Management Buyout of Professional Music Technology

31 October 2019

The Management team of Professional Music Technology (“PMT”) has completed a Management Buyout of the business, with financing provided by YFM Equity Partners and the founders of the business.

Founded 28 years ago by Simon Gilson and Terry Hope, PMT is the UK’s leading multi-channel retailer of Musical Instrument (MI) and Professional Audio products. The business operates through 15 stores across the UK and has a web presence at www.pmtonline.co.uk. PMT employs more than 200 staff across its business and generates revenue in excess of £40 million per annum.

The Buyout has been led by David Black who becomes Managing Director of the business. David first joined PMT some 18 years ago and has had day-to-day leadership responsibility for the business over the last four years, having opened six new stores in that time.

David is supported in the buyout by Carly Scott (Commercial Director) and Andrew Ball (Operations Director), who joined the business in 2010 and 2012 respectively. The Board will be supplemented by Peter Moss, who joins as Finance Director. David Garratt, former CEO of Wex Photo Video, the leading multi-channel retailer of photographic and video equipment, joins the Board as non-executive Chairman.  Simon Gilson and Terry Hope will continue to support the Management Buyout team as Founder Advisors and retain a significant investment in the business.

Over the coming years, the management team plan to take advantage of the continued strong demand for musical instruments and pro-audio products from hobbyists and professional musicians alike. The business will focus both on the selective opening of new destination stores and the further development of its multi-channel proposition.

Simon Gilson commented: “Terry and I have spent nearly thirty years building PMT into the strongest and most successful business in the sector of which we are both extremely proud. Going forward we felt that some new thinking and strategies are necessary to fully exploit the many opportunities that the current market presents and that this is the ideal time to let our younger talent, led by David Black, take this amazing company into its next phase of growth”

David Black commented: “I am very pleased to complete the buyout of PMT with the rest of the team. The founders have done a fantastic job of establishing a market leading position and we look forward to building on that in the future. YFM have impressed us from the start and quickly understood the plan to continuing opening new stores whilst growing the online presence. In choosing YFM, we have an investment partner with a wealth of experience and notable success investing in the hobbyist retail sector.”

Jamie Roberts of YFM added: “The founders have done a great job in building a market leading business in a growing niche. We are bucking the wider high street trend with the plan to open new physical stores but see huge opportunity to continue the impressive growth to date by doing this alongside investing in the existing online presence.”

 

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SharpCloud closes £4.5m Series A round from YFM

16 October 2019

Funds advised by YFM Equity Partners (“YFM”), the specialist private equity fund manager, have backed a £4.5m investment into SharpCloud Software Limited (“SharpCloud”) to support the continued growth and roll out of its enterprise SaaS product. YFM’s investment comes from its two advised VCTs, British Smaller Companies VCT plc and British Smaller Companies VCT2 plc, alongside YFM Equity Partners Growth II LP.

SharpCloud was founded in 2012 by Sarim Khan and Rusty Johnson, following the successful sale of their previous software business to Oracle Primavera. Having spent some time within the Business Intelligence (‘BI’) and data analytics space, they noted a lack of powerful top-down software tools that could allow large organisations to visualise complex data across siloed lines-of-business and built SharpCloud to solve this.

Since the launch of its enterprise product 2 years ago, SharpCloud has seen rapid growth, with organisations ranging from Rolls Royce to the US Federal Government using the product to unlock key insights and support executive decision making.

YFM’s investment will be used to support the continued growth of the business as it scales to meet the market opportunity, with SharpCloud expanding its team in the UK and the US. These newly created roles will enable the business to continue to further develop its market-leading technology and to grow its international client base.

Adam Hart and Jamie Roberts led the investment for YFM.  Adam Hart commented: “SharpCloud are solving a key business problem that large organisations have contended with for many years – ‘how best to use the large quantities of data to inform complex decision making and to shape business strategy?’, removing the need to inform decisions using static slide deck presentations built upon hotchpotch datasets.

We’ve been hugely impressed with Sarim & Rusty’s ambition and vision, as well as the culture the business has created in a short space of time. We are very excited about what the future holds and will work closely with the SharpCloud team to scale the business into an international success story.”

