Grafenia has completed the acquisition of Image Everything, a £5 million Manchester sign and display business with 41 staff and customers that include Manchester City FC.
Grafenia is paying £1.15 million in cash with £600,000 set aside if sales targets are achieved by the three key directors Neil Cousins, John Fitzgerald and David Brunt, who remain with the business.
Image Everything was founded in 1998 and operates from 5,600m2 premises close to Manchester’s Trafford Centre. In the year to May 2016, it achieved sales of £4.81 million and a pretax profit of £590,000. The deal will be cash generative and earnings enhancing for Grafenia.
The deal is its second as Grafenia attempts to create a consolidated sign and display graphics network. CEO Peter Gunning has previously explained that the intention has been to take on small businesses where the owner wishes to retire and to combine these into larger hubs, offering the range of Grafenia services including Nettl outlets. However, this is a different scale due to its size and represents a “significant step up in our sign roll-up strategy”.
Gunning adds: “Neil, John, Dave and the team have built a great business together. When we shared our sign roll up plans with them, there was a natural click. It’s refreshing to meet a team with the same determination to deliver reliable service to clients. They truly centre their entire business around their clients and doing whatever it takes, no matter how tricky, to get the job done.
"When we first met, it was immediately obvious that the culture at Image is similar to Grafenia's. The more we’ve got to know the people, the clearer cultural alignment we’ve found.”
Cousins agrees that the strategy is aligned. “The UK has huge potential for brand development across all sectors. Our vision is to supply a full range of commercial support products and services, from websites to commercial signage, and everything in-between, to satisfy that need.
"Joining forces with Grafenia is an organic fit and provides us with the catalyst to reach more customers, with more solutions, at a much faster pace. Grafenia's vision for a nationwide network of Nettl studios was exciting to us.”
There is little overlap in the customer base, Image Everything working with larger businesses that Grafenia has aimed at. It produces building traps as well as pop ups and exhibition graphics.
An obvious synergy will be to consolidate large format production on one sire given that Grafenia's production hub is also in Manchester and this is considered a potential opportunity, the company says.
The deal is being funded from a combination of cash in hand an a £900,000 sales and lease back organised through Close Brothers with £1.25 million of loan notes repayable in monthly instalments. The earn out provision applies to achieving certain targets over the next two years.
The thinking of the two management teams was aligned he says making the deal a natural fit. It provides the scale to grow the existing business and to add new products.
No comments to display, be the first! Leave a comment in the box above.