By Jez Abbott, Monday 15 April 2019
Resource had already taken the organic route to growth through smart investment and operational excellence. So the next logical step was to seek an acquisition that would allow the company to diversify its business model and provide scope for future opportunity and growth.
Resource provides an in-house service encompassing creative design, concept and strategy, marketing and branding including data management, mailing and fulfilment, print both digital and litho, large-format graphic and web to print.
While the company had some experience with events, purely as a result of client demand, it was not something it specialised in – until an opportunity arose to acquire that skill set through an events business. Realising certain synergies, Resource set about bringing the two services under one roof.
Managing director Phil Thompson had a vision of how the merger should play out, but equally had a realistic view of the challenges that lay ahead in managing a successful acquisition.
“Acquiring a company means you are inheriting a process – someone else’s process – and that can cause cultural problems as well as operational problems. So it requires both parties to engage from the start, be inclusive, adopt a tight cost-benefit analysis process, patience, and commitment to ensure a successful execution.
“A strong sense of purpose and sense of humour also helps.”
Resource began its journey in Leeds, establishing the company in 1997, initially trading as a high-street copy shop providing just-in-time reprographic and print services; mostly to the professional services business community in Leeds city centre.
It continued to grow, pumping in new investment and reinvesting in plant, software, employees and skills development. The business model has “changed 100% from the company it was in 1997” and it now channels services through an agency-style business model that aims to offer something to everyone.
Tebays was established nearly 40 years ago and was situated in Guiseley just 10 miles from Leeds and the Resource head office. The business had an established print service division and 20 years ago began an events business. It was the latter that appealed to Thompson and his team when Tebays’ management decided to sell the business.
Thompson explains: “The Tebays business model was attractive on several fronts: the previous owners had operated the business for many years through thick and thin. Its client base, although not huge in numbers, consisted of blue-chip brands and local PLCs.
“Tebays was a trusted partner to clients, so the culture and values of their business aligned with ours, which was a positive start.”
Tebays had two servicing divisions, print and event management, so it ran separate client portfolios, which immediately threw up the possibility of cross selling services. Thompson immediately saw an opportunity for aligning his company’s marketing expertise and in-house operational infrastructure to create a powerful event management service.
“We knew we could absorb the Tebays print business into the Resource production model without significant increases to our cost base because we were efficient, experienced and financially healthy. We would also introduce new services to Tebays existing print clients thus creating new opportunity and business growth.
“Events did represent a potential banana skin because up to now it had not been a core service of ours, but it was also the most exciting aspect of the deal. We could see the potential to create something that would only serve to enhance our service model and Tebays was the perfect fit to help us achieve a more diverse and unique business model.”
The Resource management team and the two partners of Tebays held several get-to-know-you meetings over a three-month period initially sharing ideas, knowledge, logistics and the ultimate vision, says Thompson.
“It was important to establish we could all work together as a team and this was high on the agenda for both parties, so the getting-to-know-you period was a smart use of time.
“Both companies have strong values in their personnel and business culture, so we needed to ensure we were initially reading from the same page and the vision was shared by everyone.
“Undoubtedly once we moved towards a sale-and-purchase agreement, relationships and resolve would be tested on all sides, so we felt it was important that despite legal negotiations we had also created a team of individuals who were all equally focused on the positive business outcome. This is a rarity in my view, so we are proud of the way we approached and managed the acquisition.”
Thompson is a savvy business leader, but he knew he needed the help of specialists to ensure the acquisition process would be successful, so he worked with his team of accountants at Brown Butler, who managed the process. Blacks Solicitors supported on the legal negotiations and funding support came from the company’s banking partner Barclays.
Integrating the new business into Resource was a carefully and deliberately staged process. Tebays continued to trade out of its existing premises for five months following completion of the deal; allowing for logistics to be communicated and managed.
This interim period enabled Resource and Tebays teams to engage and work on a framework together that would see the successful coming together of the two companies and re-location of Tebays into the Resource premises in Leeds.
“We engineered the logistics of moving plant and equipment very carefully to ease any disruption to either business and to avoid unnecessary downtime or delays for clients. New furniture was ordered, and office plans created, IT infrastructure and software upgrades were all carried out using a project plan method, which I am pleased to say we didn’t overrun on,” says Thompson.
“There were of course challenges, but nothing overwhelmed us”. Planning was key as during the period of change he had to ensure both businesses continued to run unaffected by the acquisition. Time was spent with clients and stakeholders communicating the new service model, with social media a great way of sharing the “journey” through the five-month period.
“Success was all in the communication; everyone had a role to play from designing new layouts to building up the machinery; all employees were provided with the chance to learn new processes, services and training.”
Thompson says: “Key lessons included the need to take your time, particularly at the beginning of the process. Relationships cannot be rushed, and you need the buy-in of all the principals as well as their teams. Change is a weird thing, and a good change rarely happens overnight. So we learned that to be successful we had to accept it would be a continuous process.
“We learned a lot from the process, most importantly to expect the unexpected. A valuable lesson is that people don’t plan to fail, they fail to plan. In-depth financial due diligence, checking of numbers, shaking the tree and asking all the uncomfortable questions were the right things to do,” he stresses.
Thompson says the acquisition of Tebays brought in new skills of event management. The entire process, he adds, tested both businesses, but from that came a “fusion of ideas and cultures” that has added value. His firm has new audiences and multi-channel cross-selling opportunities.
“Our combined culture is still driven by strong service, added value, innovation and sales. We now have a point of difference that allows us to stand proud and create a unique service that is not the norm in our business environment.”
All that leaves is the future. “Over the years Resource has enjoyed growth through organic and acquisition routes, and the business of today is almost unrecognisable to the one we established in 1997. We have always adapted to the changing needs of the markets and our vision is to continue and grow, regardless of whether it’s organic or through acquisition.”
Resource & Tebays
Location Leeds, West Yorkshire
Inspection host Philip Thompson
Size Turnover around £10m; Staff: 55
Products Design services, newsletters, leaflets, brochures, annual reports, display items, branded marketing and personalised mailings, events and experiential campaigns
Kit SRA1 Ryobi 925 press, several HP Indigos, a mono Canon printer and envelope printing capabilities as well as finishing machines including a Foliant Taurus 530 NG laminator and a Horizon StitchLiner Mark III, binding kit, guillotines, polywrapping and automated inserting
Inspection focus Managing a successful acquisition
Build teamwork through regular meetings and updates to help foster a strong sense of partnership and then to help both sets of staff work together
Keeping everybody motivated. Being realistic and honest is essential when it comes to the hard work of building a new merged identity following an acquisition
Take the rough with the smooth, says Thompson: “Be prepared for some dips and accept that at times your business is in the hands of others. Accept the challenges and rise to them”
Enjoy the journey and share the rewards by looking at the total costs, the size of integration work and the reward arrangements between the two firms.