Sarim Khan, co-founder and CEO of SharpCloud, added:

“We’re really excited to have found and partnered with an investor, in YFM, that understands and shares our vision. This round of funding comes at a time where we have begun to experience rapid growth, with the SharpCloud product continually garnering rave reviews and subsequent viral effects taking hold. We’re now able to capitalise on the huge opportunity that lies ahead.

We have built a great relationship with Adam and Jamie during the process and have enjoyed their straight-forward and pragmatic approach. We’re delighted to have YFM join the team.”

Financial Due Diligence was provided by Nathan Willis and Brad McAvoy of James Cowper Kreston, tax structuring advice by Phil Snell and Emma Elliott of James Cowper Kreston, legal advice by Chris Reed and Niall McCooey of Gateley Plc, Commercial Due Diligence by Roger Penney and Geoff Rampton of RPL Ltd, Organisational Review by Anna Cornwallis of Stratton HR and Technical Due Diligence by Paul McAdam of Source Code Control.

Daniel Jonas of WK Corporate Finance acted as financial advisor to SharpCloud with Tim Hewens and William Nicolson of Osborne Clarke LLP providing legal advice.

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Impact investing – a nice to have, or an expectation?

Helen Villiers
Investment Manager, YFM Equity Partners

Over the past fifteen years there has been a growing trend in the Private Equity industry for ‘impact investing’ or ‘social responsibility’, with an ever-increasing number of investors, asset managers, and advisors focusing on measuring, managing and mitigating environmental, social and governance (ESG) risks. Now we are starting to see mainstream investors pay attention to their impact too.

So why is this? The value of an investment is no longer just about returns. An increasing number of investors are also calling for their money to make a positive impact on society and the world at large.

A recent survey showed that 90% of millennials (double the percentage of the general investor population) believe that the success of a business should be measured by more than just its financial performance. Those same millennials are set to inherit an estimated $30 trillion of intergenerational wealth over the next 40 years in the US alone – so as the investors of the future, their views are key.

The average age of Board members and Investment Directors at Private Equity houses is coming down, meaning impact is becoming an important topic on both the sell-side and buy-side. To many mainstream Private Equity firms, now is the time to make ‘impact investing’ the norm, as the growing millennial population will leave them with little option but to adapt.

So what is Impact investing?

There is no common convention of what ‘impact investing’ means, however the Global Impact Investing Network (GIIN) defines it as: “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return”.

But this doesn’t mean the business needs to focus solely on social impact and ignore market-norm financial returns – it’s possible to do both. For example Just Giving have built a platform which is used around the world and helped their users raise over $4.5bn for charity since 2001.  They took an estimated £6m of funding and were sold to Blackbaud for £95m in 2017 – an exit multiple of almost 20x.

In our experience, considering and monitoring impact will often benefit the business as whole – improving productivity, retaining talent, reducing costs and ultimately increasing value.

What’s next?

What this all shows is that impact investing doesn’t need a label, it’s just becoming an industry standard and should be incorporated into day-to-day activities. YFM consider impact from three different angles:

  1. Within our own business such as recycling in the office, converting utility suppliers to green energy suppliers, encouraging flexible working and providing time for employees to carry out volunteer work.
  2. When making investment decisions, impact is considered alongside financial returns when appraising new investment opportunities.
  3. Working with our portfolio companies to ensure impact is on the Board agenda and encouraging an annual impact questionnaire to monitor performance. For example Friska, a chain of food-to-go restaurants, ensure all of their restaurants are powered by 100% renewable energy, all unsold food is donated to homeless shelters in the local community, all onsite waste is recycled or composted with zero going to landfill and all staff are paid above the National Living Wage.

I suppose the take away from this is that impact just seems to be the evolution point now for businesses – previously it was a ‘nice to have’ but now new business leaders and emerging business models are inherently delivering impact as a key focus of their commercial activities.

So the next time you hold a Board meeting or make an investment decision, take a moment to consider how impact can be incorporated and small changes made – perhaps you can have your cake and eat it too.

