The initial consideration payable to the owners of VIC, an Italian manufacturer and distributor of fastening systems predominantly to the white goods industry, is €27m (£22.5m). That’s hardly an exacting valuation for a business that made pre-tax profits of £4.4m in the last financial year and enjoyed a robust net margin of 20 per cent. The maximum earn-out is £4.1m and is based on VIC’s profits for calendar 2014 on the basis of €5 of additional consideration for every €1 of post tax profit made above €3m for the current financial year. The earn-out is capped at €5m so it’s fair to assume all this will be payable. On this basis the total consideration of £26.6m equates to 9.4 times historic post tax profits (the Italian business is taxed at 36 per cent for corporation tax).
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