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Capitalise from the changing highstreet and trending M&A to form a thriving group of jewellers

Member: pererap
Located in: London, United Kingdom (Great Britain)

Business Details

Business Stage:
  • Established (MBI or to purchase)
Amount Required:
  • £300000.00
Investment Types:
  • Equity/shares
Reasons:
  • Initial start-up of business
  • Management buy-in/buy-out
Industries:
  • Fashion & Design
  • Internet Services/ISP/Web
  • Personal Services
  • Retail Trade & Shops

Short Description

Capitalise from the changing high street and the void created by growing online jewellers to build a thriving group of one stop jewellery and watch retailer backed with a high-tech online presence.

Currently, many high street jewellers have disappeared and more and more have moved solely to an online retail model. Lots of small-scale sole trader type retail jewellers have completely disappeared. Covid19 has expedited this. However, the remaining jewellers are now thriving. Among them are well-established family own businesses run by baby boomers who are at retirement age and looking to exit but most of them have no exit strategy. They are too big for an individual buyer to acquire without financial backing and too small for VCs. There is an opportunity to acquire these businesses with 2 to 3 x EBITDA and build a broup and grow the business within 12 to 18 months and sell to VC with a 5-6 multiples of EBITDA. This will give your investment a 200% to 400% ROI within 12 to 18 months.

Executive Summary

Problem/Opportunity;

Currently many highstreet jewellers have disappeared and more and more have moved solely to an online retail model. Lots of small-scale sole trader type retail jewellers have completely disappeared. Covid19 has expedited this. However, the remaining jewellers are now thriving, and they are either national and international top brands that owns their own retail outlets, large corporate retail groups such as H Samuel and well established small to large family-owned jewellers offering services more than a retailer.

However, most of the owners of the remaining well-established family-owned businesses are either the founders or the second-generation owners of the business who are currently at their retirement age. Again, Covid-19 has brought their retirement plans forward. They are the baby boomers. Their children are in non-business professional categories mostly working in the corporate field and have no interests in their parent?s business. Most of these business owners do not have a exit plan and many are desperate to exit. However, their options are limited in these economic conditions and the limited byers in the trade. There is no appetite from highstreet banks and other lenders for retail businesses so options for an individual buyer are extremely limited or non-existing currently. These businesses are too small for a JV or VC investors. This will eventually force them to close these profitable and valuable businesses that were providing a valuable service to the local community.

Therefore, our goal is to strategically identify and select 10-15 such businesses in England and Wales that can fit into a group and acquire them. We are in a better position to negotiate a more favourable deal with the vendors and structure it accordingly differing bulk of the payments over a longer period. Each business will and should complement the rest of the businesses in the group either by skills, assets or services provided. This will enable the new group to have maximum leverage of its assets, skills, staff and buying power. Each shop in the group will then immediately be able to offer extra services and products and immediately increase its individual turnover and increase profit margins by combined buying power and peer support of the group.

The project will strategically identify and select 10-15 such high street businesses (explained in the background) in England and Wales that can fit into the group we plan to form. Each business will and should complement the rest of the businesses in the group either by skills, assets, or services provided. This will enable the new group to have maximum leverage of its assets, skills, staff, and buying power. Each shop in the group will then immediately be able to offer extra services and products and immediately increase its individual turnover and increase profit margins by combined buying power and peer support of the group.

Each business being acquired will have a turnover of £400k to £1million with a net profit margin minimum 20%. (Generally in the jewellery trade it is between 20% to 25%.) Most importantly each business is over 80% staff managed. Businesses being acquired will be at a maximum 3 x of EBITDA multiples with a considerable differed payments some spans up to 10 years.

Once the group is formed with 10-15 individual shops and the online presence with a group turnover of a minimum £10 million the value of the business will be in 6 x of EBITDA multiples. The founders will either buy the shares back from the investors or will decide to either go to IPO or to be sold as a group to trade or PE. This will give you a ROI between 200% to 400% within 12 to 18 months.

We can then repeat this process multiple times or make even larger groups to exit with higher multiples.

Detail business plan is available on request after signing a NDA.

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