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Driving more from a Sales function

Jamie Roberts
Partner, YFM Equity Partners

Most private equity investors invest across a whole range of small and medium UK businesses, across most industries and at various stages of a company’s life cycle. The one thing they all have in common however, is a team with a desire to grow and create equity value.   There are a whole range of growth strategies, but they are all reliant on increasing sales – and to do that they need good sales and marketing strategies; here we concentrate on the sales focus.

It is rare these days to come across a business that does not have some data around customer lifetime value –this concept was first mooted in the 1980’s and focuses on a pretty basic calculation centring upon:

  • the cost of acquiring customers,
  • the attrition rate of those customers, and
  • the lifetime value of those customers.

Not many businesses however measure the same data around their Sales team – which is odd as they are the ones tasked with delivering that sales growth and its easy data to find:

  • how much does it cost you to recruit a sales person,
  • what is the annual attrition rate of sales people,
  • what is the lifetime sales value of those sales people.

Most businesses do closely monitor the “performance” of individual sales staff with some basic KPI’s around sales funnel and conversions.  But not many are looking at the wider drivers around successfully recruiting and retaining their staff. A McKinsey study published in July estimated that the cost of an employee who leaves within a year can be as much as c£40k to a business when factoring in lost productivity, customer relationship damage, recruitment and training costs.

Various “thought leaders” are now talking about how to take performance management for sales professionals to the next level and quantify the cost and value in the same way they do a customer – if we look at a very basic example for “ACME Ltd”:

A How much does it cost ACME to recruit a sales person  £20k
B The attrition rate in the first 12 months  33%
C Average compensation including bonus, PAYE etc  £50k
D Gross profit generated by an average sales person each year  £100k
E Average tenure for those who stay past the first year  5

Based on the above numbers it costs ACME

  1. £60k for every 3 people they recruit
  2. 33% of the recruits will leave in the first 12 months and add no little to no value during that time
  3. ACME Ltd pays c£50k pa in total salary / commission for each sales person
  4. The 2 sales people that do stay past the first year generate £100k of GP each year on average
  5. There is on average 5 years of £100k GP generated from a sales person before they leave

Using the above we can work out the lifetime value of a sales person:

  • Total cost of recruitment = £60k (3 people at £20k each)
  • Each person costs £50k pa = £550k (1* £50k for the person who left in year 1, and 2 * £50k * 5 years for the 2 who stayed)
  • The 2 who stay generate £100k GP pa each for the 5 years they stay = £1m (£100k pa * 2 people * 5 years average tenure)

Based on the above it will cost ACME Ltd £610k of recruitment costs and salary to have 2 people stay an average of 5 years and generate £1m of GP.  Which is a 1.6x “lifetime value return” on the investment in recruiting 3 new Sales people.

Most Sales Directors are focused on how to get their Sales people more efficient and generate more GP which would definitely help the calculation. Just increasing the average GP per employee by 10% increases the “lifetime value return” on investment in the same 3 sales staff to 1.8x.

The really pro-active Sales Directors however are thinking about increasing their team’s sales performance, and they are driving that performance by putting just as much focus on the other levers they can pull in their teams. For instance:

  • If ACME Ltd recruited better and only 15% of people failed and left in the first 12 months, but everything else stayed the same, then the “lifetime value return” also increases to 1.8x
  • So, increasing the people who stay from 66% to 85% is the same as adding 10% more GP every year for every sales person
  • If AMCE Ltd increased the average tenure for a successful recruit to 8 years instead of 5 years, and kept everything else the same, then the return on investment increases to the same 1.8x

Obviously if ACME Ltd could do all three;

  • increase GP performance by 10%,
  • reduce year 1 attrition to 15%, and
  • extend the average length of an employee to 8 years

then the “lifetime value return” increases to 2.0x!

So next time you are in a board meeting looking at sales performance make sure you spend as much time thinking about how you can improve sales staff retention rates and increase the average tenure of sales people, as well as pushing the Sales team to just sell more.

 

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Thinking of buying out a non-core business of a larger Group?

25 July 2019

Dan Freed
Partner, YFM Equity Partners

For a variety of reasons, good businesses sometimes fail to fulfil their potential when part of a larger corporate structure. It may be that it is no longer deemed to be of strategic importance and cash generated (from ongoing operations or a disposal of the business) is re-invested in other “more attractive” parts of the group. Or it may have suffered from a lack of stakeholder attention and support and not progressed as well as it perhaps should have. Ultimately, there could be a better owner of the business to back its future growth – and that is often the senior management team, who understand its competitive position, the market it operates in and the critical success factors for a growing profitable business.

