Nicholas Manuel

Buying a business in less than a month may seem like an impossible feat, but as specialist printer and Mastermind graduate, Nicolas Manuel, reveals, it can be done.

Buying a Business Without Meeting The Owners

In just three weeks, Nicolas Manuel achieved the seemingly impossible. He acquired a promotional merchandising company that is expected to add a turnover of at least £200,000 to his current company.

What’s more, Nicolas did it during the Government’s tiered COVID-19 lockdowns and when he was only part-way through the Mastermind programme of the Dealmaker’s Academy.

Prior to joining the programme, Nicolas and his father ran a company that managed specialist print jobs for clients. They had begun to consider creating a new company that could produce all the merchandising material they were buying from other companies.

“We were outsourcing a lot of promotional merchandise at one point. I decided that we should start our own promotional merchandise company, so that we could sell it [the merchandise] to ourselves effectively, and add it to the bottom line.”

At the time, he believed organic growth to be the only way forward.

“That was before I heard from the Dealmaker’s Academy about how to buy a business.” He knew from first-hand experience the slog involved in setting up a new company. It is what he and his father had done back in 2015.

“It’s awful hard work; starting from scratch.” “I started off working as a Print Buyer and Project Manager in an advertising agency in London. And my father worked as a Sales Director in London’s most well-known large format printers.”

“We both faced the same problem: we couldn’t find anyone to take on a project and look after the whole thing. I had so much work going through that I couldn’t look after every single aspect of the project.”

His father, meanwhile, would often win print jobs only to discover that it involves work his printing company could not do.

“He would come back to the office and say, ‘I’ve got this amazing project,’ and they would go ‘Well, we don’t do that’. So, he’d lose the work.” Frustrated, the pair set up their own company, We Love Merchandise, determined to manage any project that came their way.

“We went in, all guns blazing, using our old contacts and with the attitude that nothing was a problem. Anything the customers wanted, we said, ‘Yes, we can do it’. Just having that attitude, I think, really helped us.”

“While working on a campaign, we had to sleep on the floor of the office. It was an ad agency pitch that had to be delivered by 8 am, and the
artwork for it came in at midnight. So, it was and still is hard work, although it has gotten easier.

Now we’ve got a team around us.” The company had a £2.2 million turnover at the last set of accounts. It managed projects and outsourced the production of all promotional merchandise. Nicolas began to consider growing the business. “It never crossed my mind to do it by buying
other businesses. I didn’t think it was possible. 

When someone mentioned Jonathan’s podcast, I started listening to it, and ended up listening to all the podcasts repeatedly. I started watching his videos as well. I thought, ‘This is something I can do.’ I got quite excited about it, and signed up for the Mastermind programme.”

“Something that definitely appealed to me was having different revenue streams, rather than having all your eggs in one basket.”

He says that the impact of the national lockdown, when all but essential shops were closed, and people were told to work from home, really brought home the need to have more than one revenue stream.

“COVID-19 just put that into perspective. Most of my work was for events, exhibitions, pop-up events in the High Street, and such. All that completely came to a standstill.”

The sudden loss of orders forced Nicolas to reconsider his strategy. “The first lockdown was a massive learning curve for me. I kind of buried my head in the sand for four weeks, and tried to think about how to save my existing businesses.”

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“When the lockdown was over, and I attended the second workshop with Jonathan, I felt that fire in my belly again. After the workshop, I sent
out 1,500 letters and had about 30 phone calls while sitting in my little home office. I found it really exciting. Within three weeks, I’d progressed to the stage of head of terms on one company.”

The target company had been on the market for a while with a significantly higher asking price than what Nicolas would eventually pay for it. The day Nicolas’ enquiry letter arrived, the company owners, a husband-and-wife team, were about to shut everything down.

“They were retiring, and had come into some family money. They were going to sell all the machinery and kit online, and just close the company down. My letter arrived on the right day.”

After reading his letter, the wife rang him. “She said, ‘I’ve just received your letter. Would you be interested in buying the business? We’ve only got three weeks to do it, though.’”

