The Business
Neville Johnson Group is the leading UK designer, manufacturer and installer of quality bespoke fitted furniture in the home study, bedroom, lounge and home cinema. The Group’s revenues at exit in 2008 were approaching £20 million with significant ongoing growth potential.
Based in Manchester, the business has a state of the art manufacturing facility with a national network of showrooms. Neville Johnson has exceptional brand strength with an affluent ABC1 customer base. During the tenure of Endless’ investment, customer satisfaction, service and lead conversions were significantly improved to industry “best in class” levels.
The Transaction
Endless supported a management buyout in February 2006 following a period of sustained financial and operational difficulty for the business. Prior to our investment, the business was burdened with significant debt which led to cash shortages and major operating issues. Neville Johnson was suffering from under-investment in key areas such as marketing and production facilities and this led to a severe decline in profitability.
Endless provided new funding to re-capitalise the balance sheet and to support an investment program and turnaround project.
Value Creation
Endless realised its investment for a 7x return in just over 2 years. There were four key drivers behind this successful outcome – (i) restructuring the incumbent debt to a level more appropriate to the business; (ii) providing funding to support investment in key areas such as marketing, factory improvements, product development and showroom upgrades; (iii) re-incentivising key management with meaningful equity participation and (iv) strengthening the management team.
The business is now in excellent financial and strategic health with significant growth achieved in recent years and a wealth of development opportunities ahead.
The Endless Difference
When first introduced to Endless, Neville Johnson was in a difficult financial position which clouded the underlying strength of the Group’s brand and business. In order for the business to be returned to financial health and realise its potential, it required an investor to see beyond its short term funding problems and act with speed and conviction.
Against a backdrop of very tight timescales, Endless completed the transaction in less than 3 weeks from the initial introduction at a time when insolvency was a real risk for the business. The funding injection gave the Group time, resources and focus to implement the change initiatives which ultimately led to the business transforming its performance from EBIT break-even (against debt in excess of £10 million) to positive EBIT of £2 million (free of debt) in less than two years.
"When Endless came in to support the business early in 2006 we were impressed with both the speed and clarity of what they offered. They were perfect for the company at the time and have more than delivered on the commitments they made. The introduction of Steve Sutherland completed the team and together we have been able to successfully restructure the business, building on what was always an exceptionally strong brand."
Nigel Pailing, CEO of Neville Johnson - Mar 2008