Managers in a variety of different industries dream of taking over their companies from their directors. Many even do it. In recent weeks, there has been a surge in takeover bids in large corporations. And with cash-rich private equity institutions eager to join in such transactions, there will likely be more.
The MBO at Jet UK last October has been the OP industry’s most talked-about MBO of late. At the time, the company’s former owners Peter and Michael Mines took lesser roles and were replaced by then operations director Chris Manley and financial controller Graham Nolan.
Almost nine months on and the company’s new owners are ready to talk. And Manley tells OPI+ that the decision to take control was the best thing that could have happened to the business. "Things are pretty good now," said Manley. "After a period of consolidation and settling down, we are on budget for where we wanted to be and are even slightly ahead of last year. We’re pretty happy with that, particularly with the market so flat."
This feat has largely been achieved through effective marketing of the Concord brand and raising its profile among dealer channels. "Over the last five years, the previous management had not really focused on the brand, but rather on own label products such as indexes and dividers," said Manley. "We have been trying to rebuild relationships with our customers and raise the profile of the brand with dealer channels."
To fuel the effort, the company promoted Liz Jefferson to the role of sales and marketing director in March, six months after she joined the company. Jet UK is now seeing a steady rise in Concord sales.
Jefferson is currently managing a 12-month promotional campaign for Concord. "The campaign is geared towards premium price products to encourage sales and increase margins," she told OPI+. "We had an extensive advertising campaign in trade and consumer publications geared towards OP buyers and secretaries. We also managed promotional mail-outs to dealers."
Concord sales now account for around 70 per cent of the company’s overall revenues, compared to around 65 percent in the days pre-MBO. The percentage of sales derived from own label products, which have gone down since the MBO, is now around 25 percent.
"Six months on we keep meeting our budget — backed by the Royal Bank of Scotland — we are resisting price pressure from customers, and we are continuing to market our products," said financial director Kevin Allen.
The company has also benefited from the introduction of a senior management team that represents all parts of the business, a set-up that Jet UK did not have before. "Strategies and goals are communicated to senior management. It is more transparent now because we involve everyone at every level," said Manley.
Jet UK now has a team of 220, compared to 224 before the MBO. It pushes 1,800 SKUs, which it wants to increase but not by a great deal. Almost all of its sales (96 per cent) are in the UK.
Both Allen and Manley admit though that the whole process of the MBO has not been without stress. "We were very nervous because we weren’t sure whether it was the right thing to do with a flat market," said Allen. "But we are growing market share so we are happy."
Manley also has no regrets. "It has been a painful year, but I would do it again. We are pleased how well we have been accepted by customers and staff. In fact, we wouldn’t do anything differently — but maybe we would do it quicker."
But there are always challenges, and Manley and Allen claim that the impact of pricing from Asia and eastern Europe is one that impacts them the most, because it allows operators in these markets to attack market share. "But our unique selling point is that we can turn a product round reasonably quickly," said Manley. "Our time to customer is much less than in Asia where there is often a 16 to 20-week lead time."
Manley and Allen are being cautiously optimistic about their strategy going forward. "We are not going to see huge growth in the market over the next 12 months," said Manley. "We are looking at new products that we can outsource or badge under our Concord name. New product developments are a priority for this year. We have already briefed our product development team to look at the market, and nothing is off the agenda. Our team is encouraged to think outside the box."
And in five to ten years’ time? "We will hopefully be trading profitably," said Manley. "Right now we remain focused on the UK, but in a few years we will look at opportunities in mainland Europe, maybe with partners there."
So that’s another successful MBO story to add to the pile.