Why would a management team want to buy out a business?

Simply put, they see the opportunity for significant future value creation. They know and understand the company – its strengths and opportunities – and, under new ownership, a good business should have the focus and resources needed to accelerate its strategic development. This can result in faster turnover growth, job creation and increased employee engagement.

What are the issues to consider along the journey?

Firstly, proper preparation for the process is important. As with any transaction, a business plan clearly articulating the growth prospects will be needed. A carve-out deal out will also require standalone financial information, which could be a detailed exercise. Here are a few other questions:

  • Are all the key customer contracts in the name of the subsidiary to be acquired?
  • Are colleagues all employed by the subsidiary to be acquired? Do some people split their time between the business and the Group – will they be included in the transaction or not?
  • How simple, or otherwise, will it be to separate the business from the larger organisation? Are there any functions provided centrally – finance, IT, insurance, property (to name a few).
  • Doesn’t managing the business and wanting to buy it create a conflict of interest? Acting as both sellers and buyers is not without its challenges, but this is a well-trodden path and advisers on management buyout transactions are well-versed in navigating through the process.

What are the options to fund the acquisition of the business?

Management teams are unlikely to have the personal financial resources to acquire the business in full. Typically, alongside an appropriate level of participation from the team, funding can be raised from one or more of the following sources:

  • Bank debt
  • Loan notes from the vendors
  • Private equity

There are many success stories of thriving businesses that were previously a non-core part of a larger structure, particularly when private equity has supported the management buyout team. YFM has spent over 35 years investing in UK businesses and continues to work in partnership with management teams looking to deliver stakeholder value, for example Leengate Valves and President Engineering.

 

 

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YFM completes £230m of deals and raises £100m of new funds in H1 2019

01 July 2019

UK’s smaller businesses continue to invest for growth

During the first half of 2019 YFM Equity Partners (YFM) completed £230m of deals and raised £100m of new funds.  This result represents a sharp increase on 2018 and reflects the resilience and positivity of smaller businesses and demonstrate that this sector is bucking some of the perceived business trends.

The results demonstrate that the UK’s smaller businesses are continuing to innovate and invest for growth, despite the ongoing backdrop of continued political uncertainty on both domestic and international levels.

This market could have performed better, but given the on-going activities in Westminster, the performance levels are understandable. This time last year there was a general belief that we’d have some form of agreement on how the UK was going to extricate itself from the EU, but scepticism over what the shape of that might be meant the period of uncertainty lasted longer than expected. Nonetheless investment rates in the first half of the year for YFM were pretty solid.

Whilst debate shifted from “how” to “who” and “if “ we’ve seen investment rates climb by over 50% on 2018 levels. At the same time investor appetite for UK smaller businesses remains undaunted which has seen YFM raise £100m in the first half of the year.

David Hall, Managing Director at YFM said; “Overall returns, both realised and unrealised have remained steady. There’s been a healthy appetite for YFM’s assets from both trade, overseas and UK investors, as well as from UK private equity houses. This has translated into positive returns and more importantly distributions to investors who are largely individuals, rather than institutions”.

“Against a background of low interest rates and returns, YFM’s strong performance has whetted investor appetite which remains strong and it is clear they remain committed to invest in this sector of the market.”

YFM has seen increasing levels of opportunity over the last few years and 2019 has shown a stepped increase on 2018. There are several common characteristics that these businesses share; they are generally younger, typically less than 10-15 years old.   In addition, they are either undertaking a management change/refresh which brings a new injection of ideas and energy or have a proposition that improves their customers’ businesses by making them more efficient, working smarter or builds an extra robustness.

Hall added; “Whilst these businesses may be small they tend to have an international outlook and customer base. Their delivery systems lend themselves to being able to scale rapidly and respond to market changes irrespective of geographical boundaries.

“However, there are some businesses which have more technical and complex products where they are mission-critical, protecting data being a prime example.  These have longer sales cycles and arguably more contractual longevity with their customers, but perhaps can’t scale as rapidly needing bigger sales forces to meet the customer’s buying needs.

