This could have spelled disaster. Both print companies were separate businesses, but late last year had agreed to share a 500m² premises to split costs such as rent and rates. Conroy had even sold his one and only printing press, a Heidelberg Speedmaster, so both firms were sharing Wheelden Print’s Komori Lithrone. And then came the bombshell. Wheelden Print was in liquidation.
The challenge
Conroy explains: “Wheelden Print took a nosedive in sales around this February, putting them under severe cash pressure. Business had dropped off, turnover went down while overheads remained fixed – it’s a story we’ve heard many times in print. In March they took advice, and by April they were in liquidation.”
If Conroy felt “backed into a corner”, it’s because he was. Claremon’s eight-staff business, which serves franchise companies and clients in sectors such as automotive and housing, had sold its own printing kit in order to share the use of Wheelden’s. And it was now being stripped of that very same equipment by a liquidator looking to sell whatever it could to satisfy creditors.
There was a Plan B for Conroy, but “it wasn’t pretty”. He could turn his beloved Claremon print company that supplies brochures, direct mail and leaflets to customers nationwide from its Wakefield Road in Bradford, West Yorkshire, into a sales office and become a brokerage.
“This was the last thing I wanted. I’m into manufacturing and making things. I want nothing more or less on my desk than piles of stuff that has been produced by my people on my premises. The only other option was to buy the equipment, but this would need finance. This is a small company with limited resources, so we would have to talk to banks and asset finance specialists.”
As well as worried, Conroy was sad. He knows Wheelden’s two directors, brothers Peter and Christian Minchella, and respects their print ancestry. Wheelden Print opened shop in Bradford over 70 years ago when current managing director Peter’s great uncle Elliot Wheelden started printing betting tickets for a major local bookmaker just after the second world war.
Worried for Claremon, sad for Wheelden, Conroy nevertheless saw potential benefits: “However bad, this was an opportunity to build immediate growth. Despite their problems, Wheelden Print was a very solid proposition and we have worked side by side, so we could offer continuity of service. We could serve their former customers, use their former staff and almost overnight boost our turnover.”
The method
First Conroy had to successfully negotiate with the liquidators and then sort out the small matter of finance. First was the liquidator, which had used an independent assessor to work out the value of assets. These included the five-colour Komori Lithrone S29 B2 litho press with high-speed inking system that until recently both printers had been sharing.
Also for sale was a Xerox machine and a host of finishing kit such as guillotine, stitchers, cylinder for die-cutting and creasing, folding kit and a laminator. Though the liquidator had little “wiggle room” to negotiate on price, a quick sale would save on marketing costs, which could be reflected in any final price. This “set the clock ticking,” according to Conroy.
So Conroy needed to move fast to secure the best deal. Working with his accountant, he sought backing from Aldermore retail bank, which provides financial services to small and medium-sized businesses, Allied Irish Bank, and the more unconventional Metro Bank, which bills itself a store instead of a bank and was sufficiently “forward thinking and leftfield to appeal to my state of mind”, he says.
Despite the inevitable go-slow nature of tying up legal contracts and lending agreements, Conroy says the process was “fairly painless”. As well as the Komori Lithrone S29, he bought an MCS-2 Wohlenberg guillotine, a McCain-Brehmer S1000C saddle-stitcher, a B2 Heidelberg Cylinder for die-cutting, a Stahl folder and a Boston stitching machine as part of a six-figure deal.
More important was the staff. Of the 13 Wheelden Print employees, eight have been taken on by Claremon: three sales and admin staff and the rest production people. One of these, sales director Christian Minchella has taken the same role at Claremon, while the option to join the company for his brother and former managing director Peter Minchella remains open.
“We were sorry to hear Wheelden Print had shut down because when a business closes it’s people’s livelihoods that are affected,” says Conroy. “But by buying the assets off the liquidator we can take our own business to the next level. And in doing so we have employed some of Wheelden’s former members of staff. Because we shared the same building there was no problem moving kit.”
The result
Conroy’s enlarged Bradford business aims to more than double its turnover in the next 12 months to nudge the £2m mark. All that, however, hinges not just on the new staff or the extra machinery, but securing work from Wheelden Print’s former clients. Fortunately one of Conroy’s earliest jobs when he looked into taking on the assets, was to sound out the 20 biggest clients of Wheelden.
“The speed of the deal was really dictated by how confident we were of bringing their customers on board. The former directors put us in contact with their clients who pledged their support, and this made all the difference. Once we knew we had tied up the finance, there was no doubt we had to do this to continue being the manufacturer we had always wanted to be.”
Having expanded its business, Claremon is also looking to expand its service offering by targeting more work from clients with multiple sites, such as financial institutions and franchise businesses. Conroy is also toying with reaching out for public sector print jobs and engaging a company to help him put together tenders. He says: “The margins with this kind of work aren’t great, but it does tend to offer regular income. Many public-sector groups meanwhile have good and wide recognition, so displaying the Leeds City Council logo, for example, can be seen as a badge of honour. But for the immediate future we will consolidate what we already do by possibly buying another Komori Lithrone.
“I am however always open to chat with other businesses over a cup of coffee to explore sharing of assets to save on overheads, or look at merger opportunities. I always have my ear to the ground and keep in touch with the BPIF to see if there are likeminded printers looking at similar kinds of ventures. If nothing comes of it, all you’ve lost is the cost of a cup of coffee.”
Conroy has no doubt this deal was worth the coffee: “It is a massive thing for us. We think we have the opportunity to expand hugely in the coming months. The new equipment and staff will allow us to offer a faster turnarounds for customers, move a wider range of production in-house rather than sub-contract it out, and we’ll also be able to take on larger contracts.
“What is really exciting it we now have operational control of everything. Winning new business is difficult, time-consuming and very expensive. But we have managed to double our business almost overnight. We have also taken on excellent, tried and tested staff with all the experience needed to serve the customers we want to bring on board. Above all we have saved jobs and secured ours.”
TOP TIPS
Make sure the finances are in place Conroy says using an excellent accountant and shopping around for likeminded “leftfield” finance houses gave him reassurance
Target staff Taking on existing staff can smooth the acquisition and maximise continuity while transferring work in progress and kit
Target clients Sound out the takeover company’s customers to try and win their business by reassuring them there will be continuity of service – and prices
Act fast If your acquisition is a stricken company, offering a quick and easy purchase can save the liquidator costs such as marketing, and might swing a better deal
VITAL STATISTICS
Claremon
Location Bradford, West Yorkshire
Inspection host John Conroy
Size Turnover: just under £1m
Established 2002
Products Brochures, direct mail, leaflets and print for customers nationwide such as automotive companies, housing organisations and educational groups
Kit Heidelberg platen, Heidelberg die-cutter, Muller Martini stitching machine, MBO folding kit plus kit purchased from Wheelden Print including a five-colour Komori Lithrone S29
Inspection focus Growing through acquisition
