BDO and Hill Dickinson advise Learoyd Packaging

25 August 2014

Learoyd Packaging, a UK-based flexographic print specialist, has hired consultants of BDO and Hill Dickinson to co-manage its sale to US-based Coveris, the world’s sixth largest packaging company. Financial details of the transaction have not been disclosed.

Learoyd Packaging has been established in 1948 under the name Learoyd Paper Mills. Following its first management buyout (MBO) in 1976, it rebranded to Learoyd Packaging. The company is based in Burnley, Lancashire, and has approximately 180 employees. Clients of the company include Seabrook Crisps, Warburtons, Waitrose and Marks and Spencer. Learoyd Packaging has a turnover of roughly £20.2 million.

Coveris is a US-based plastic packaging company that, with its 64 plants across North America, Europe, the Middle East and China, is the sixth largest company of its kind in the world. Coveris’ global revenues are more than $2.8 billion.

BDO and Hill Dickinson advise Learoyd Packaging

Over the past years, Learoyd Packaging has set the target to significantly grow its business, both in the UK and in other markets. With the sale to Coveris, the firm can now accelerate the realisation of its plans, says Allan Ferguson, Managing Director at Learoyd. “The backing of Coveris will enable us to deliver accelerated growth in a market which offers considerable expansion and cross-selling opportunities both in the UK and internationally.”

For Coveris, the acquisition of Learoyd Packaging is considered a valuable addition to its portfolio, as the British company can build on a strong reputation and track record. “Through our aligned capabilities in flexographic print, Coveris’ investment in Learoyd will offer our customers greater access to first-class technology and an extensive knowledge base,” commented Mark Lapping, President of Coveris’ UK Food & Consumer business, on the acquisition.

BDO and Hill Dickinson
To assist with the deal, Learoyd Packaging hired the Corporate Finance team of professional services firm BDO. The BDO team consisted of among others Ruth Percival, Sam Irving and James Fieldhouse. “Learoyd has invested heavily in its people and infrastructure following its MBO in 2003. With a quality management team driving a ‘best in class’ ethos and a business that has delivered revenue growth of almost 10% year on year since 2005, it was an attractive proposition for many trade buyers and private equity investors around the globe,” says Percival, M&A partner at BDO.

BDO - Hill Dickinson

Other advisors that contributed to the transaction were Emma Suchland and Lauren Fletcher from BDO for Tax advice, and Craig Scott and Jonathan Brown from Hill Dickinson for Legal advice.



8 tips for successfully buying or selling a distressed business

18 April 2019

Embarking on the sale of a business is one of the most challenging experiences a management team can undertake. Even serial dealmakers acknowledge that the transaction process can be gruelling, exposing management to a level of scrutiny and challenge through due diligence that can be distinctly uncomfortable.

So, to embark on a sale process when a business is in distress is twice as challenging. While management is urgently trying to keep the business afloat, they are simultaneously required to prepare it for scrutiny by potential acquirers. Tim Wainwright, an experienced Transactions Partner with Eight Advisory, says that this dual requirement means sellers of distressed businesses must focus on presenting their business in a way that supports buyers in identifying value, whilst simultaneously being open about the causes of distress. 

According to Wainwright, sellers of distressed businesses should focus on eight key aspects to ensure they are as well prepared as possible:

  • Cash: In a distressed situation cash truly is king. Accurate forecasting and day-by-day cash balances are often required to ensure any buyer is confident that scarce cash reserves are under proper control. 
  • Equity story and turnaround plan: Any buyer is going to want to understand the proposed turnaround strategy: how is the business going to enact its recovery and what value can be created that means the distressed business is worth saving? Clear presentation of this strategy is essential.
  • The business model: Clear demonstration of how the business model generates cash is required, with analysis that shows how financial performance will respond to key changes – whether these are positive improvements (e.g., increases in revenue) or emerging risks that further damage the business.  Demonstrating the business is resilient enough to cope with these changes can go a long way to assuring investors there is a viable future.
  • Management team: As outlined above, this is a challenging process. The management team are in it together and need to be consistent in presenting the turnaround. Above all, the team needs to be open about the underlying causes that resulted in the distressed situation arising.  A defensive management team who fail to acknowledge root causes of distress are unlikely to resolve the situation.

8 tips for successfully buying or selling a distressed business

  • Financing: More than in any traditional transaction, distressed businesses need to understand the impact on working capital. The distressed situation frequently results in costs rising as credit insurance becomes more difficult to obtain or as customers and suppliers reduce credit. Understanding how these unwind will be important to the potential investors.
  • Employees: Any restructuring programme can be difficult for employees. Maintaining open communications and respecting the need for consultation is the basic requirement. In successful turnarounds, employees are often deeply engaged in designing and developing solutions. Demonstrating a supportive, flexible employee base can often support the sale process.
  • Structuring: Understanding how to structure the business for the proposed acquisition can add significant value. Where possible, asset sales may be preferred, enabling buyers to move forward with limited liabilities. However, impacts on customers, employees and other stakeholders need to be considered.
  • Off balance sheet assets: In the course of selling a distressed business, additional attention is often given to communicating the value of items that may not be fully valued in the financial statements. Brands, intellectual property and historic tax losses are all examples of items that may be of significant value to a purchaser. Highlighting these aspects can make an acquisition more appealing.

“These eight focus areas can help to sell a distressed business and are important in reaching a successful outcome, but it should be noted that it will remain a challenging process,” Wainwright explains. 

With recent studies indicating that the valuation of distressed business is trending north. With increased appetite from buyers who are accustomed to taking on these situations, it is likely that more distressed deals will be seen in the coming months. “Preparing management teams as best as possible for delivering these will be key to ensuring these businesses can pass on to new owners who can hopefully drive the restructuring required to see these succeed,” Wainwright added.