Sale of Sports Merchandise Company
A well run sports merchandise company offering an extensive range of trophies, awards, medals, glass and crystal awards and gifts for all events and sports occasions. 80% of sales were to regular accounts such as football associations and motorsport clubs. The remainder of sales were via their e-commerce website. The company’s MD was sales and process driven and had grown sales steadily from £250k to £1.3m over the past 10 years.
This business was a father and son, family run business started over 30 years ago. For many years the company was run as a lifestyle business around the founder’s other commitments as a professional football player and coach. His son joined the business in 2003 after university, and took on the objective as managing director of building the business to a £1m company, which he duly achieved within 8 years.
With family businesses it is often difficult to separate the business from normal family life, and despite the success of the company, the co-running of the business was putting a strain on the father-son relationship. In addition, the son having achieved his objective and the father having reached retirement age, it was a natural point in time to sell the business and realise the value of the asset they had built.
What Hornblower Did
Whilst we have worked with corporate merchandise companies, this was a somewhat new market sector for Hornblower. However the principles of how to identify and find the right buyer for a niche business remain the same. Direct competitors are rarely the best buyers for any niche business; we therefore identified two categories of buyer,
- Merchandise companies operating a similar business model but selling to a different market,
- Entrepreneurial investors looking for a well-run, profitable and sustainable business to grow.
Hornblower researched the corporate and general sports merchandise market extensively before approaching companies for whom our client’s business would make a good fit. We also put the opportunity to our extensive database of entrepreneurial investors. Many of these buyers regularly watch our website for new opportunities as they know we select good businesses for sale.
Over a period of 3 months, we received over 40 enquiries. Confidentiality within the trophy market was of paramount importance to our client; each enquiry we qualified to make sure that our client’s company would be of real interest and that the buyer had the funds available to achieve our target valuation before providing further information. Through this process of qualification, we identified and held meetings with 3 prospective buyers and received 3 good offers.
WIN WIN Outcome
The selected buyer was a publicly listed investment company which specialises in acquiring owner managed, SME sized, niche businesses. The managing director (the son) agreed to stay on running the company under new ownership, taking 30% shares in the new holding company, but receiving a significant windfall having realised the majority of the value of the business through the sale.
The managing director and the new owners have together developed a business plan to build the business significantly over the coming years. The founder will retire after a short handover period and there should be less discussion of the business around the family dinner table!
SOLD – November 2014