“One area that is surprising by its absence is the premium/advanced engineering sector. This is an area of traditional UK strength, but investment in and enquiries from this sector don’t seem to have been as strong. If I could wave a wand I’d like to see this area represented as well as in the recent past.”

YFM invests in UK-based smaller businesses, none of which are listed, and their investments cover the length and breadth of the UK through its network of regional offices as well as its hub in London.

 

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YFM Equity Partners announces £60m first close of its Buy-Out Fund II

20 June 2019

YFM Equity Partners (YFM) announces the first close of its Buy-Out-Fund II with £60m of investment committed.  This follows the £45m raised for its Buy-Out Fund I, which had a final close in April 2017.  Only two years later, and following the recent investment in THE PROTEIN WORKS, this fund is now almost two thirds invested.

“Nearly three quarters of the funds have been raised for our Buy-Out Fund II from existing investors, which is a great endorsement from our investor base, with over £15m from new investors” said Mike White YFM’s Partner responsible for Investor Relations.

YFM’s strategy is to raise funds that are invested over 2-3 years. This gives investors shorter commitment periods allowing them to re-invest with YFM over shorter cycles. “This is something we learnt investors found attractive when raising the first fund.” added White.

Buy-Out Fund II will continue the investment strategy established by the first fund where typically YFM invests between £3-7m through its UK footprint of offices into businesses where there is a change of ownership and strong growth potential.  The strategy for Buy-Out Fund II will be to hold second and final closes before the end of 2019 and the fund will invest over a similar period to Buy-Out I, investing into 2022.

White goes on to say, “What we have found most interesting is the funds have all been raised from within the UK with all our new investors being individuals, family offices or high net worth investors. Most of these investors have generated their wealth as owner managers in the UK small business sector which has given them enormous empathy and a strong understanding of what we do and the businesses we invest in.”

David Hall, Managing Partner added “We believe the market for these smaller businesses is less well served which has been demonstrated by the success of our Buy-Out Fund I which is nearly fully deployed just two years after its final close. In addition, we realised one of our investments at the end of 2018, delivering a 4.2x return which shows there is real and tangible value in this market.

“There’s been a strong investor appetite in both our Buy-Out-Funds which has seen YFM raise over £100m in addition to the £35m invested in our growth funds. This provides us with powerful investment capacity to support and invest in the UK’s small businesses with funds under management now exceeding £300m.

“We are targeting a fund size of £75m so as to have a manageable portfolio and it is very encouraging to have such a strong first close”.

 

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BSC2 wins at the AIC Shareholder Communications Awards 2019

17 June 2019

British Smaller Companies VCT2 plc (BSC2), one of the VCTs advised by YFM, has again won the prestigious award for Best Report and Accounts – VCT at the AIC’s Shareholder Communication Awards.

Roger McDowell, a director of BSC2, commented: “It is an honour to receive this award which reflects how seriously the trust and YFM takes its investor communications and is a testament to the work of YFM’s fund reporting team.”

Read more about the awards here.

 

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Helen Villiers joins YFM

13 June 2019

YFM Equity Partners (YFM) has today announced the appointment of Helen Villiers as Investment Manager. Based in the London office, Helen will be focussing on supporting YFM’s new investment activity, working with the existing team to deploy funds into growing businesses at points of transformational change.

Helen’s appointment comes at a time of significant activity for YFM, with investments in The Protein Works from its Buyout Fund 1, marking the eighth investment from the fund, as well as recent scale up capital investments in Frescobol Carioca, Elucidat, Wooshi and Tonkotsu from its two advised VCTs.

Helen, a qualified chartered accountant, joins from Grant Thornton’s Corporate Finance team in London, where she worked closely with management teams and entrepreneurs on a range of transactions, primarily in the Human Capital and TMT sectors.

Colin Granger, Partner at YFM said: “Helen is an important addition to the team at YFM.  We are experiencing increasing levels of opportunity to provide funding to UK based companies, particularly in our core investment range of £2-10m.  Helen’s experience in the market will be invaluable as we look to scale further in the future.”

