CASE STUDY 3: FINDING THE RIGHT FIT
In 2019 brothers Matthew and Joseph Thompson sold their family fit-out business to private equity with the aim of seeing it develop and grow.
However, four years later, and with things heading in the wrong direction, Matthew stepped in to reacquire the Blackpool company, turning it back into a family-owned business.
It was a bold move that has seen Thompsons Contracts back on track and thriving once again, offering its fit-out, manufacturing, electrical and solar solutions.
Over its history the company has worked with some of the most recognisable brands in the food and beverage, leisure, retail and workspace sectors.
Since the sale back to Matthew, its client base has both grown and diversified with hotels, Premier League football clubs and new franchise operators in food and leisure proving a good source of work.
A workshop improvement plan has been hailed a success with increased productivity, staff retention and investment in new equipment.
And the creation of a solar division has provided Thompsons with an additional offering to current clients and allowed it to diversify into new markets across the industry.
With a team boasting 30 years of combined experience in the renewable energy sector, that operation offers both commercial and domestic solar PV and storage installation.
The growth continues with the company’s new building division, working in the burgeoning care homes sector. Created earlier this year, it is on site with its first project and has others in the pipeline.
Matthew, 42, who describes the current business’ incarnation as ‘Thompsons 4.0’, doesn’t look back on that PE period with any affection. He remained in the business post- deal and watched in dismay as it faltered.
With hindsight he believes it was the wrong fit for the company. “Things just fell apart,” he explains. With things in a bad way, he was offered the chance to buy it back.
He says: “To be honest, reacquiring Thompsons was never part of the plan, but I’m glad we did. The aim was to turn the company around and secure its future for everyone.”
That work to turn around Thompsons’ fortunes has included creating a “robust company structure”. Matthew is also full of praise for the company’s workforce and how they have met the challenge.
The business’ annual turnover is heading to around the £22m mark and there has been more good news for its 100-strong workforce with the reintroduction of its bonus scheme.
This year’s pipeline of work is the strongest the company has ever seen as it works in some of London’s most iconic buildings, football clubs and transport networks.
Matthew says the company will continue to invest in growth, innovation and individuals.
He adds: “There’s a totally different atmosphere in the business now. The pressure before on everyone was immense.”
Expert View
CHOOSING THE RIGHT EXIT FOR YOU
By Sarah Brough, solicitor at Forbes
There are a number of exit strategies available to potential sellers, and it is important to choose the one that aligns with the goals of the seller and the conditions of the business.
Straight Sale
A straight sale is a simpler process compared to others and ensures a clean break from the business, providing immediate cash.
However, this is dependent on the current market conditions matching the seller’s valuation. There may be disruption to the business due to the sudden change of ownership, which could adversely affect operations, employees, and customers.
Management Buy-Out (MBO)
A Management Buy-Out (MBO) occurs when the existing management acquires the business, ensuring continuity of operations. This can lead to a smoother transition and boost employee morale, as they would not have to worry about the potential implications of unknown external buyers.
However, there may be challenges in securing sufficient financing and an increased risk of conflicts of interest during negotiations, which could impose significant risk and complexity on the sale.
Employee Ownership Trust (EOT)
An Employee Ownership Trust (EOT) transfers ownership into a trust to benefit the employees, aiming to promote engagement and motivation, which could
Matthew Thompson LANCASHIREBUSINES SV
IEW.CO.UK
lead to better performance and continuity within the business.
EOTs also provide lucrative tax advantages for both sellers and employees, which has increased their popularity. However, setting up an EOT is highly complex and depends heavily on the continued financial performance of the company to be a successful strategy.
Choosing the right strategy
Each exit strategy has its advantages and disadvantages, and each would benefit you differently based on your and your business’s current circumstances.
• Timeframe: If you need to leave the business quickly, a Straight Sale would ensure a clean and quick exit but might impact the legacy and continuity of the business. An MBO or EOT would help maintain the company’s culture and values.
• Business performance: High profitability will attract more buyers and better terms, whereas high debt could complicate an MBO or EOT. It is vital to consider the current market conditions to determine which exit strategy is the most feasible.
Choosing the right exit strategy is a decision not to be taken lightly. Your personal goals and the business’s current performance will greatly impact your decision. It is important to seek expert advice before deciding on the best exit strategy.
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