding structure which enabled the buy-out to take place while allowing sufficient cash to be reinvested for future growth.”

MOT Expert is based in Northampton and is the UK’s most established MOT course provider. MOT Experts’ trainers together have over 50+ years of experience in the MOT industry and are fully equipped to support their students through the numerous courses.

One of the UK’s leading providers of training courses for MOT testers is planning to expand after undergoing a management buy-out backed by a loan from Mercia.

MOT Expert, which is based in Northampton, helps over 1,000 candidates each year to gain their qualifications including staff from some of the major garage chains.  The buy-out gives control of the business to Ross Laurence, who has managed it for the past five years. The deal was supported by Mercia’s SME Loans Fund alongside investment from Mr Laurence.

Established in 2015, MOT Expert has become a well-known brand in the industry that boasts an above-average pass rate of 95 per cent. The company offers a wide range of SEG and IMI-accredited MOT tester training programmes catering for professionals at all levels and covering cars, light vehicles and motorcycles. It also offers a two-day test centre management course which equips individuals with the skills to run an entire MOT testing business.

The company, which has been growing steadily under the current leadership, has recently won a number of major contracts and made a significant investment in its premises and equipment. Two recent industry audits have also shown that it has lowest risk rating in UK.  It now plans to continue its expansion by offering a range of new courses, tailored training programmes and consultancy services, and expects to create four new jobs in the year ahead.

Ross, a former British Army instructor, also ran his own recruitment company before joining MOT Expert in 2016. He said: “Having led the business for five years, I am delighted to take ownership of it. MOT Expert has built a reputation for high standards, thanks to the hard work of the team. Going forward, we will continue to enhance our service to maintain our position at the forefront of the industry.”

Mercia’s SME Loans Fund is one of the few debt funds that will support management buy-outs of smaller firms. Peter Rooney of Mercia added: “The MOT Expert brand is already well established in training circles in the automotive sector. Ross is passionate about the business and has played a key role in its growth to date. We are pleased to be supporting this buy-out which will give him the opportunity to build on its success and take the business forward.”

Matt Usher of Empire Finance provided fundraising advice to the company.


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Under the excellent leadership of Paul Taberner, our debt teams have made solid progress over the last six months and despite the economic backdrop they have continued to lend, seeing some of their busiest ever weeks during September and October. The drivers behind this growth are initiatives which the Group has been working hard to bring to fruition over many months.

There is no doubt that COVID-19 has created an unexpected stimulus in demand for debt finance, but the underlying driver behind our growth has been the initiatives that we have been working on for many months. Our debt funding has been critical for businesses that are successfully mitigating the challenges of this pandemic or indeed have experienced positive trends upon which they seek to capitalise.

In April 2020, we announced an extension of our Northern Powerhouse Investment Fund (“NPIF”) debt mandate that was increased by c.£30million taking that debt fund alone to over £80million. NPIF is playing a really important role in helping to unlock the potential of small businesses and we are delighted to build on our successful partnership with the British Business Bank (“BBB”), as together we continue to realise the value in the regions.

In May, we announced our accreditation by BBB to lend via NPIF under the Coronavirus Business Interruption Loan Scheme (“CBILS”) from July 2020. This has really helped us to support those businesses that are losing revenue or seeing cash flow disrupted as a result of COVID-19. At a time when many of the high street banks have been unwilling or unable to support small businesses, or indeed unable to react quickly enough, Mercia has been able to resolve these short-term needs through CBILS.

As our business model shows, our output is not solely reliant on publicly-funded initiatives. In September 2020, we announced an additional commitment to our debt funds alongside our well-established investment partner, the Greater Manchester Pension Fund. Mercia SME Loans II, a fund of up to £40million, helps ambitious, regional businesses that are seeking debt finance as they move beyond the cash flow constraints caused by the COVID-19 pandemic. The fund will typically lend up to £1.0million to support the growth of regional SMEs, predominantly across the North West of England. Mercia’s first SME Loans fund was launched in 2015 and backed 52 businesses, including high-profile brands such as Harrogate Spring Water and polyurethane fabricators, Rosehill Polymers.

