ADVERTORIAL: Unlocking business growth during uncertain times

Dale Alderson leads the North West team of mid-market private equity house LDC. Over the past year, the team has completed more than a quarter of all new investments into North West based mid-market businesses valued between £10m – £100m. Here, Dale discusses how management teams in the North West can unlock growth in the current economy.

The current economic climate has prompted business leaders to rightly review priorities and focus on building resilience to bolster their growth plans.

A critical step for management teams in times like this is to identify the strategy that will best suit their objectives, and to outline how they can most effectively drive growth. This means asking some important questions. Where can you add most value, what are the timescales, and do you have the right talent to deliver your goals?

Organic growth

Organic business growth requires management teams to have a comprehensive understanding of their customers. While customer needs are changing faster than ever, this can create opportunities for businesses that are agile enough and able to continue to meet those needs.

Cheshire-headquartered SRL Traffic Systems is a good example of how to achieve this in practice.

SRL is the leading manufacturer and provider for temporary intelligent traffic lights and variable messaging signs. We first backed the management team, led by Richard Tredwin, with a £24m investment just before the pandemic. As the world shut down in the first half of 2020, the management team needed to make crucial decisions about whether to invest to grow and to capitalise on potential opportunities emerging, or take a more cautious approach and wait until the pandemic restrictions subsided.

As major infrastructure projects were given the green light to continue during the lockdown restrictions, we worked with SRL’s management team to help the business invest heavily in expanding its fleet and its network of depots across the UK.

In just two years, the business was able to increase revenues by 72% from £18.4m in FY19 to £31.6m, and added more than 40 new employees to its roster over the same period. This demonstrates the importance of having the right support in place to be able to pursue new opportunities at speed.

SRL Traffic Systems increased revenues by 72% from £18.4m in FY19 to £31.6m Strength in numbers

Buy-and-build remains one of the most popular – and successful – avenues for businesses looking to increase their scale, revenues and workforce; particularly in the challenging labour market we find ourselves in. We know how effective a buy-and-build strategy can be having supported our portfolio to make 65 acquisitions in 2021 alone.

Take fast-growing digital agency CTI Group. The CEO and founder Nick Rhind had already successfully acquired businesses into the group but he recognised that he needed additional funding and support to deliver his acquisitive growth plans.

LDC completed a minority £25m investment earlier this year and within four months we supported Nick and his team to acquire Manchester-based app developer, Silverchip. We’re working closely with Nick to identify and complete further acquisitions to enhance CTI’s service offering and international footprint.

Delivering a successful strategy

There are a series of steps management teams should take to make sure whatever strategy they implement is a success.

Reviewing a business’ track record helps to pinpoint where the biggest opportunities lie. Is there room to grow existing products and service lines, or could an international strategy boost sales?

Teams must also have a clear idea about who in the business is going to deliver each element of their strategy. If there are gaps to fill, they should plan to recruit high-calibre people to support the strategy. And most importantly, they must trust their employees to deliver by empowering them and giving them the authority to do their job without anyone getting in the way.

When management teams are considering routes to growth they should consider the benefit an external investor with capital and expertise can provide. Management teams know their business better than anyone – but bringing in people that have been there and done it can give them the added confidence to push forward with their plans, particularly in uncertain times.

With more than 40 years of experience in backing ambitious management teams to grow through every stage of the cycle, we know the difference an experienced investment partner can make to a business leader looking to deliver a growth plan.

Over the past year, our North West team has completed 13 transactions with a combined enterprise value of more than £500m.

LDC is actively looking to support more management teams in the region and are aiming to make at least four new investments in the next 12 months.

Find out more about LDC here: LDC.