Even experienced dealmakers might have baulked at the prospect of achieving a deal on such a tight deadline. Nicolas, however, was undaunted.

“I said, ‘Yes.’ You can do everything if you have a motivated seller.” “For them, it wasn’t about the money really. They wanted someone to carry on with the business they’d had for 38 years. But they were motivated because they’d sold their factory, and someone else was moving in. So, they had to get the stuff out.”

Their online business, Balloons Galore, sold merchandise to corporate and consumer markets, and was one of the country’s most reputable balloon printing companies.

“On the corporate side of matters, the business offered latex screen-printed balloons for events and shops. They also had an online B2C side. The public could go online, pick a balloon, upload a photo, put some text on it, and personalise it. The balloons were delivered to their houses in a box the next day.”

The consumer side of the business had grown during the lockdown. “That is actually the side that excited me quite a lot because people go online every day and buy balloons as gifts.” He also saw the potential for cross-selling and upselling his existing products.

Having agreed to proceed with the purchase, Nicolas got himself to learn more about his target business.

“The first thing I did was send an NDA, and she sent me her accounts. I went through them in great detail for the rest of that day.”

“Basically, they were sole traders for 38 years, which really blows my mind with the numbers involved. It was a lifestyle business.” Nicolas believed that his own staff could manage the balloon business.

“There was a crossover between what my existing staff did and what the owners did. I worked out that my staff could do what the owners had been doing. It would just fit in; there were no additional requirements at all.”

That was fortunate because the balloon business had just sold its factory.

Nicolas believed that the acquisition would have a beneficial effect on profits. “I would have legitimate add-backs of over £100,000,” he says. If customers were offered upsells and cross-sells of other products of the company, the profits were likely to be even higher.

“The business was making year-on-year around £500,000 in revenue. By slotting into my business, there would be a profit of £200,000 in that.”

After another Zoom meeting, Nicolas and one of the co-owners discussed the deal structure. “We came to a price agreement over a Zoom call. The price we agreed was £150,000 for the business assets. I managed to do it, such that there would be a down payment of £50,000. The assets in the business and machinery was worth more than the whole company’s value if I were to sell it.”

Nicolas knew that he could recover his investment within about 10 months of taking over the business.

“I thought, ‘Well, when I take over, I’ll refinance the assets if I need to get my money back out.’ I agreed that we wouldn’t pay anything for six months, and instead, pay the balance in four quarterly instalments.”

“Interestingly enough, we were going back and forth on the warranties and contracts, not to mention, their solicitor, who was a nightmare. He wouldn’t accept giving any warranties at all.” With an asset sale, the warranties are more limited than they might be in a share sale.

“But the solicitor wanted to provide no warranties at all. I wasn’t happy with that. My lawyer, John, who Jonathan recommended, wouldn’t let me accept what they were offering either.”

Nicolas pushed back. “I said, ‘You know what? I’m just going to leave it.’” His refusal to accept the sellers’ terms actually worked in his favour. “I ended up getting them to add the warranties in and defer the payments for nine months instead. So, I walked away with a better deal.”

His refusal to accept the initial terms had a lot to do with his ambivalence about buying the company.

“I just didn’t need it. I knew that I didn’t need it to put food on the table, so if it wasn’t right for me, I wasn’t going to do it.” This attitude gave him a psychological edge in the negotiations.

“I think they panicked at that point because they were probably a week away from completion. Someone was about to move into their factory,
and they had machinery, which needed to be housed in a 5,000 square foot space. She [the co-owner] told her lawyer off I believe, and said,
‘Just put the warranties in’.”

It helped that Nicolas had a frank conversation with the woman about why he needed the warranties.

“I said, ‘I understand that the deal needs to work for both of us, and you need to be protected, but so do I. I don’t know if this kit will work when it
all gets switched on. I haven’t seen it working; we haven’t had time to assess it all. So there must be warranties.’”

Once the warranties were agreed upon, the deal was completed. 