COVID-19 has created challenges that we have not seen since the recession of 2008 and dot-com crash of the late 1990s. Having led investment teams through both periods what I have learnt, and which is the very essence of Mercia today, is the importance of ensuring that we behave responsibly with the right type of capital to deploy at the right time.  Economic downturns such as this will always create short-term funding needs for those businesses and Mercia is well placed to fill that gap, as we help viable businesses return to prosperity.

Over the last six months Mercia has seen investment levels similar to those of the same period last year. Increased levels of co-investment have in part been driven by the introduction of the Future Fund initiative but certainly, capital deployment from Mercia has not slowed down as a result of COVID-19. Mercia’s CIO, Julian Viggars, sets out Mercia’s investment highlights in a difficult macroeconomic environment.

During the six months to 30 September 2020, Mercia has:

  • invested £42.1million in 81 businesses across its four asset classes of venture, private equity, debt and balance sheet against an additional £46.2million in syndicated third-party investment. Highlights include:
    • of the 81 companies supported, c.32% were new companies added to the broader group portfolio;
    • 100% of businesses supported have been in the UK regions, outside of London;
    • £10.9million invested into 14 balance sheet portfolio companies alongside £11.5million from the Future Fund and £10.5million from other investors including £3.6million from Mercia-managed funds.

Mercia benefits from a strong cash position with c.£230million of available investment capital in its third-party managed funds and £24.9million unrestricted cash on its balance sheet each as at 30 September 2020, providing strong liquidity to selectively support its portfolio.

Edison’s research – The hybrid model – halfway home provides a further progress update on our three-year strategy plan.


Our Complete Connected Capital solution has the added benefit of offering the right type of capital for investors as well as for existing and prospective investees, whether you are a private investor interested in tax-efficient investing via Mercia’s EIS or Northern VCT funds, or an institutional investor seeking investment into long-term debt, private equity or venture capital funds. Indeed, we find many investors associated with our investment activity across our managed funds are also shareholders in Mercia Asset Management PLC. We thank all our investors and shareholders alike for their belief in our regional philosophy coupled with their confidence in our ability to provide investment returns. Some of our recent highlights include:

  • The sale of Woodall Nicholson for 9.6x return on investment cost in our private equity fund
  • The continued strong performance of our debt funds accelerated by our CBILS accreditation
  • Strong performance of our venture funds driven by exceptional returns such as our c.95x on investment cost return associated with Blue Prism plc, where we were the founding investor
  • Recent return of 12x investment cost for the sale of The Native Antigen Company, again where Mercia was the founding investor. This exit was split across one of our venture funds, an EIS fund and our balance sheet proprietary capital – a real exemplar of the benefit of Complete Connected Capital for investors and investees alike

For our portfolio and future investments, we firmly believe that the most critical driver of success is innovation that will enable us to adapt to new ways of working and will help drive the necessary regional recovery, both in terms of societal and economic benefits.

Innovation such as this is often driven by small, agile and ambitious businesses; precisely the same attributes which Mercia looks for when backing new portfolio companies.

Register here for Mercia’s Year in Review webinar

Mercia is continuing its support of UK SMEs with an additional commitment to its debt funds. Over the next five years, Mercia will provide up to £40million to support the growth of regional SMEs across the UK.

Mercia SME Loans will be providing a much-needed source of finance to ambitious, regional businesses that are seeking debt finance as they move beyond the cash flow constrains caused by the COVID-19 pandemic.

Mercia’s investment team can lend between £100,000 to £1million to fund working capital, acquisitions, capital investment and management team restructures/buyouts, an area of specialism for Mercia.  The fund can invest in all areas of the UK with a focus on the North of England.

Mercia SME Loans is backed by existing investor, Greater Manchester Pension Fund. It builds on earlier investments completed into previous debt and private equity funds in a relationship which spans more than 15 years.

Mercia’s first SME Loans fund launched in 2015 and backed 52 businesses including high profile brands such as Harrogate Spring Water and polyeurathane fabricators, Rosehill Polymers.

MD of Mercia Debt Funds, Paul Taberner (pictured), explained: “Mercia SME Loans backs profitable and ambitious SMEs that are reigniting growth plans stalled during the first part of this year.  We’re already seeing a strong pipeline of new deals as the regional economies start to recover and we hope initiatives like the launch of our new fund will stimulate even more growth as the country fights back to recovery.”


