Peter Lidgitt

No matter how bad the economic situation may appear, there are always opportunities to grow your business through acquisition as serial investor, Peter Lidgitt, has discovered.

Buying Businesses From Abroad

As expected from someone with more than 30 years of experience in acquiring businesses, Peter Lidgitt is great at spotting opportunities to expand his network of companies.

At last count, he had 20 companies in his group, eight of which he acquired during the COVID-19 pandemic. They are expected to produce a turnover of £18.5 million this year.

While many owners of service and retail companies despaired about the UK lockdowns during COVID-19 and the people were ordered to work from home, Peter saw the potential for acquisitions.

This is not to say that he escaped unscathed. One of his businesses supplies flowers to London’s hotels, livery companies, and clubs. The lockdowns and work from home orders meant that the demand for flowers in commercial buildings all but withered.

What saved him from despair was his energy and attitude, along with the fact that he owned other businesses. So even when his flower business was sent into hibernation, Peter knew to focus on acquisition.

One of the businesses he acquired was Planscapes: the largest independent grounds maintenance business in Cornwall and Devon. Its clients included schools, hospitals, and councils. It had 60 employees and machinery such as tractors and lawnmowers.

Soon after the acquisition, the former owner said to him, “You won’t believe this, but there’s a company for sale in Cornwall called Schoolscapes.”

Peter says, “He didn’t know what they did. I investigated it and found that it had gone to an administrator in Falmouth.

Everybody had left the business, and a shell sat there. They were going to liquidate the assets.” “The administrator enquired, ‘What do you want?

Do you want a forklift? You want a couple of desks?’ To which I replied, ‘No, I want to buy the business.’”

“‘Oh, well, you’re a bit late for that, but okay, what do you want to offer?’”

Peter offered £40,000.

 

He sent two of his advisors to investigate.

“The key to buying every business, as you know, is to have the right people around you to do the due diligence. You’ve got to have the right people around you. You cannot run 20 businesses on your own. We probably look at 50 a year to buy, and it would be impossible to do that alone. My people will tell me if it’s good or terrible.

“I bought a business out of distress nine years ago, and with it came a fantastic bean counter called Martin. That’s all he does for me. I don’t necessarily run my businesses on profit and loss. I run my businesses on cash flow. Martin can tell me what the cash flow will be in 18 months. He looks at the PAYE and VAT. He knows what we’re going to do. We plan all our companies like that.”

“Martin went to look at the business on the 17th of December. My number two went with him. He said, ‘Yep, it looks like a good business.’ I bought it on a wing and a prayer.”

“It designed, built, and installed school playground equipment. It had 30 employees in a freehold unit and a leasehold unit next door. The guy who had owned it couldn’t bring himself to make people redundant, so it had gone down the pan. So, I bought the business for £40,000hoping to do something with it.”

“We brought 13 people back into the business. We looked at the old order book, which hadn’t gone away. It’s a very profitable business, and we’ll produce a turnover of £2 million this yearthe same would have been £3 million had the COVID-19 pandemic not occurred.”

“So the Planscapes alerted me of Schoolscapes, and with the latter came a wonderful marketing department. Of course, now we’re marketing for Schoolscapes, Planscapes, and the rest of the businesses.”

Peter is based in Burgundy in France. He usually visits the UK once a month, but has only returned twice during the pandemic. One of those visits was for a funeral. Peter also held a meeting and acquired a business during that visit.

“I came back for the funeral of my old headmaster in Harrogate,” recalls Peter. Prior to becoming a private equity investor, Peter was a teacher. “I was alerted of a business that was in distress. On my way to Harrogate for the funeral, I met the valuer and the owner of a cleaning business with a £1.5 million turnover and 200 cleaners. I met them at Wetherby Services, discussed it, and arranged to go and look at the company and its operation”.

“The funeral was at two in the afternoon. At three o’clock, I stood on the church steps, and my phone rang. I could feel it vibrating, so I answered it. The deal was done on the steps of the church.”

“My old headmaster would have been extremely proud of me for having bought the business at his funeral. He loved how having bought businesses, I empowered people to run them. When you’ve got 20 different businesses in different parts of the world, you need people around you, the right team. Without doubt, I’ve got the right team, and I’ve had them now for many years.”

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By the time Peter returned to France, he was involved in negotiations for another company.

He’d heard about it from the mother of a young man he’d helped set up business. “She’d heard about a weed-killing business for sale up the road. I started talking to the guy. He wanted to retire and get out of the business. So,

we started the process before Christmas. But his solicitor was so long-winded that it went through to February, and then to March, at which stage he said, ‘Enough is enough. I’m liquidating.’”

“I said, ‘Don’t do that.’”

“He responded, ‘I can’t go on, Peter. My solicitor is not helping me one iota. And I’ve got to get rid of the business.’” “To which I replied, ‘I know a friendly insolvency person from whom I’ve bought four companies until now.’ She came along and did the deal.” 

