Chris Stone

Adding a turnover of nearly £500,000 to his company during the national lockdown was just one of the benefits business owner, Chris Stone, gained from being a member of the Dealmaker’s Academy as he explains.

Growing a Hearing Clinic by Acquisition During Lockdown

When the COVID-19 national lockdown first began in early 2020, Chris Stone’s first instinct was to batten down the hatches and ride out the storm like many other business owners.

However, a Zoom call that featured the members of the Mastermind programme of Dealmaker’s Academy changed all that. Chris, who co-owns a company with his brother, had signed up for the programme a few months ago.

“Some of the people on that Zoom call talked about how they were just lining up deal after deal,” recalls Chris, who is a Glasgow-based audiology specialist. “I thought, ‘I need to get my thumb out.’ I realised that it was time to do it. And it turned out to be a good decision.”


“The motivation I got from that Zoom call alone was worth its weight in gold to me,” he admits. “Just knowing that other people were out there doing those deals made me feel as though I was being a bit lazy. And that’s not really my

He was so motivated by what he’d heard that he and his brother started looking for targets. Within five months, they had acquired the assets of a competitor, which allowed them to add a turnover of nearly £500,000 to their business. It made the company the fastest growing hearing healthcare provider in Scotland.

To put the deal in perspective, Chris says that it would have taken two and a half to three years to achieve the same level of turnover if they’d relied solely on organic growth.

He and his brother had created their business from scratch about eight years ago. It had taken them four or five years to reach a turnover of £1 million.

The first months of the national lockdown had taken a significant toll on their business. “From March to the mid of May, revenue-wise, we lost about £500,000,” he remembers, “It was pretty dicey. We didn’t exactly know where things were going to go.”

The loss of turnover meant that Chris was forced to question every cost, and then restructure the business wherever possible.

“It was a harrowing experience. Some difficult business decisions had to be made because of being shut down for quite some time. We had to let some good staff go.”

The lifting of the lockdown restrictions helped the company recover. “At the tail end of May and into June, there was pent up demand, which we picked up back again within two or three months.”

“We are significantly better off now than if the COVID-19 pandemic had not happened. It’s
really strange, kind of bittersweet.”

“We are now much leaner, which has been hugely positive for me. Last year, we were looking at a net profit of 7%. We were going to try and grow to 10% on a £1.2 million turnover.

We’re now at 21% on that. Although difficult decisions had to be made, it has worked out positively.” Before joining the Dealmaker’s Academy’s programme, Chris and his brother had considered buying a couple of their competitors.

“I felt that organic growth was just going to be far too slow for us. But we didn’t really know how to go about doing acquisitions.”

“I picked up on the Dealmaker’s Academy’s podcasts. I learnt about the Mastermind programme, and knew that I just had to be part of it. I just felt that I didn’t have a big enough network that was involved in such things.”

Having signed up for the Mastermind programme, his first step was to add ‘Investor’ to his LinkedIn profile. This helped boost his profile, which resulted in invitations from other owners to consider joint ventures or even a buyout.


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He began to network and sought out potential targets.
“Ideally, we didn’t want to buy anyone in our local vicinity, as we’re large enough across the central belt of Scotland. Initially, we wanted to grow out from central Scotland down into England, and onward.”

It soon became evident to Chris that he had a significant gap in his management team. “I was juggling too many balls. I had to find people who could come in, work operationally, and take control.” He needed an Operations Director, a Marketing Director, and a Sales Manager. “I managed to get an Ops Director, which freed me up quite a lot.”

He then found likely acquisitions in Yorkshire, Liverpool, and Cheshire.
An early plan was to create a franchise model that divided the UK into regions with five million or more inhabitants. But that idea was soon scrapped.

“Just finding the time to get around to building that franchise model was going to be challenging. So, I thought we’d just make a couple of acquisitions initially. And that is exactly what we did.”

Chris heard about a couple of businesses that weren’t performing well.