Helen Villiers added: “I am delighted to be joining YFM at an exciting time and I’m looking forward to working with the YFM team to meet interesting businesses and ultimately to back dynamic, ambitious founders, entrepreneurs and management teams to transform and grow their companies.”

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Tonkotsu partners with YFM for next phase of growth

11 June 2019

Tonkotsu, the Emma Reynolds and Ken Yamada-founded ramen restaurant group plans expansion after partnering with investment firm YFM Equity Partners (“YFM”)

The group, which is led by Managing Director, Stephen Evans, operates nine restaurants in London and one in Selfridges Birmingham, with two more due to open later this year in Peckham and Shoreditch.

Reynolds and Yamada continue to be involved in the business, and Yamada says, “this partnership will allow us to grow our business, enabling us to open a handful more Tonkotsus. Our commitment to the quality of our food, our homemade noodles and the way we treat our people, who are the heart of this business, has been fundamental from day one. We chose YFM as our partner as we felt they shared our ambition to grow the business in the right way to maintain the culture and the brand”.

Entrepreneur and Dragon’s Den star Sarah Willingham, formerly of Pizza Express and Bombay Bicycle Club, will Chair the business. She says, “Tonkotsu’s ramen is the best I have ever tasted, and I’ve been a huge fan for many years. I love the culture and look forward to working with Emma, Ken and the highly-motivated management team, led by Stephen.”

Stephen Evans added “the casual dining sector is experiencing some well documented issues, but the partnership with YFM is proof that well-run brands, with a distinct and value-led offering, continue to attract investment. This is an exciting time for us, our financial performance over the last 12 months has been strong, and this additional investment from YFM will allow us to continue to grow and bring our ramen to a greater audience”.

Funds advised by YFM the specialist private equity fund manager are investing £5M in Tonkotsu for a minority stake.  YFM has a track record of backing businesses across all sectors in the UK. Mike Clarke and Jamie Roberts led the investment for YFM. Mike Clarke commented:

“The team have done a fantastic job in building the company, a unique brand and a loyal customer base despite real challenges to the restaurant sector. We are delighted to be working with Tonkotsu to support their continued growth over the coming years.”  YFM’s has other investments in the consumer market including Friska and Frescobol Carioca and YFM’s previous investments in the sector include – Go Outdoors and Gill Marine.

YFM’s legal advice was provided by Jon Gill at TLT LLP, Organisational Review by Anna Cornwallis of Stratton HR, Tax structuring by Phil Snell of James Cowper Kreston and Financial Due Diligence by Stephen Reed of Price Bailey.

Will Baxter, DSW and Grant Thornton acted as lead advisor to Tonkotsu, and Tim Bird of Field Fisher provided legal advice.

 

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YFM Equity Partners invests £3.6m to support the growth of Wooshii

10 June 2019

Funds advised by YFM Equity Partners (“YFM”), the specialist private equity fund manager, have backed a £3.6m investment into Wooshii Limited (“Wooshii”), a disruptive video agency. YFM’s investment comes from its two advised VCTs, British Smaller Companies VCT plc and British Smaller Companies VCT2 plc.

Wooshii, founded and led by Fergus Dyer-Smith, was built to capitalise on the increasing demand for fast-turnaround digital content, offering clients the convenience and quality of a traditional video marketing agency paired with a decentralised, global creative network. The result is the ability to provide clients with a video content solution that scales with their needs, with feet on the ground across the globe, making localised video content production faster and more affordable.

Growth in recent years has been impressive, and today Wooshii works with a number of blue chip corporate clients including Coca-Cola, Microsoft and Booking.com.

YFM’s investment will be used to support the continued growth of the business, with Wooshii planning to strengthen its team in the UK, the US and across Europe. These newly created roles will enable the business to further expand its international footprint and client base, and to further develop its technology platform.

Colin Granger and Adam Hart led the investment for YFM.  Colin Granger will join the board of Wooshii at completion and commented: “Wooshii have successfully built a decentralised video production model that solves the key issues facing corporates today with a growing demand for content across a global market. We’ve been hugely impressed with management’s vision and the quality creative network and technology platform that the business has created. Having a solid platform, international reach with the opportunity to scale, it’s the type of early-stage, high growth business we look to support, and we’re excited to be part of the Wooshii journey as it continues to gather momentum.”

