During the recent Made in Group online meetup, members gathered for another insightful session centred on best practices in manufacturing. This month's event featured three thought-provoking talks followed by breakout discussions. One of the standout presentations was delivered by Nick Platt of Henwood Court, a Made in the Midlands patron, who emphasised the importance of implementing a well-thought-out ten-year plan for businesses considering succession or exit strategies.
Nick’s talk offered practical steps for companies to prepare for a future exit. He focused particularly on management buyouts (MBOs) and how businesses can transition smoothly by planning early and strategically. His advice resonated with a broad cross-section of members, ranging from those who had already completed an MBO to those still contemplating succession planning for their businesses.
The discussion that followed reflected diverse perspectives from the community. For many, the focus wasn't solely on selling their businesses but rather on ensuring that the right people take over to preserve the company’s values, innovation, and culture. In owner-managed and family-run businesses, this concern is particularly pressing. These enterprises often thrive on the personal drive and unique vision of their leaders, and finding successors who can maintain that ethos is a significant challenge.
Some members echoed this sentiment, noting the struggle to find capable successors who possess the same passion and technical expertise as current owners. They pointed out that many potential buyers or investors may lack the deep-rooted understanding of engineering and manufacturing that has driven success in the sector. The trend of conglomerates and private equity firms buying up businesses without maintaining the same commitment to innovation is worrying for many in the manufacturing community. As one member put it "It’s finding someone with the same drive.”
One of the key takeaways from Nick’s talk was the need for business owners to think long-term. He advised starting early, suggesting a ten-year planning window to allow room for adjustments and learning from mistakes. The discussion highlighted how crucial it is for owners to understand the financial and personal implications of their exit. For instance, a management buyout may allow owners to stay involved in a more strategic role while gradually handing over the reins, making the transition smoother both financially and operationally.
Other members raised important points about the financial intricacies of an MBO, noting that while paying back an owner from profits can be feasible, it often leaves the original owner with the stress and risk of running the business. In response, Nick discussed alternative funding structures and ways to mitigate these concerns, such as partial trade sales or offering owners a share of future profits to keep them incentivised while easing them out of day-to-day operations.
Another interesting contribution came from Karen Tinkler of Partners PR, who shared her own experience of an MBO. For her, the process was made seamless by a former business owner who had meticulously planned the transition, considering everything from business valuation to financing options. Tinkler emphasised the importance of being well-prepared, as her story demonstrated how a clear, structured plan can lead to a smooth and successful handover.
As the discussion shifted to broader concerns, several participants noted that smaller manufacturing firms are increasingly being acquired by larger organisations, which often prioritise short-term profits over sustaining the business. This trend has heightened anxieties about the long-term future of British industry, where many fear that the unique characteristics and innovations of smaller firms could be lost in the process.
In conclusion, the roundtable highlighted the critical role of early planning in ensuring a smooth business transition while preserving the culture and values that make manufacturing firms successful. Whether through an MBO or another exit strategy, the consensus was clear: planning and finding the right successors are key to safeguarding both the business and its legacy. This month’s meetup not only provided practical insights but also underscored the community's shared commitment to navigating these challenges with foresight and care.
Join Our Monthly Meet-Ups!
To be part of an upcoming meet-up, simply head to your dashboard and add yourself to the list. Each session features three expert speakers, followed by focused discussions on key themes. Our online meet-ups are intentionally designed to be time-efficient and enhance productivity. Held monthly at 9 a.m., these 75-minute sessions include three best practice talks, each delivering at least two actionable takeaways, followed by a 32-minute roundtable discussion.
Prefer in-person events? We also host a variety of factory tours, offering a firsthand look at how businesses are putting best practices into action. These tours are a great opportunity to network with fellow members while learning directly from industry leaders.
Additionally, the Made in Group is championing the call for a Minister for Manufacturing. You can help by signing our pledge—your name will be added to the letter we'll be sending to every MP to drive this crucial change. www.g2made.uk/signthepledge
For a 1-2-1 conversation about MBO’s or succession planning, please contact our patron Nick Platt on 0121 313 1370 or visit their website https://www.henwoodcourt.co.uk