“I hadn’t even thought of acquiring one of them, but a door was opened. We made contact, and it turned out that we’d met the owner at trade events, away days, and product launches over
the years.”

The potential seller owned a chain of nine clinics and employed several staff. Unfortunately, he’d made a few poor decisions, such as trying to open in London too soon. “He got his fingers burnt. He didn’t want to get rid of the business, but couldn’t really hold on for much longer, as it was in quite a bit of debt to
the bank and whatnot. It really wasn’t profitable.”

During an early discussion, the brothers discovered that the company was £120,000 in debt to the bank. A closer examination of the P&L revealed a turnover of £460,000. Among other things, profits had been gobbled up by the opening of the clinic in London and a £60,000 Director’s salary.

If not for costs like those, the company could have earned a net profit of £120,000. The owner wanted to be rid of the company so he could focus on his other business.

“We were able to purchase the assets of the business rather than the shares, which was quite
a good move. It meant that the owner could wrap that business up. We’ve just merged all of his assets into our bigger business.”

They used a £120,000 loan via a peer-to-peer funding circle to purchase those assets.

“We then wanted to pivot that loan, as it carried PGs [personal guarantees], which we wanted to be free of. Then the lockdown happened, and several loans appeared, which were backed by the Government. So, we took one of them for a couple of hundred grand, and used it to pay off the funding circle loan. This gave us a reprieve, since there were no interest payments for the first 12 months and lower rates over the following months.” 

“This was a good deal for us. Businesses in our sector go for sale for about a 1:1 valuation, so if you’re doing a £1 million turnover, it goes for £1 million. Once your turnover goes north of about £4 million, your business starts to become worth an awful lot more.”

“As it’s usually a vertical integration, it’s a manufacturer or supplier, or a trade buyer down the line, who will buy you out. So, we’re aiming to get a turnover of £10 million, which will put a 1.2 or 1.4 multiplier on the business.”

“We were able to buy the company for £120,000, and we are going to add a turnover of about £420,000 from that one acquisition.”

It would take us about three years to achieve the same turnover organically by opening a new site.

In contrast, he believes that the acquisition allowed them to do it in about five months. During that time, Chris was approached by three other business owners who were keen to sell.

“Word had got out that we were acquisitive. In our market, you get an awful lot of owner-operators who are considering retiring.” The lockdowns had exacerbated things for these three owners who were keen to sell quickly.

“We immediately discounted two of them, as we didn’t think there was a good synergy between them and us,” he says. The third business seemed to have potential. The brothers went as far as reviewing the accounts and creating a deal structure before changing their minds.

Since then, they have found another acquisition target. If the deal succeeds, they will be able to add another turnover of about £700,000 to their business. They will use a loan of £200,000, which is payable over five years, to fund the acquisition if they go ahead. The loan will have a six-month no-interest payment window.

The owner wants £750,000 for the business, which has a turnover of about £600,000. “It’s extremely profitable. The owner has run it on a shoestring budget, but it’s very high end, and the margins are insane.” “We really want him to come and work with us.” Chris has already identified a £60,000 saving that could be made on devices. Hiring the owner as a consultant and replacing him with someone on a salary of £40,000 means more savings. It won’t be long before the company makes a turnover between £700,000 and £100,000 a year.

In the next couple of years, Chris expects the company to acquire two or three other companies. Later, it will move into other healthcare sectors.

What he never wants to do again is start a business from scratch. “I would never do it. It’s fraught with danger. People don’t realise just how risky it is to start a business from scratch.”

“I’ve got a few friends who are exploring the possibility of going out on their own. I’ve tried to
encourage them to buy something that’s already working with at least five years of history behind it and a management team in place.”

“If it has a good structure, database, premises to operate from, and marketing that works, you can just go in, and improve it piece by piece. Never ever consider starting from scratch. It takes too long. Life’s too short, far too short.”

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