interested in acquiring the business.
Explaining the background behind the deal, Khalid told Lancashire Business View: “As we continued to grow year-on-year we became attractive to our competition and to other European players. As a result, we were approached by a number of companies.
“Selling wasn’t the end game. We are from Blackburn, have lived here all our lives and we were focused on building a strong business here. We have put a lot of investment into the company.
“However, the conversations we had with WEPA led us to recognise that this deal would be a good thing.
“It is a family business similar to ours. We share the same values and a focus on sustainability.
“They are good match as a management team and manufacturing will remain in Blackburn.
“The deal gives us the ability to grow the business further and take it to the next level.
“They recognised the strength of the company and want to make it stronger. The acquisition also strengthens their market share.”
He added: “I’m excited by the new relationship. We can fast track our growth with the level of experience and resource WEPA has, and really take the business forward.
“It is a great opportunity and with their paper mills they also give us more security in a volatile world when it comes to supply.
“All in all, it gives us a lot more potential to get to where we want to be and we have some exciting times ahead.”
In another new year-announced deal in the sector, Blackburn based AIM-listed tissue products manufacturer Accrol has expanded its product range and capacity with the acquisition of Somerset-based Severn Delta.
The firm, which has annual revenues of £5m, specialises in the production of wet wipes and tumble dryer sheets.
The deal was completed for an EBITDA multiple of less than 3x before synergies and was funded from the Blackburn-based group’s existing cash reserves.
Accrol highlighted its successful acquisition and integration of Welsh wet wipe maker John Dale in April 2021 as a model for scaling its business at pace.
Gareth Jenkins, Accrol chief executive, said: “Severn Delta enhances our market share in the wet wipe segment and extends our product range, adding further personal care and household wipes.
“The business currently operates four production lines which we believe can be utilised further to support our customers with their growth and generate a significant return on investment.”
Expert View MBO: IS IT A GOOD
FIT FOR YOU? By Sarah Brough,
corporate solicitor at Forbes
A management buy-out (MBO) is a transaction where the managers of a business buy it from the current owners.
This type of buyout is usually appealing to professional managers because of the greater potential rewards and the control from being owners of the business rather than employees.
Deciding whether or not a MBO structure is suited to your requirements depends on the current arrangement in the business and what your intended end goal is.
While becoming part of the management of a business is beneficial to the potential new owners, the new management will have to make the transition from being employees to owners, which comes with significantly more responsibility and a greater potential for loss.
Sometimes it is common for a member of the existing management team or shareholder to stay within the company for a period of time after completion to
retain some control of the performance of the company and try to ensure that the business continues to operate as it was.
It is essential that the parties involved in the MBO strategically plan and prepare for the shift in ownership and seek to establish how all parties wish for the company to be structured and the way in which the business will continue to be manged.
Ensuring that everyone involved in the transaction is in agreement with the terms and the structure of the transaction will help to ensure that the transaction runs as smoothly as possible. It is also important to consider the relationship between the buyer(s), the seller(s) and the business.
There are advantages for the seller entering into a MBO arrangement as there will be no requirement to look for an outside buyer. This also offers enhanced business continuity by selling this stake in the business to the management team.
Khalid Saifullah and Andreas Krengel LANCASHIREBUSINES SV
IEW.CO.UK
15
DEALMAKERS IN VIEW
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