Kroll Transaction Advisory Services provided Financial Due Diligence to Accrofab, a portfolio investment of Endless. The services were in connection with Accrofab’s acquisition of RTI Advanced Forming Limited from Howmet Aerospace.
RTI Advanced Forming Limited specialises in superplastic titanium forming and has an impressive customer base including aerospace OEMs and Tier-One suppliers. The acquired business will be separated from Howmet and integrated into the Accrofab group.
Accrofab was acquired by Endless LLP’s Enact fund III in 2023.
This acquisition will support the expansion of Accrofab’s position on single-aisle aircraft and grow their customer base across engine and structural precision engineered component enhancing the offering of Accrofab.
Q&A with Stuart Finch, Managing Director at Kroll
Stuart, can you tell us what your role was during this acquisition and who was on your team?
Kroll was engaged by Endless and Accrofab to conduct Financial Due Diligence including financial modelling and other advisory work. Kroll has a long-standing relationship with Endless and we were delighted to work with them again on this transaction.
I led a senior team of experienced professionals from the Transaction Advisory Services and wider Advisory teams that included Martin Gray (Managing Director), Paul Carter-Bell (Senior Director), Richard Li (Director), Lucy Edwards (Manager) and Adnan Hamarneh (Senior Associate)
Why is conducting due diligence so important for transactions like this one? What is the consequence of neglecting this step?
Accrofab developed its initial investment rationale on RTI based on its knowledge of the business and market positioning. Rather than “boiling the ocean,” our approach is to spend time understanding the key drivers of the investment hypothesis and focusing our due diligence to robustly test and support the critical areas.
For example, RTI was part of the wider Howmet Group, and it was critical we understood the nature and quantum of intercompany costs and what benefit was provided to RTI in return for these costs. Had this work not been undertaken, there may have been additional costs post transaction that were not factored into the buyers’ investment decision and valuation. We helped the Accrofab and Endless teams to understand what the RTI business would look like in combination with Accrofab and the synergies that this would unlock.
By neglecting focused due diligence, acquirors risk taking on a business with significant, undiscovered liabilities that can result in real financial loss in the future. Conversely, by spending time understanding the real commercial and financial drivers of a target business, means potential synergies can be robustly quantified, thereby providing our clients with ammunition to successfully compete in a transaction auction process.
Does your strategy change for each client and if so, why is this necessary?
Absolutely! Every transaction and client are different, and it is critical to provide a service that is tailored to the client’s needs and the Target business.
On this transaction the data we had to work with was initially limited to a high level with insufficient detail to provide a deep enough insight into the commercial drivers of performance and the financial issues that needed to be understood. This was where our model of deploying a senior, experienced team paid dividends. We were able to leverage this experience to develop a comprehensive financial model to flex future scenarios and understand how the business would be able to react to various sensitivities.
"We like to work with clients we know. This allows us to tailor or approach to best support them. We believe in speaking to our clients regularly between transactions so we are aware of their pipeline and can offer our insights on sectors / geographies from across the firm."
Why was Kroll including yourself, the best suited to support Endless and Accrofab on this acquisition, and what specific area of expertise made you confident for the job?
As I mentioned earlier, we deploy hands on, senior-led teams. We understand that our clients hire us for our experience and our expertise and Endless in particular, wanted us to be an extension of their deal team. We brought expertise from multiple service-lines across Kroll but did so whilst maintaining an efficient team structure and providing huge value to our client. Our work fed directly into Endless’ Investment Committee paper, further supporting the deal team during the busy period leading up to signing.
As Managing Director in the Transaction Advisory Services practice, what necessary information do you provide your clients before going ahead with large acquisitions to make sure they are well informed, and does this change for each client and situation?
The output of our work is a concise, issues-focused report that addresses the key risks and opportunities available to the client as part of the transaction. Of most value is the real-time advice and views we provide throughout the transaction – the report is a culmination of our client interactions – very much a ‘no surprises’ approach.
How do you expect this acquisition to boost growth and expansion for Accrofab and would they have been able to accomplish this without this recent deal?
The acquisition is another step in Accrofab’s buy and build strategy and gives the business access to some unique engineering expertise as well as expanding its single-aisle aircraft offering. The acquisition will also provide the overall group with a more diversified customer base and will present revenue generating opportunities to both businesses. This would not have been possible without this transaction.
