Owners share insights after selling their businesses
Four business owners who have been through a company sale process shared their experiences at a recent HURST event.
An audience of business leaders heard from David Gardner, Jill Harrison, Mike Perls and Katie Whitehead at the ‘Exploring your exit options’ M&A event, which was held at The Light Cinema in Stockport.
It took the form of a panel discussion chaired and hosted by Nigel Barratt, head of HURST Corporate Finance. The breakfast event was jointly hosted with Shawbrook Bank.
The four panellists discussed their exit journeys – you can read about their experiences below – and provided valuable insights into the process as well as advising about what may lie ahead for business owners contemplating a sale of their own.
Nigel said there continues to be a market for good quality businesses, with enthusiastic buyers waiting in the wings. Sterling’s fall in value over recent months has made British companies more attractive to international buyers, he added.
Matt Greenhalgh, a director in the corporate lending team at Shawbrook Bank, said the lender was ‘not pulling up the drawbridge’ amid the economic uncertainty and rising costs of borrowing, but said there may be less debt in future deal structures and greater scrutiny in the due diligence process.
David is a serial entrepreneur based in Staffordshire who most recently jointly completed a buyout of Whichrate, which provides court compliant data services to the motor insurance sector.
Whichrate, which is based in Uttoxeter and has 60 staff, collects car hire data which is then sold back to insurance companies to help them fight excessive claims.
David and Whichrate’s finance director Paul Roscoe acquired the business in a BIMBO deal in May 2021 facilitated by Shawbrook Bank.
David had been introduced by Paul to the business as a consultant a year previously. The owners were looking to sell and David said the potential of Whichrate was too good to ignore.
Since the acquisition, the duo have been implementing a new structure and systems and are now looking at the next phase of growth, which will involve diversifying the business.
David’s previous ventures included Cleanex Contract Services, an industrial cleaning business based in Stoke, which he sold in 2016 to Morecambe-headquartered AM Support Services.
He told the audience that the operations director helped prepare the business for a sale, a process which also involved ensuring that its systems were in a robust shape, including those concerning health and safety, quality and being able to demonstrate customer satisfaction.
David also established The Chemical Hut, which was also based in Stoke. This business was sold to its management team in 2017, a transaction which helped to protect the company’s culture and take the business forward.
He said business owners looking to sell should enlist the best advisers possible, to provide moral support as well as for their professional expertise during the transaction process.
Jill is Executive Director at Bioscript, an international provider of specialist healthcare communication services for pharmaceutical companies.
Bioscript, which has its headquarters in Macclesfield, received significant investment from Sovereign Capital Partners in 2021 to further develop and grow the business. HURST advised the Bioscript management team on the transaction.
Jill explained that the process was triggered because Bioscript had grown to the stage where it needed an injection of additional capital to develop an expanded range of specialist healthcare communication services.
She said the management team had received numerous approaches, from private equity firms and potential trade buyers, and had explored the possibility of an MBO.
The decision to go with Sovereign was made due to its understanding of the business, its shared ambition for Bioscript, a strong origination team who could identify potential acquisition targets, and the warm relationship which existed between the parties.
Bioscript has firmly embarked on an M&A journey of its own with Sovereign’s backing, completing three acquisitions since the investment.
Jill reflected that this has involved a lot of hard work and a big change for the business, but that the Bioscript team has been ‘hugely excited’ by it.
She said she has no regrets about the deal with Sovereign. The culture of the business, the buzz in the team and Bioscript’s ethos of looking after its staff, for example by supporting flexible working, have all been retained, which was important to the management team from the outset when seeking the right partner.
“You have to be able to stand up in front of your team and explain what you have done and why,” she said.
Jill added that the choice to work with Sovereign was not just about financial backing. Sovereign’s investment has allowed Bioscript to elevate the quality of the business while upholding Bioscript's values, she said.
She warned business owners that they should be prepared for a vigorous and demanding due diligence process, which will cover far more than just the company’s finances. Commercial, data and HR will be among the areas coming under scrutiny.
Having the right people in place, who can step up and keep the business running without you as you go through the due diligence process, is vital, she added.
Mike is the chairman of MC2, a Manchester-based strategic marketing communications business which he co-founded with his wife Jenny Morgan in 1999.
In 2021, MC2 became employee-owned, with HURST advising on the transition.
Mike said MC2 had developed strongly since its inception, working with private equity firms, their investee companies and other high-growth businesses across the full range of integrated marketing services.
“We’ve always had a model of recruiting at entry level to ensure a strong values-led culture throughout the business. Preparing the senior team for the transaction was a staged process that evolved over probably five years,” he said.
Along the way, Mike had invested in a number of other creative industry businesses, including a digital marketing agency and a podcast network. This was alongside a portfolio of non-executive roles including Chair at GreaterSport, a member of the board of governors at MMU and Chair of Risk & Audit at the Rugby League World Cup, currently taking place during October and November.
“Neither a PE nor a trade sale felt appropriate for what we had created at MC2,” he said, adding that he was keen to avoid loading the business with debt that might present a barrier to further growth.
“The choice was made to transfer ownership of the business to an employee ownership trust after considering all our options and meeting numerous business owners who had completed an EOT transaction.”
“Compared to a PE or trade sale, it was a relatively quick and simple process, especially working with the team at HURST. It felt like the best way to build a sustainable solution for everybody in the business,” he added.
Mike said it was key to communicate extensively with the team before, during and post-transaction.
“Making it an inclusive process ensured the transition was a seamless one.”
Mike, whose current role as MC2 chairman means he acts as chair of the Trust and Executive Board as well as mentor to the leadership team, said it was also important to plan for growth post-transaction.
“The bounce that you can see is remarkable and one that should be embraced by more businesses looking to unleash the potential of true distributive leadership,” he said.
Katie is the sales director at Red Rose Packaging, a Stockport-based business which was sold earlier this year to trade buyer Logson Group.
HURST advised on the deal, which has seen the management team stay with the business, continuing to lead Red Rose as a standalone business within the Logson Group.
Red Rose has a 25,000 sq ft factory in Hazel Grove producing cardboard boxes. It employs 37 staff and turns over £9m a year.
Katie, who has worked at Red Rose for 20 years. said it was the right time to sell the business and the decision to sell to Logson was strategic.
Logson is the UK’s largest independent supplier of corrugated packaging whose brands include Board24, Boxes and Packaging, Cases24, Jardin Corrugated and The Cardboard Box Company.
The deal ensured the continuity of supplies to Red Rose, which was a vital consideration.
Katie said the owners’ mission was to find a buyer that would be a good fit for the business, ideally in the trade and a larger group which would look after the people at Red Rose, invest in the factory and make it a better place to work.
“The sale to Logson Group was definitely the right decision for us,” she said.
Katie added: “I thought the process would be pretty straightforward, but it was hard work and very consuming.
“The due diligence process was more detailed than I expected. It was not all about the numbers. However, we have come out of it better and it was a good learning curve.”