Having rescued Lincolnshire-based AC Williams from administration in 2012, new owner Glen Pratt rapidly set about providing a firm footing for the business, which has since expanded by buying two other firms in the area. But these are just the first steps on a journey.
When a long-established coach firm runs into financial trouble, the outcome is not guaranteed to be positive. When a business enters administration, the news is less likely to be good.
But, thanks to a chance conversation, when family-run AC Williams of Ancaster found itself in this position in December 2011, there was something that could be done. And, since then the firm has been reinvigorated and is now on a journey that has seen investment, consolidation and then expansion, thanks to new owner Glen Pratt, 42, a newcomer to the coach industry who is adding his business acumen to an experienced operational team.
The back story
Glen grew up in Huddersfield and his father ran a textile business. Sadly, this struggled in the 1980s recession and shortly afterwards his father, who was relatively young, died, when Glen was aged 15. These twin events had a profound effect on Glen: â€œI became determined to crack on with my studies and work hard.â€ He achieved good grades and went onto to gain an Economics degree at the University of Nottingham.
â€œI’d been interested in the Stock Market and always wanted to get a job in it,â€ he says. Yet, when he left university, the bottom of the recession in 1992/3 was hardly a great time for job seekers. Eventually, after applying for around 200 jobs, he won a post with Fidelity, the biggest fund managers in the world.
That training enabled Glen to understand how companies work, value them, and predict their future.
â€œI gained a fantastic insight into how to analyse companies’ accounts, their profit and losses, and forecast their future.â€
In very basic terms, a fund manager invests money on behalf of clients, such as pension funds, into a variety of businesses, picking those it believes will generate the best returns. Therefore, this also means that fund managers have to try to work out what businesses are really worth.
Glen later moved from Fidelity and is now a Partner at City-based fund manager Dalton Strategic Partnership (DSP).
The next step
â€œAbout three years ago, having spent all this time analysing companies, I decided to find a private business and take a 20% stake, becoming a non-executive director,â€ says Glen. â€œI’d be investing my own money.â€ He didn’t have any particular type of business, or location, in mind.
However, things took a different turn when, in December 2011, he was having dinner with friends in Grantham. While chatting about his idea, they mentioned that nearby Lincolnshire-based AC Williams Coaches had just been put into administration. Glen decided to find out more.
The firm was founded in 1953 as a motor engineer and agricultural machinery repair business. The main part of the business, which was immediately closed by the administrators, was a Renault garage and parts outlet that had been hit by cash-flow problems due to the recession and falling UK Renault sales.
But the coaching side of the business was continuing to trade while the administrators and corporate recovery specialists, Nottingham-based Begbies Traynor, looked for a buyer.
The coaching side had a day-trip and holiday programme and a fleet of 20 vehicles ranging from minibuses, an Optare Alero, to a Neoplan Skyliner and four well-spec’d Scania Irizar PBs. It also continued to run its 12 schools contracts, transporting over 400 pupils a day, with three more contracts due to start in 2012.
Says Glen: â€œThe coaching part of the business was a small subsidiary that had been left to its own devices, while the parent company struggled during the recession that affected all car dealers, but Renault especially badly.â€
Glen and his accountant brother David, 45, went to Ancaster to conduct due diligence. What they found was mixed. â€œClearly it had some issues, but there was a great brand with loyal customers including 20 schools. It held good contracts, such as for the Red Arrows team, Harlaxton College, and football clubs Lincoln City and Boston United.
â€œThe employees were very dedicated but it had suffered from under-investment and there had been a lack of financial control.â€
It took three months to do the deal. â€œI invested a lot of money,â€ says Glen, and in March 2012 routeone reported the news of the purchase, that saw Glen become Executive Chairman of the business, while keeping the AC Williams name. David Pratt joined the board as Finance Director.
Ian Mansell was retained to manage the business day-to-day and is also now the Joint Transport Manager. He is supported by Andrew Scotton as Joint Transport Manager, while Rebecca Robbins is now the Tours Manager.
At the time of the sale former Managing Director David Williams told routeone: â€œI’m delighted that jobs will be saved and the AC Williams name will continue in what promises to be a bright future for the company.â€
Peter Blair, a partner in the Nottingham office of Begbies Traynor, and who was appointed joint administrator in December 2011, said: â€œWe’re pleased to have saved jobs and maintained important services in Lincolnshire. We are grateful for the support and tenacity of the AC Williams staff during difficult circumstances, and that we were able to retain those staff. We wish the new venture every success for the future.â€
In the first few weeks, the positive news saw sales increase 30% ahead of target, two additional employees recruited and 25,000 invested in the Ancaster workshop, including a new compressor and sophisticated diagnostic software.
