The main advantage for the companies we acquire and the Group is our strategy for businesses to continue to operate independently as they previously did, while removing time-consuming administration processes, enabling each business to focus on serving the customer and maximising market opportunities.
Nelson Hydraulics and Indequip were acquired over two years ago. Their performance since acquisition, outlined below, exemplifies how the acquisition strategy is working for each business and the Group.
Nelson Hydraulics (Nelson)
Nelson is a hydraulic components and hose assemblies business, based in Ireland. Previously owned by the Nelson family for 50 years, the company was purchased in July 2015 under a two-year earn-out agreement, which de-risked the purchase for the Group and presented a more lucrative option for the previous owners.
Still managed by former owner and MD, Mark Nelson, the company retained its original team and strong relationships with customers throughout Ireland and globally.
Since acquisition, Nelson's revenue increased by 30%. Sensible cost savings, investment from the Group and taking advantage of the resources available have ensured sustainable growth via the following initiatives:
- Investment in machinery – the company invested over £150k in two automated hose cutting machines, which cut around 70% of all hose assemblies in half the time and with 100% accuracy.
- UK expansion – new division of Nelson Hydraulics set-up within mainland UK to expand the hose assembly service. Operating from Primary Fluid Power, it utilises current facilities within the Group.
- Improved reputation – with no previous marketing support, Nelson utilised dedicated marketing expertise to create company brochures and presentations for global leading companies. In addition, Nelson is one of eight companies within the PMC division who go to market as one Group of companies with complementary skillsets. This combined with the kudos being part of a plc brings has significantly raised the profile of the company.
The above initiatives, combined with a clear direction and bold mindset from the Board, has encouraged Nelson to seize opportunities, which previously they may have been nervous to take. The investment in machinery along with promoting their Group status enabled Nelson to secure a £1 million contract with a leading company in the crushing industry and additionally service increased demand from existing customers.
Indequip, a specialist distributor of pneumatic components based in the UK, was purchased as an asset sale in February 2016. Prior to acquisition, Indequip had a strong position in the distribution market but was becoming severely constrained with little investment from its former owners to drive the business forward.
Still operating under the same MD, Ian Simpson, and retaining the majority of its original workforce, Indequip has experienced two years of solid sales growth; 38% in 2016 and 32% in 2017.
Being part of the Group has enabled Indequip to flourish and add value in the following ways:
- Enhanced stocks – investment, buying expertise and a sophisticated warehouse and logistics function have increased despatch rates from 70% to 97%, empowered the team to proactively win business and facilitated the launch of Indequip's exclusive brand, 'Techmatic'.
- Improved reputation – repositioned themselves away from former negative perceptions via a rebrand in 2016. Customers saw this as a giant leap for Indequip and felt compelled to support them in their journey. Being part of a Group enabled Indequip to secure the UK contract for pneumatic supply into a global online distribution business and also within the packaging process for a leading UK building materials and construction company.
- Enhanced services and secured additional business through machined products (via sister company Primary Fluid Power) and marketing and catalogue production (utilising centralised creative services and IT). In 2017, they doubled online sales via a new website and also launched the first Euro-version fluid power catalogue in Ireland supporting Irish customers and winning business in a new geographic location.
- Increased team morale, following a successful integration process, a new collaborative office space and overall business success.
- Strategic reporting and planning via new business Intelligence and customer relations software.
Fundamentally, both businesses have enjoyed ongoing successes as a result of strong leadership and the belief and trust each managing director had in the vision delivered from the Board at the time of acquisition and beyond.