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Capitalise on talent

Selling up is not the only way to release capital from a successful business, as Central Roofing’s James Broady discovered following a successful management buyout.   Find out how involving key people in the business strategy has had a massive impact on the company’s success.

A recent scandal in Edinburgh, where faulty workmanship led to a wall collapsing in a council-run school, highlighted how important high standards are in the construction industry. This is, says James Broady, Managing Director of Hereford-based Central Roofing, precisely why his business has always focused on finding and retaining the right people. “Our blue-chip clients look for the highest levels of quality, from managing health and safety on site to construction standards,” he says. “We work on large construction projects, from schools and hospitals to power stations and factories, so a safety-first reputation is everything.”

As James points out, success in tendering for projects with organisations such as EDF, BAE Engineering Systems and BMW means standing out from the crowd. Central does this by employing its people full-time, in an industry where sourcing sub-contractors at the start of each project is standard practice. While it means more of a burden for the business to carry, this approach allows it to offer greater skill levels, standards of workmanship and, critically, control over health and safety. Training is also considered important. “We see plenty of repeat business, so we’re doing something right,” James says.

This strategy has seen Central Roofing expand from an annual turnover of about £1.5 million in 2000 to an anticipated £20 million in 2017. The company has high levels of retention among its people because, James continues, the business has always aimed to offer them an opportunity to progress.  “It does mean we’re a bit ‘top heavy’, but in an industry renowned for low standards, once you find good people, you hang onto them.” Retaining open lines of communication has also been important. “We try to involve key people in strategy meetings, for instance, so everyone understands our goals and objectives,” he adds. “I’ve heard criticism that we’re too open with this strategic information, but I disagree. It means everyone knows where we’re going and how we’re going to get there.” 

Initially, the team of directors thought about selling the business five years ago. But when they dipped their toe in the water, they didn’t achieve the interest they expected. So they brought in Haines Watts. “We underwent a period of evaluation and received advice from several Haines Watts teams. It helped us to reach the decision to proceed with a management buyout,” James reflects. “Karen McLellan and the team were able to demonstrate to us that the business was in great shape – and that we wouldn’t see a return on all our hard work if we sold. Instead, we have worked together to restructure, bring in fresh blood and release capital to the older directors – so they don’t have to walk away altogether.” The restructure was a natural progression, he says, which allowed key people to move into their natural positions of responsibility: “We have been able to reward those who are at the top of their field with a slice of the action, and meet their long-term goals.”

During its five-year restructuring journey, Central Roofing has used the full range of Haines Watts services, overseen by Karen – from general accounting, tax and legal advice to longterm business planning. Haines Watts has also acted as a useful mirror to the business. “We looked at how we operate, our strengths, and how we perceive ourselves. We also looked at how we market ourselves to others,” James continues. “Whenever I ask a question, I know Haines Watts will present us with a range of scenarios and a view of the bigger picture, so we can make fully informed decisions.” All information is given in plain English which, he says, is particularly appreciated. “We’re roofers, not accountants,” he smiles. “As a result of Haines Watts’ support, we are heading into 2017 with a renewed focus to promote our core strength of managing risk and health & safety.”

Haines Watts Partner view

When we first began working with Central Roofing, it was a successful, entrepreneurial business whose directors were looking to sell. But we felt that having worked so hard, they wouldn’t get the return they deserved.

We helped them appreciate that, having already worked hard to build growth, they would be passing this advantage to a buyer if they sold.

We worked with the directors to assess the enterprise value of the business and restructure so they could bring in a younger tier of directors. Up to that point, these ambitious, talented people hadn’t been involved in more strategic planning.

As soon as they joined these important planning sessions, you could see the light bulb switch on about the potential opportunities.

The restructure has also allowed for capital to be released to the older directors, so they have been rewarded for their hard work, but have not had to walk away from the business altogether. It’s a win-win for everyone.

This is a forward-looking business where the leadership team is happy to invest in the proper advice. Different teams from across Haines Watts worked cohesively and in tandem on this to deliver a positive result for our client. It was a great pleasure to work with the team at Central Roofing. It is a business run by open-minded, entrepreneurial people who can see the big picture and are happy to challenge themselves.

Karen McLellan Managing Director