This isn’t a short-term get-rich-quick plan. Indeed, says Glen: â€œI am not going to sell it.â€ Instead, a five-year strategy has been put in place to grow the business. â€œInitially we gave all the employees a pay rise, while we also made good with our customers, some of whom had lost their deposits when the old firm went into administration. We wanted to create goodwill.
â€œBut the big financial issue was low vehicle utilisation. We had spare capacity, while holidays and day trips were not full. Also, drivers were not being used well enough, such as between schools work.â€
The solution was relatively quick and simple – to put in a marketing plan to increase private hire work and volumes. â€œWe have gradually filled that spare capacity.â€
There is no doubting Glen’s deep understanding of the business and the dynamics of coaching. â€œI’ve invested 1m of my own money – it’s a serious commitment. My motivation for this is two-fold; not only do I want to test myself, I also want to give something back.
â€œI’ve never been given anything: everything I have got has been earned through hard work. At the time, the purchase meant that we were able to save 25 jobs, now we are employing 40 people, in turn supporting 40 families. These are people who work hard.
â€œI am providing the capital and strategic direction, supported by effective people managing the business. It’s also very important to keep effective financial control.
â€œThe best run companies in this market sector make around 10% margins, and that’s my optimum.â€
In the first year of trading, revenues were around 1m, with a loss made.
The 2013/14 financial year saw turnover increase to 2.5m with a small profit. The forecast is that in the fifth year turnover will be around 5m, with a 10% profit margin.
The next stage
Having bought the business, stabilised it, and turned it into profit, the third stage is to grow the business.
Organic growth has seen the fleet increase from the 20 operated in 2012, to 32 today. At the same time the existing fleet has been improved, with re-trims and re-paints.
The AC Williams-branded fleet is mixed â€“from double-deckers for schools, to a quartet of Scania Irizar PBs that forms the front-line executive fleet.
The other aspect is growth by acquisition. â€œI’m very prepared to buy other businesses,â€ says Glen.
The first of these came in June 2013, with the purchase of nearby Spanish coach tour specialist Southern Holidays.
Director Rebecca Robbins, and one employee transferred to AC Williams. Together, it grew the merged companies to 35 people and saw the two companies offering a total of 50 holiday departures and over 200 day trips over the next year (2014), alongside their schools and UK and European commercial contracts.
Southern Holidays, established in 1998, transferred from its Sleaford base to the AC Williams site in Ancaster.
What Southern Holidays brought to the mix was a different approach, of an online model, offering additional products to what AC Williams was providing, mainly to northern Spain.
As a ‘virtual’ or online model it didn’t own coaches.
The next purchase took place this year, on 1 May, when Lawtons Executive Coaches’ private hire/holiday business joined the fold. Former owner of the Stickney, Boston-based, firm Geoff Lawton stays with the business and the purchase added three coaches fitted with wheelchair lifts, plus an extensive database.
â€œBoth owners of the two business we bought wanted to sell. We can provide a home for the vehicles, buy the brand/name and provide jobs for the employees and vendor,â€ says Glen.
Because the business takes on the vehicle finance, the upfront cost of purchase is reduced, while it removes the liability for the vendor.
â€œIt also brings synergy with the existing business and there are obvious cost savings,â€ he adds.
What’s in a deal?
Glen recognises that coaching is a people business: â€œOtherwise, there’s nothing to sell; I am buying assets, but the people are the real assets. Proper people management and innovation are the keys to success, and we have an excellent team that works very hard.â€
Glen spends around 25 hours a week on the business, aside from his day job, and keeps a close eye on monitoring budgets. He is conscious that, like all small businesses, lack of cash control can be an Achilles’ heel. Weekly key performance indicators (KPIs) and a keen eye on the current sales positions are vital.
â€œAn accountant will tell you what has happened in the past, but they can’t predict the future,â€ says Glen. â€œNo two weeks are the same, and we know that often it’s the last 10 seats on a trip that will make the profit. That’s why it’s really important to stay focused on sales.
â€œThis is a journey and I’m very excited about this industry.â€