Views from a CEO – Giles Hampson, CEO of Recruitment Management Group


About RMG

RMG has successfully positioned itself within the recruitment sector as an executive search consultancy. The firm takes pride in recruiting outstandingly talented people who make a significant and lasting impact across a range of sectors including healthcare and chemicals and STEM.

Level of investment received

£300,000 from Mercia’ SME Loans Fund in January 2017 to support at buy-out of the founder-shareholder.

Why did you choose Mercia over other providers of finance?

As the transaction started life as a vendor-initiated management buy-out (VIMBO) it was actually the founder of RMG who had led the initial discussions with the team at Mercia. Some of the negotiations were already underway by the time I joined the process, but the main thing which impressed me about Mercia was its investment director, Chris Pestell.

Chris gave a deep overview of the process, warts and all. He was really good in presenting the fund proposition, as well as giving practical details about the process itself, including how and why transactions like ours could get into difficulty.

Negotiations like this take time and ours took around six months but throughout the process Mercia was really supportive of the transaction and the process itself was seamless.

I keep in contact with Chris now even though he’s not my day to day contact but I’m very grateful to him. Without Chris’ support I wouldn’t have received the investment.

My main investment contact now is Paul Ferguson. Paul is great; he’s reasonable and very good to deal with and he’s shown a really flexible approach as a lender.

What progress has RMG made since the initial investment?

I’m pleased to say that our sales have strengthened since the investment. The business itself had often hit around £750,000 turnover, but since we received the investment, we have consistently met £1million. Of course, this year might be a little different, but we have worked really hard to maintain our sales levels.

How did the COVID-19 pandemic affect your business?

It was actually the week before lock-down which was a bit more surreal. We had a few projects stalled and candidates pulled out of roles and nobody really knew what was going on. But we had to maintain our pipeline as we couldn’t have just closed our doors.  In the following weeks we worked hard to maintain our contacts and build the pipeline. We didn’t need to furlough any of our staff or ask for any capital repayment holidays on the loan, so I am pleased with how we have come through the year.

Mercia was really supportive during the period too. Chris gave us some helpful advice about managing cashflow which was great.  I also found the series of webinars they ran excellent; they helped me to think things through and bounce ideas of other people and the sessions run by Patrick Dunne were very reassuring indeed.

How would you describe Mercia as a lender?

Merica is a responsive, straightforward, flexible, and practical lender. The team is open minded, and they operate a robust process. You know you have to prove yourself and the value you can add, there were some tough conversations during the early days of the process, but I actually thought that was useful. The team asked more probing questions than some of the other lenders we had been talking to, so you know you are buying into a professional outfit.

What advice would you give to other SMEs seeking finance from Mercia?

The most important thing to consider when assessing a potential lender, is not just the offering and the deal terms, but the people you will be working with as part of this process. See things beyond the actual transaction and try to get a feel for what type of support, challenge and working relationship you are going to have. Like it or not, you will be having plenty of dealings with any lender post transaction, in either an equity or debt scenario, there is often a saying that says “People buy from people”, in this case I believe this can be extended to “people borrow from people!”


Chris Pestell, Investment Director of Mercia SME Loans explains how to avoid the most common mistakes that companies make when applying for a business loan. As an investment director and former banker who has spent over 30 years liaising with companies seeking loans, Chris said it never failed to surprise him how many applications fall short of the mark. Here he sets out his top tips to help you when you are applying for a business loan.


  1. Think like a funder

Most entrepreneurs are passionate about their business and love talking about their line of work. While they may have developed a good grasp of finance, it’s usually a secondary skill and they are less confident in dealing with figures and forecasts.

By contrast, the figures are the focal point for investors. Of course, they will want to know all about the business, and most have a genuine interest in helping you grow, however, the first questions that will spring to their mind are: Is the company making money? What do the figures look like? In many cases when funders open your business plan, they will turn straight to the back to read the financials first.

It is useful to understand this difference in mindset when you are dealing with funders. Another consideration is that the person you are dealing with is unlikely to make a decision in isolation – no matter how much he or she believes in your business, their recommendation will have to be approved by a credit team, and they will need the facts and figures to back your case. If you can provide all the right information in the right format first time round, it makes it easier for them to put together their own report to the credit team and thus increases the chance of approval.


