David Lockwood, Babcock’s newish chief executive, and David Mellors, his recently appointed finance chief, have pegged this year and next as “transition years” for the aerospace, defence and engineering outsourcer. They have instigated an overhaul of the company’s multibillion-pound contract book and disposal programme in the hope of bolstering the balance sheet and turning the cash taps back on.
A rock-bottom valuation, though, means that the new team may not get the chance to bask in any glory. Babcock’s forward enterprise value of just under seven times ebitda — the all-important metric of earnings before interest, taxes, depreciation and amortisation — is just lower than the 2008 financial crisis-era multiple and might prove too tempting for potential bidders.
Moreover, turning over rocks can reveal
