Crucial link in business buyout

HBH Tools and Stamping, in Romford, Essex, makes machine tools for manufacturing industry and components for the automotive, telecommunications and kitchen appliance industries. But it was losing £200,000 on £3m turnover and parent company Symonds Engineering wanted to sell it. HBH operations manager Peter Morris and his brother-in-law, Steve Drury, decided to bid for the […]

HBH Tools and Stamping, in Romford, Essex, makes machine tools for manufacturing industry and components for the automotive, telecommunications and kitchen appliance industries. But it was losing £200,000 on £3m turnover and parent company Symonds Engineering wanted to sell it.

HBH operations manager Peter Morris and his brother-in-law, Steve Drury, decided to bid for the company, but believed they lacked the expertise.

They contacted adviser Jan Sofat at their local Business Link. Drury says: ‘Jan scrutinised our business case to see whether it made sense and questioned our every assumption to ensure we understood what the possible outcomes would be.’

Symonds was asking a high price for HBH, but a Business Link study showed the firm’s value was zero. After four months of talks, Symonds agreed to give the company away. Sofat put together a funding package including capital from the new directors, a loan from Symonds and finance from a factoring company.

After the buyout, Business Link provided advice, and helped reconstruct the company’s balance sheet and arrange finance.

HBH has now started to break even, and turnover in the metal press shop has gone up from £50,000 to £65,000 a week with the same number of staff.