“The sad part about it was that before Christmas, I was going to pay him £50,000. Along with that came six large IVECO vans into which you could put two quad bikes mounted with all the spraying gear. They were used to spray the pavements and curbs for county councils in Leicester, Plymouth, Portsmouth, and Southampton councils. The councils all pay extremely well. In the end, I bought this company with all that tackle and nearly £1 million worth of ongoing work for £14,000. I felt sorry for the guy because his solicitor had put him in that position.”

Peter also bought a Christmas decoration business during the lockdowns. It provides Christmas decorations to shopping centres and town centres. He knew that it would work very well with the other companies he already owned.

“I’d already gotten the flower business in London that had been producing a turnover of about £1 million, providing flowers to hotels, clubs, and livery companies. It suffered during the COVID-19 pandemic, and had been virtually wiped out. But it usually did a lot of work during Christmas. I’d already gotten my cleaning company that did umpteen shopping centres throughout the UK. So the link was there.”

“I bought the Christmas tree decoration company and discovered that it used a haulage company to move those big trees. The haulage company had a great guy running it, to whom I said, ‘Would you be happy if I bought your company and you ran my Christmas decorations business?’ He responded with a yes, so I bought his company.”

“I said to him two months later, ‘It’s going to be Christmas shortly, what lorry do you want for Christmas?’ “He responded, ‘I don’t want a lorry.

I would much rather prefer that you buy the company down the road that has another five lorries with cranes on the back for lifting and haulage.’”

“So, I bought that business.”

As it happened, the purchase proved wildly successful, mainly thanks to the COVID-19 lockdowns. Demand for garden offices had gone through the roof as people realised how difficult working from home can be when surrounded by family members.

“The business is absolutely crammed out at the moment. It delivers portable cabins to people’s gardens in South London, as a lot of people are working from home.”

“They are looking to buy ready-made cabins. We turn up in lorries with 80- or 100-foot reaches, and deliver the portacabins over the hedges and houses by dropping them in the gardens, where they are ready to be plugged in for offices straightaway. 

This business literally joined the existing business I’d gotten for lifting and haulage, but it had with it a portacabin, container, and a welfare unit business on the side, which we’re growing already.”

On the same day he completed that purchase, he finalised a deal for a grounds maintenance business in North London.

It’s similar to the one Peter bought in Devon. It provides grounds maintenance for schools, hospitals, and council areas in North London. Within two days of taking it over, he quoted other schools in North London for more work.

“I had already gotten a government Bounce Back loan in the business. I applied through another one of my businesses for a CBIL’s loan, which they granted. I’d gotten a CBIL loan for £200,000. I put £150,000 down on that business.

The £200,000 came in, and the £150,000 was spent on the down payment. The other £50,000 was used to pay the Bounce Back loan we initially had in the company.”

He has already spotted another grounds maintenance business.

It’s a £1.5 million worth of grounds maintenance business with £150,000 worth of assets. If you were
to liquidate it and sell the assets on the side of the street, you would get £150,000 for the mini diggers, tractors, dumpers, and tackle. The money is lined up from the first business ready to buy the next grounds maintenance business 20 miles away.”

Peter mainly uses invoice funding for his acquisitions.

“I don’t raise cash against the assets. Once my invoice discounting company is satisfied that it is an actual debt, they will fund it. One business I get 100% of the invoices. It’s usually 75% to 85%.

“We don’t run on a profit and loss situation, although that’s very important. I do monthly management accounts for every one of my businesses. We never go into an overdraft situation because we’re planning six, nine, and 12 months ahead.”

You would think that with 30 years of experience in business acquisition, Peter would know all there is to know about the subject. But he believes that he can always learn more, which is why he joined one of the Dealmaker’s Academy programmes.

 

“You’re never too old to learn,” he admits, “You always need to refresh what you know. That’s why I signed up for the course.”

For instance, after buying a business with a marketing department of its own, he re-evaluated his opinion on marketing. In the past, he’d seen investment in it as “dead money.”

“Having bought a company with an excellent marketing department has proven to me that marketing is essential.”

When starting your business buying journey, Peter recommends finding someone more experienced to bounce ideas off of. “Ask, ‘Would this be a good buy?’ And someone with business buying experience will reply, “It’s a non-starter,” a ‘Great idea, but why don’t you attack it from this angle?’ or ‘Have you thought about doing that?’ Experience is a wonderful thing.”

He believes that while anybody can buy businesses, far fewer have the processes necessary to turn their acquisitions around.

“You need the energy to do it, and you’ve got to be a slight chancer. I don’t gamble on horses or dogs, but I gamble with businesses. Having said that, I know that with my energy and the people around me, even if I buy a lame animal, I can turn it around.”

It’s also crucial to follow the advice of Michael Gerber, the author of ‘The E-Myth,’ that you must work on and not in the businesses you buy.” “I try not to work in the business. You can’t work in it, and go looking for other companies.”

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