  1. Get professional help with figures

Given the difference in approach between business owners and funders, it is not surprising that the financial section of the business plan is where most problems arise. Businesses find it easier to explain their products and services and their modus operandi rather than produce financial data. Often, they don’t understand what type of figures they are expected to produce, and they don’t always employ the right people to help them.  This is mainly because they don’t see the value in getting this type of help.

Financial forecasting is a specialist area and is distinct from historical accounting. There is a real skill to producing a robust financial model that can be flexed according to the key performance indicators of your business.  A funder will want to know what would happen if the assumptions that have been made don’t work out as planned, so a well-constructed financial model which a funder can amend is extremely valuable.  It is well worthwhile using an adviser who has particular experience in this area – don’t assume that your current adviser is up to the task.


  1. Present figures in the right format

Given that the funder will want to be able to flex your forecasts and carry out sensitivity scenarios, submit them in a program such as Excel that allows this, rather than a ‘fixed’ format such as a pdf.

In addition to a cashflow forecast, an investor will also want to see a funds flow forecast. Both contain similar information, but are presented in a different way with the latter showing movements in working capital which helps to confirm that the business can afford to service the debt.

It’s also a good idea to include the key financial figures in a box in the introduction to the business plan. This will help to satisfy the fund manager’s curiosity and ensure their initial questions are answered at the start!


  1. Don’t try to cover up problems

One of the main reasons companies fail to provide the right information is that the figures highlight problems in certain areas of the business. This situation poses a real dilemma – do you leave out the offending set of figures and hope the funder won’t notice or include them and blemish your track record?

An investor will expect you to have some areas of weakness – in fact, I have never seen a company that doesn’t have some issues, so a too perfect set of figures may in itself arouse suspicions.

My advice would be, don’t try to cover up such problems but instead present them along with a plan on how you are going to mitigate them. This approach will help you build trust with funders from the start.


  1. Keep forecasts realistic

Every time I see a ‘J curve’ in the forecasts I wonder how the company is going to achieve it. Some companies believe they can change the world – but while setting high targets is fine for internal purposes, in your business plan projections it’s best to be realistic or a funder may regard them as unobtainable.

A funder will always look at historic patterns to determine how realistic forecasts are, so if you are forecasting significant growth and haven’t achieved this historically, you need to have some cast iron reasons as to why this will happen.


  1. Be honest about management skills gaps

From the business plans I review you might think that every company in the UK has a very strong management team – yet clearly that’s not true. After the financial section, it is the information on the management where most omissions occur.

Often business owners themselves do not want to acknowledge, or are not aware of, their own limitations. Again, it is better to be open and objective about gaps in management skills or experience and state how you will overcome these, perhaps through training or recruitment. An open approach, accepting of areas of weakness, will command far more respect from a funder.


  1. Don’t forget the competition

While the company information is generally the strongest section in all business plans, competitor information is just as important. Ensure that you identify them, assess their strengths and weaknesses and how their position compares to your own. This information will be checked during the due diligence process but it’s best to include it and give your own view from the start.

By following these seven guidelines you will make it easier for the lender to approve your application and give yourself the best chance of success. If you would like to apply for a business loan from Mercia then please fill out this application form.

One of the challenges that we at Mercia know that small businesses face, is accessing funding. And now, during COVID-19, this has just become even more stressful as hundreds of thousands of businesses are unable to access emergency funding, as banks are battling to process applications or are turning down customers – oftentimes without giving any reasons.

To recap, there are a number of different loans that are available, including our own CBILS, and it is essential that these loans are being made available quickly. Or that a response to these applications are made in a speedy manner, so that small business owners are not left wasting valuable time when they can least afford it.

The loans that are available currently include:

Coronavirus Business Interruption Loan Scheme (CBILS)
For small businesses with a turnover of less that £45m per year. These small business in the UK can borrow between £25,000 and £5m – in this instance from Mercia – with the Government guaranteeing 80% on each loan and covering the first 12 months of interest payments.

Bounce Back Loans
Small business can borrow between £2,000 and £50,000, and the good news is that these small businesses can access this cash within days. Interest free for the first 12 months, these loans can be applied for online and the process is short, fast and simple.

Other options that may help SMEs and even micro/small businesses include Swoop Funding that can help with the funds mentioned above, as well as other grants or funding solutions that small businesses may find as life-saving or a healthy boost during this pandemic, and indeed for future growth when we get back to business as usual.


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