Leaderflush & Shapland
Transaction Background
In September 1999 Graphite Capital led the £12.5 million management buy-out of Leaderflush & Shapland (LS Group) from Whitecroft plc, a quoted company being wound up. LS was the UK’s largest manufacturer of high performance doors and door sets made to order for public buildings, schools, hospitals and offices. It has been formed from the acquisition of Shapland by Leaderflush in February 1998 and had three factories. The business enjoyed strong relationships with large construction companies and contractors.
Deal Attractions
Whitecroft was a forced seller and we were able to complete the transaction quickly, whilst accommodating the vendors’ main sale conditions. The management team of six directors was highly experienced in the industry and proved instrumental in negotiating an attractive transaction. LS Group’s market was set to benefit from the Government’s strong promotion of PFI and increased public-sector spending.
Achievements
- substantial synergies and financial benefits from the merger were realised post-transaction
- improvements in purchasing and production resulted in a strong increase in gross margin
- strategic partnerships with large contractors led to a significant expansion of the order book
- operating profit grew from £1.6 million in the year before Graphite's acquisition to £5.6 million in 2005
- we strengthened the management team in key areas
- Graphite’s shareholder loans were redeemed early from strong cashflow
- the business was refinanced in April 2003 with Fortis Bank providing £18 million of bank facilities
Exit
- in spring 2005 we were approached by SIG plc, an acquisitive building products group
- LS Group was sold to SIG for £47 million in June 2005
- Graphite generated a return of 6.1 times its initial cost of investment and an IRR of 59 per cent