“Then the real journey started. It was a steep learning curve, which I didn’t make any easier by buying a business with no factory and staff.”

Along with machinery, the acquired assets included the business name, phone number, email addresses, and website. “The website is ranked first on Google for ‘personalised balloon printing’. It gets an awful lot of traffic coming through.” 

“That’s probably where I saw most of the potential because during the lockdown, they had £38,000 worth of online orders from Joe Public each month. And this was without any marketing or ads. It was purely on the basis of SEO [search engine optimisation] on Google.”

With the help of his Marketing Director, Nicolas knew that it would be possible to at least double the sales turnover.

Besides, Nicolas delegated his Operations Director the task of finding a suitable space to house the machinery. He found a factory with a huge mezzanine floor.

Having so much space meant that Nicolas could expand in a new direction. He bought machinery to handle his company’s large format printing work. Previously, the same work had been outsourced.

“Having a factory actually strengthened my business because it allowed us to bring all the manufacturing in-house, which probably added another £400,000 to my bottom line.”

“The nicest surprise from this acquisition was the corporate client list. When it came over, it was like Christmas for my Sales Director. He couldn’t believe it. They’d gotten well-known companies like Next, Holland, and Barrett, along with some really big events companies.”

“We can contact these people to see if they want some balloons. But we can also say, ‘Do you want us to build your exhibition stand for you
as well and provide the promotional merchandise?’ The cross-selling potential is incredible.”

Prior to the acquisition, Nicolas and his team worked from a serviced office in central London and outsourced projects to suppliers. “Buying machinery added a significant amount of money, probably 40%, to our bottom line. So now, we’ve got space in this factory, and two businesses to share the cost. It has grown the profitability of the group quite significantly.”

The whole thing took mere weeks to complete. 

The COVID-19 restrictions meant that Nicolas did not meet the company owners in person. All the meetings with the owners, lawyers, and accountants were conducted through Zoom.

“I don’t know if it’s a good or bad trait, but when I get into something, I become absolutely obsessed with it. I would ring people at 11 o’clock in the night to ensure that everyone’s on it constantly, to really drive the train forward.”

“I was probably a bit more involved than Jonathan would recommend, but I think that since it was the first one, I wanted to ensure that it was done correctly.”

“It has been a sharp learning curve, but I’ve got a good team around me, and they’ve really helped.”

Now, Nicolas is busy developing the offline side of the balloon business.

“The factory is on a retail park, opposite a Hollywood Bowl, and it has got a shop front. We’re planning to open a shop so that when mums drop their kids off at the Hollywood Bowl, they can come in to order a personalised balloon and wait for it. That will open a new market.”

Nicolas has already begun his search for the next acquisition. He has 3,000 enquiry letters ready to send to target companies.

“I’m looking for bigger businesses because I’ve found from all the phone calls that I’ve had that the smaller ones tend to be a bit harder to buy. 

In my industry, you get more emotional sellers with poor management information.” Sellers tend to fixate on the idea of getting £1 million for their business, no matter what the state of their finances, he says. 

“You could spend two or three weeks chatting with people, and then realise that they’re not motivated enough, or that their evaluations are ridiculous. I dealt with an owner whose business earned £40,000 a year in net profit, but his accountant told him that it was worth £1 million.”

Nicolas believes that involving with other people on the Mastermind programme gave him the motivation he needed to keep going.

“I get inspired by other people. I love to see other people doing well. And every time someone talks about a deal they’ve done, it gets a little fire going in my belly.”

“I’m still in contact with the people from the course; we talk almost daily. This is the best take-away from it all. It’s also opened my eyes to see what’s possible. Once you get a couple of acquisitions under your belt, you can really scale it up to quite a size.”

He wants to create a group with about £20 million turnover in the next five years.

“Depending on how much profit it’s bringing in, I’d decide whether to sell it. I’d probably do it all over again then.”

His only regret is that he didn’t begin sooner. “I wish I’d done this in the first lockdown and not sat on the sofa playing FIFA for a month. If I’d done that, I might have two or three businesses now.”

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