Label Express, founded in 1984, is an industry-leading provider of top quality labels with an express service to a wide variety of market sectors. We had the opportunity to jump on a Zoom call with Andy (Managing Director), Mark (Operations Manager) and Simon (Sales Director) to discuss the acquisition process and all that has happened in the past five years since partnering with Lynx. All three individuals have been running the day-to-day activities since the major shareholder retired a few years ago, and have been with the business for many years.
Reason for Sale, Expectations & Goals for Acquisition
In 2017, when the major shareholder of Label Express was ready to divest himself of his shares, it is fair to say that at the time, the team was weary about what this would mean for the business and long serving staff. The future can sometimes be uncertain when small businesses are acquired, and certain approaches can result in disruptive changes to the management structure of an organization. In the past, Andy had experienced two different acquisitions within the sector and witnessed such impacts first hand. Well managed businesses were turned on their heads and were never the same, as their unique selling points (USPs) were diluted.
Andy, Mark and Simon were determined to explore all the available options in order to find a partnership that would allow them to maintain a level of managerial control and secure job stability for their staff. Through a business brokerage called Benchmark, the trio met with a few different companies, and recognized that trade interest was more adversarial than they envisioned. Although they did not know much about private equity, they were interested in Lynx after speaking to Brad on the phone, and even more so after him and the team travelled to London to meet them and visit the site. Reflecting back on it, Andy said that “within the first 5 minutes we were able to tell whether or not we would be able to work with Lynx.” They came to love what they learned about Lynx, their portfolio, and what they stood for; with the ability to crack a joke here and there while doing so.
Partnering with Lynx
Reconceptualizing Private Equity, Building Trust & Deal Management
Andy, Mark and Simon joked that before meeting Brad, they were quite naïve, as “when you hear ‘private equity’ you think they’re just after assets and money. But it has been quite the opposite. It has been quite a refreshing experience.” Andy recalled that Lynx conducted the deal in a way that allowed them to truly get a better understanding of the business and its people, and immediately established a basis for trust and open communication. It had been made clear that they would be able to run the business without any major changes, which was extremely important to them, as the team had heard of ‘poorly managed’ acquisitions in the Packaging sector – which had been disastrous for many small businesses attracted by the security of the PLC (Public Limited Company) umbrella.
Early on there had been a level of trust and chemistry that was established between Label Express and Lynx, as both sides always did what they said they would, and that is something you do not always get. As the trio stated, the management of the deal can be summarized in one statement: “If we hadn’t told anyone we were bought by Lynx, no one would know.”
Andy explained that the personable but non-intrusive management style of the deal “allowed us to discuss the business and the shareholder’s individual aspirations openly.” The team had met with several possible candidates, but Lynx immediately offered a safe and secure home for the business that they had built up over 30 years. It was essential that they retained and enhanced the strengths of their business. Further, it “allowed some of the sensitive subjects to be managed in an open fashion. There was a high-level of trust in every aspect, through due diligence until completion.” They noted that Brad had come to visit and meet the people there, and continues to check in, especially during these rough past few months. During the COVID-19 crisis Brad had written to all the staff thanking them for their support and hard work during these difficult times, this letter can be seen in the staff room by all the team.
Successes & Accomplishments after 5 Years
There were smiles all around, as jokes were thrown out and accomplishments were reflected on. Label Express has been able to win several major contracts and sustain healthy margins over the past several years, even throughout the hit of COVID-19. Specifically, they have found success in targeting the niche products in the brewery sector, which has majorly contributed to boosting sales and margins. As promised, they kept their experienced staff on board, who have the freedom to implement such strategies utilizing the up-to 30 years of industry knowledge they have.
Their ability to continuously stay in touch with customer demands is a key strength they have been able to retain throughout the acquisition. Mark, Simon, and Andy went on to explain that this is possible because of the autonomy they have been able to maintain in their company even after being acquired, which is not always the case, but has been made possible through their partnership with Lynx. Andy noted that his experience with Lynx has been a stark contrast to those he had on the bad side of acquisitions in the past.
So, What is the Secret Formula to a Successful Deal?
Hint: There isn’t one.
President of Lynx, Brad Nathan, explained that this deal set an ideal standard for others. However, there is certainly no infallible “formula” that can guarantee such results. He went on to say that “deals are like marriages, but with more complexities.” Each partnership is a two-way street, and each relationship begins and ends with the people. Brad credits the success of the Label Express in part due to the great people within the organization, and the way they are able to run their operations. He goes on to note that each month Label Express is amongst the first to submit their reports, and their numbers are amazing. However, the numbers are only as good as the organization as a whole, as both continuously work hand-in-hand; Label Express is a prime example of that.