Plastics Direct is a leading supplier of cut-to-size plastic sheet products operating from a 22,000 sq ft site in Oldham, Greater Manchester. The business was set up as a partnership in 1989 and now supplies to the automotive industry, and fabricates materials for street signage and the construction of film sets. Lee Adair joined the company on a two-week trial in 1999. 25 years later he would become a joint owner as part of a management buy out.
In 2022, the two owners began internal discussions with their employees, Lee and Samantha, about their intention to retire. They concluded that a management buy out was a possible solution, but first they needed to agree what the business was worth.
In February 2023, their external bookkeeper introduced the team to Paul Dodgshon of Business Partnership and they appointed him to calculate a realistic business valuation. When Paul presented the figure, the vendors and buyers already had a similar value in mind, so they agreed to proceed with the MBO. Lee and Sam subsequently appointed Paul to broker their side of the deal.
Paul was on a site visit when unfortunately one of the owners took ill. Despite his unexpected health issues, negotiations were able to continue and an offer was made, negotiated and agreed by October 2023.
The relationship between the vendors and the management team had always been good. Lee and Sam intended to continue running the company in the same way and the vendors trusted them to do this. Due diligence made for a potentially tricky situation as Sam was both part of the management team buying the business and heavily involved in providing data required by their solicitor. All parties putting the best interests of the company first made this process easier.
The vendors were both landlords and tenants of the business premises that would be purchased as part of the sale. Early on, when solar panels were about to be installed on the roof, it came to light that the roof needed repairing to the tune of £150k. Paul had to recalculate the business value to allow for this cost and restructure the deal to account for the roof repairs to be carried out.
As the deal was about to be finalised in December 2023, Plastics Direct’s biggest customer went into administration, dramatically reducing turnover overnight. The MBO had to be put on hold whilst the business adjusted to these new circumstances. Fortunately they had an insurance policy to cover this eventuality and the management team went away to plan how to recover the lost turnover.
When the deal restarted in April 2024, Paul recalculated the business value and restructured the terms of the deal based on data from the last quarter. Final Heads of Terms were agreed in July 2024. The discovery of a deceased shareholder took a few more weeks to resolve before the deal could complete.
The MBO concluded in October 2024 and delivered favourable results for everyone involved. One of the owners retired and the other has stayed on in a part-time role. Lee and Sam are getting used to life as business owners and enjoy being involved in all aspects of operations and management. They have plans to grow the business through investing in new machinery and expand their customer base by exploring export opportunities.
Paul was really helpful and made the MBO process very easy. It was all new to Sam and I and we were naturally very nervous, so we relied on him to guide us. He took away all our concerns, presented information in an easy-to-understand way, and seemed to intuitively know what our expectations would be.
Paul recommended an accountant and a solicitor – people he trusted and was familiar with. It was obvious from the start that they had a good relationship and knew what they were doing, which was very reassuring.
I have no basis for comparison because you don’t buy a business every day, but in my opinion Paul was tremendous. When we faced the problem of the roof repair and then our biggest customer went into administration, it felt like we were going back to square one. Paul was like the glue that held it all together. He’s always enthusiastic, highly knowledgeable and a great communicator. He did as he said and held our hands through the MBO process. We couldn’t have done it without him.
Lee Adair, Managing Director
Plastics Direct
Whether you’re selling, buying, or planning for the future, Business Partnership is here to help. Contact us today to speak with your local Regional Partner and start your journey toward success.
Whether you’re selling, buying, or planning for the future, Business Partnership is here to help. Contact us today to speak with your local Regional Partner and start your journey toward success.