Intelligent Finishing Systems has solved a succession dilemma by becoming an Employee Ownership Trust.
The sale of the business to its 30 employees allows managing director Bryan Godwyn to retire and secures the future of the business, says Eric Keane, who steps in as managing director. Both Keane and Godwyn have been 40% shareholders in the business with technical sales director Jason Seaber holding 20%. Now 100% of the shares are in a trust owned and controlled by the staff.
Godwyn had made no secret of a desire to retire at 55. When Keane became involved in the business two years ago and acquired his stake at the start of last year, the need for a succession plan was paramount. Godwyn becomes a director of the trust overseeing the business.
The more traditional routes to bowing out were either not open or would not have delivered for the staff or customers of the business. As Graphic Arts Equipment, the business had been acquired by Litho Supplies whose collapse led to Godwyn, and then joint managing director Tony Hards, to set up IFS in order to buy the business from administration, honouring all the debts at the point of Litho Supplies’ administration. Among these was Keane IT company.
“Bryan and Tony took on the debts at the time. Nobody was left out of pocket,” he says. A sale to an international business was ruled out as unsuitable for a machinery dealer reliant on its people and customers.
And IFS has had the example of former neighbour Apex Digital Graphics to demonstrate what can happen without a succession plan.
He explains that Horizon, the principal supplier in the IFS portfolio, had no interest in buying its supplier. It has always preferred to work with independent distributors who are closer to the market, have a strong interest in building Horizon’s presence, and have a long term commitment to the Japanese company and customers. Horizon has reaffirmed its support for the deal, says Keane.
“Horizon is very very happy that the business stays with the business. They love continuity,” he says.
What has made the deal possible has been the success of Horizon in the last few years. In Japan the company is expanding production by 30% and is about to open its first Think Smart Factory open house to demonstrate near line and inline integration with a number of digital press suppliers, a Japanese equivalent of the Hunkeler Innovation Days, says Keane.
In the UK, IFS has enjoyed two years of growing sales and profits. It is this that has enabled the business to fund the transition from its own resources and to leave the EOT free of long term debt. “It needs a minimum of 25 people and a growing business where everyone can share in the growth for an EOT to work,” says Keane.
By Gareth Ward