Private equity investment: Nanotechnology case study: Mantis Deposition

Acuity Advisors helped to secure strategic private equity investment for a firm of Oxfordshire-based nanotechnology specialists

Here is how we did it…

The opportunity

Mantis Deposition Technology is a world leader in speciality instrumentation, working with the thin-film coating community to develop top-quality deposition components and systems. The company wanted to further exploit its potential, focussing on specific international markets. Acuity Advisors successfully procured and oversaw strategic private equity investment on behalf of Mantis to help boost its growth potential and commercial ambitions, therefore reaching a more global market.

The Business

Founded in 2003, Mantis Deposition are a leading speciality instrumentation firm that develops high-quality deposition components and systems for the thin-film coating community. Its products are designed for all cutting-edge materials research and pre-production coating applications. The company was founded by scientists who used their expertise to develop a deep understanding of nanotechnology, instrumentation, patented IP and commercial capability.

Mantis’s core business focuses on nanocoatings; these are the deposition of thin layers of particles on a surface. Advances in instrumentation have allowed an expansion in the development and use of nanotechnology and Mantis has developed its own unique technology. Mantis’s nanocoatings expertise, which is protected by patents and IPR, has opened up lucrative opportunities for the firm to expand its business worldwide.

The need

Mantis’s products are used in a range of academic and research applications at the forefront of thin-film coating technology. It has more than 120 customers, including the University of Cambridge, MIT, Stanford, NASA and Toyota, and has a proven profitable business with immense growth potential. But despite a proven instrumentation business, Mantis recognised that there was scope to take its products to a more global market. It needed investment to boost its sales and marketing power, so it could fulfil its potential in markets such as the USA, Japan and Germany.

“The technology we have developed at Mantis for nanocoatings and, in particular, nanoparticles deposition has tremendous market appeal – both within R&D and also industrial processes. We have a substantial amount of IPR; instruments, systems and coatings. The challenge for us was how to take this message to the world,” says Lars Allers, Mantis managing director.

In setting out to achieve the above, Mantis faced two major challenges:

• It needed to adopt the right “dual-track” approach:

Mantis was aiming for smart investment and realised that it needed corporate advisors on board who had a track record in tackling a dual-track process of approaching trade buyers and investors.

• Capturing the essence of its value proposition:

Mantis knew it needed to recruit a corporate team who knew their business inside out and who could portray its ambitions and business values to prospective investors in a convincing and compelling manner. They needed to use a corporate advisor who could quickly get up-to-speed and had the technical know-how and track record to be able to talk their language.

The Mantis management team were running its business and were too busy with the day-to-day activities to take themselves out to attract investors. Geographical closeness was also a factor and they wanted a team that was easily accessible. It soon became apparent that Acuity fitted the bill.

“Either divesting our business or finding the right investment partner was not going to be an easy process. From the outset it was apparent that we needed corporate advisors with the necessary track record, technical understanding and who had the ability to run a dual-track process. I knew almost immediately that Acuity was the right choice for us as a company and this was confirmed throughout the process,” says Lars Allers.

The approach

Acuity have a strong background and experience in this sector and so already had an insight into what was necessary. It could also offer a strong geographical proximity to Mantis to smooth the overall communication process. Acuity focused on developing a comprehensive Information Memorandum, which portrayed Mantis’s complex value proposition in simple and understandable terms. The team at Acuity then used its international expertise and contacts to research, profile and then proactively approach various prospective targets.

Acuity’s hallmarks of tenacity and empathy were apparent as it set up management meetings with the investment contenders and gave Mantis a brief on how to handle themselves in those crucial meetings. They made sure the Mantis management team understood how to portray its messages in the right manner.

Eventually, three very different final offers were forthcoming. Acuity coached Mantis through the decision-making process, so an agreement could be reached on the outcome that was best for Mantis. Acuity also helped to recommend a legal and tax team and offered advice on due diligence.

“Acuity created a number of compelling options for me as the main shareholder in the company. Deciding which option was best for me and the business was in itself a challenge. Acuity was able to objectively highlight the pros and cons in each case and I felt we walked through the decision-making process together. It was clear in every interaction that they had my best interests at heart,” comments Lars Allers.

The result

Mantis agreed a strategic investment, which included a cash-out element for the founders with private equity specialists NVM Private Equity.

“We were very pleased with our choice to use Acuity Advisors as our exclusive advisor. The strategic investment provided by NVM is exactly what the business needs and has already brought a lot of focus. Acuity understood from the outset what we were trying to achieve and left no rock unturned in their quest for the right partner. I would certainly plan on using them again,” adds Lars Allers.

“As the investor, it was reassuring to know that Mantis was being advised by Acuity. Acuity continually thought ahead to ensure that we were given exactly what we needed and this certainly helped secure the investment. We are delighted to have invested in Mantis and do not underestimate the role Acuity Advisors played during this process,” Peter Hodson, NVM Private Equity Limited.

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