TAYLOR

WHY

Taylor had a long, proud history as a manufacturer of waste containers in the UK and a fantastic product. Its Continental 1100 was the market standard for 4-wheeled steel bins for over 20 years and still is. When we acquired the business in 2011 it had been through a period as an orphan asset, but for most of its 50-year existence Taylor had been owned by the Taylor family. We saw the opportunity to take the strong, loyal, family ethos and introduce commerciality into the revenue and controls into the manufacturing facility to enable growth. We believed the resilience of the underlying bin sales so transformed would then support development and growth. And we believed that growth was to come from building on that one symbolic product and extending to other products and other geographies to create a resilient, diversified, international waste containment provider.

WHAT

Contraction in the UK economy and a drive by local authorities to consolidate and run down their fleets of waste containers meant the recent history on acquisition was flat for the core product, but the installed base gave strong cause to think the related growth would resume to follow the replacement cycle. Unfortunately asset sweating, historical over-purchasing and changes in refurbishment usage meant the core £20m product revenue for both Taylor and the market declined by over 30% within the first twelve months of our ownership.

WHERE

Our response was complete and absolute. We acquired a bolt-on manufacturer, Sellers, to bring an alternative manufacturing site and new products – large, sea-container style waste containers for county recycling sites. We actively overhauled the production process, changing everything from supplier dependencies to shift patterns and manufacturing techniques. We installed a new team at first and second-level management which transformed the commercial thinking in the business – within a few years Taylor’s revenues were back to pre-acquisition levels with the revenues filling the 30% shortfall comprised of: new self-manufactured products; new re-sold products utilizing Taylor’s relationships; services and rental income; international sales; international operations and overseas offices; and, technological innovations to up-sell the core product and provide standalone sales. The creation of over £7m of revenue from these changes in addition to margin improvement in the residual core left a diversified business unrecognizable from both the one we acquired and the one left standing after the initial market downturn.

RESULT

Unfortunately the market headwinds in the core product were not finished. Four years later, after the above changes, Sullivan Street were on the cusp of exiting the business at a good multiple of money to a group that could take advantage of and grow the international operations. At this point the core product revenues took another hit, in absolute terms as significant as the first, in percentage terms dropping another 50% of revenue. Notwithstanding the diversification and the capital restructuring undergone in the previous five years this was not something the business could withstand, and the debt provider, Indigo Capital, decided to enforce its security, place several of the companies in the group into administration, and take control of the operating company they felt had a viable future they could monetise.
Obviously the result of leaving the company with an enforcing debt provider was not the intention, but as Sullivan Street we can take comfort that we left a strong, vibrant and growing company behind the capital structure. Equally, for the partners at Sullivan Street, the experience of Taylor was more valuable than any successful transaction in their history – in the series of challenges which were almost surmounted both Rich and Layton learnt lessons essential to the subsequent successes.