Fergus Dyer-Smith, founder and CEO of Wooshii, added:

“It’s a really exciting time for Wooshii, and the funding from YFM will allow the business to capitalise on the huge opportunity that lies ahead. We selected YFM as a partner given their knowledge of our market as well as having supported numerous businesses like Wooshii through this planned phase of growth. We have built a great relationship with Colin and Adam during the process and have enjoyed their straight-forward and pragmatic approach. We’re delighted to have YFM join the team.”

YFM’s legal advice was provided by Chris Reed and Poppy Wilkinson at Gateley Plc, Commercial Due Diligence by Geoff Rampton and Suzy Urch of RPL Ltd, Financial Due Diligence by Robert Ledger, Organisational Review by Anna Cornwallis of Stratton HR and IT Due Diligence by John Dowell of Turous.

Dane Phillips of NOR Capital acted as financial advisor to Wooshii with Sam Mabon of Brabners providing legal advice.

 

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YFM leads the buy-out of The Protein Works

7 June 2019

YFM Equity Partners leads the buy-out of  THE PROTEIN WORKSTM with a £6m investment from its Buyout Fund I

YFM Equity Partners (“YFM”), the specialist private equity fund manager has backed the MBO of THE PROTEIN WORKSTM from B&B Investment Partners

Dan Freed and Andy Thomas lead the investment for YFM and this announcement marks the 8th investment from YFM’s Buyout Fund I taking it past 65% invested.

Founded in 2012, THE PROTEIN WORKS™ is a direct-to-consumer sports nutrition business that sells a wide range of protein powders, snacks, supplements, and foods, manufactured at their 34,000 square foot facility in Runcorn, Cheshire. The business has won several awards including New Business of the Year 2014 at the National Business Awards.

Consumers in the UK and the EU can buy directly from THE PROTEIN WORKS™ through their website, and the business sells to markets across the globe via a network of international distributors. The company has enjoyed a sustained period of growth, buoyed by the development of a leading vegan range, unique snacks from its in-house protein bakery and best of breed flavours. It now expects to reach £13 million of sales this year.

The business is run by CEO Mark Coxhead, who co-founded the business, and Marketing Director Laura Keir. As part of the transaction, Arvin Ghoora will join the business as Finance Director. The team plan to make further board appointments in the coming months as the business gears up for further growth.

Andy Thomas, Partner at YFM commented:

THE PROTEIN WORKS™ is ideally placed to serve customers seeking to make protein and other healthy supplements part of their everyday lifestyle. The team have developed an exciting proposition that consumers can trust, and we’re looking forward to working with them to grow the brand, both in the UK and globally. YFM is delighted to be part of THE PROTEIN WORKS™ team”.     

Mark Coxhead, co-founder and Managing Director added:

“It’s a very exciting time at THE PROTEIN WORKS™ as we embark on a new phase of expansion. The brand’s premium range of products have been well received in diverse markets and cultures around the world, illustrating its incredible potential. Partnering with YFM will help us to make this unique brand truly global and give millions more the opportunity to snack healthy on everything from Protein Crunkies to Loaded Nut Butters.”

Sam Davies, Corporate Finance Director at Cowgills advised YFM and its management said, “Mark and his team have rapidly built TPW into a leading premium sports nutrition brand, the partnership with YFM matches the team’s growth ambitions. The management team met a number of equity partners but had a strong cultural fit with YFM which has an excellent track record supporting MBOs and consumer sector deals. The team have been a pleasure to work with and we look forward to continuing to support them as an independent business”.

Sam Davies of Cowgills provided corporate finance advice for the acquisition. YFM’s legal advice was provided by Mark Winthorpe and Andy Walsh at Pannone Corporate. Financial Due Diligence was undertaken by Iain White of DSG, and Commercial Due diligence by White Cap Consulting. OneFourZero undertook Digital Due Diligence, and Marsh completed Insurance DD. Will Munday of DWF provided legal advice to the management team. Paul Satchell of Spayne Lindsay and Crispin Bridges Webb and Gareth Cook of Shoosmiths advised the vendors.

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