MD’s quote:
“Secantor has made a world of difference to our business – we are now in control. It’s been a transformation of the higher level work within the business”
“It’s a very cost effective way for us to have high level management and strategic help”
“We will never forget your huge contribution to Montezuma’s and your constant support, encouragement and all the board room laughs. Thank you for everything!”
The Dream Exit
Business owners may often think about how to exit their business and what it might be worth. For some it is just a dream, for others a business exit strategy is their key driver & business vision. The journey may last a few months, a few years or 10 or more years.
For one client of ours an exit strategy was always the goal whatever the timescale. The husband & wife team with huge energy & passion successfully grew their chocolate business with its distinctive brand over 8 years to £3m turnover. Then the 2008 financial crisis damaged their success bringing distress for profits and cash. Their insightful bank manager understood the potential of both the business and the abilities of the owners so introduced Secantor to provide some independent management & financial support from an experienced external perspective.
Turnaround
We helped manage the turnaround by closing unprofitable shops, selectively improving gross profit margins and strengthening financial controls. However the owners had been micro-managing the business which was actually four totally different & distinct businesses. They had become victims of their own success. We carried out a strategic business review by interviewing each of the key players and studied the available financial & operational information. It provided a unique combined insight from the owners, the key staff plus our own external strategic perspective.
Getting on Top of the Business
Together with the owners we identified four young potential managers with talent, determination & knowledge, each one to take responsibility for each business. The owners trusted their new team and delegated full accountability for the performance. Acting as FD/Facilitator we joined the owners & managers to form a complementary management team.
Having got on top of the business to get the big picture view from above, the owners let go of day to day operational management, trusted in their people and created their future business vision from fresh strategic & objective thinking.
Executing the Plan
They prepared a business plan together with an action plan with goals & targets for each of the management team. They listened to customers, assessed the market & USP and reviewed their products & margins. Especially important was their brand & reputation ie. a British family owned business with a unique personal story, a fair trading ethos, innovative chocolate flavours and a quirky and fun culture exuded both internally and externally. We assisted the owners translate the business plans into a robust financial forecast providing the basis for monthly tracking of actual performance.
The owners plan included building value in the business through:
New customer acquisition particularly wholesale trade to multiple retailers plus online consumer sales.
New markets especially the US where large orders from a major supermarket chain followed soon after a trade mission visit prompted by Secantor.
Product development whilst focussing on key core products - there were a few mistakes but lessons were quickly learnt & they moved on.
Emphasis on gross margin analysis and much stronger stock & cost control.
Improved factory planning, methods and controls through tightened disciplines and strong supervision.
A major investment in plant & equipment quadrupled production capacity and achieved substantial productivity gains.
Best Practice Management
The business plan also embraced developing best practice management through:
Structured monthly Board meetings with agenda, financial & operational MI circulated ahead of meeting whilst action notes with responsibilities & dates kept everyone on their toes.
Re-organised management accounts and forecasts plus KPIs were added to aid operational & strategic decision-making where business goals were translated into personal goals and individual accountabilities were introduced for each member of the management team.
Challenging & motivating the team towards improved performance. The owners also appreciated being challenged by Secantor to achieve their strategic goals.
Corporate Finance Specialists
The original exit plan was potentially to be succession by their children but this was ruled out after 5/6 years. At this point we started talking to Corporate Finance specialists and so the focus became a trade or investment exit sale.
Over the ten year period the business successfully scaled-up in preparation for an exit sale. Sales growth had been extraordinary to several UK as well as US supermarkets and also online. There was a well-developed & managed product range with new innovation both chocolate products & packaging for every season with regular pruning to keep novel and control stock levels.
The business demonstrated a solid track record of historic growth in profits and future potential plus a strong established brand and reputation. Future profit forecasts showed excellent ongoing growth backed by evidence of a good forecasting track record. The owners had established partners, both customers & suppliers with strong mutual relationships & understanding and sharing of plans & developments ie. developing a recurring business together. There was a solid order book, sales pipeline & record of successful lead generation & conversions.
Strong Accountable Management Team
Finally the management team, now including finance & HR executives, had grown with the business and managed the day to day affairs which enabled the owners to reduce their time commitment. There was a time when a two week family holiday for the owners involved taking office calls and emails. But with a strong accountable management team in place this became a thing of the past. In fact the owners could take a three week holiday and also shorten their working week without detrimental effect on the business.
Sale at High Multiple
The owners sold their majority share to private equity at a high multiple, retaining 1/3rd themselves. The PE firm have invested significantly in marketing and the owners look forward to their final future exit. One very happy & successful couple!
The owners were delighted with the outcome and the impact that Secantor had on achieving the turnaround and successful sale.
Fulfil the Potential of Your Business
Are you a small business owner who is thinking of retiring and reaping the rewards of many years of hard work? Do you want help to prepare your business for successful exit? Or perhaps you know someone else who is? Get in touch with us. Secantor has a wealth of experience with helping businesses fulfil their potential - let us know how we can help.