Investing for Growth
Engineering company realises its ambitious growth targets with Santander support.
- Company turnover: £3.2 million (2013)
- Sector: Engineering
- Engineering firm Quick Hydraulics was founded in 1977 and grew to a turnover of £2.5 million with clients including Nissan and Caterpillar.
- The founders’ decision to sell, coincided with Andrew Esson’s search for a business opportunity. He had a list of investors to approach for help to fund a Management Buy In (MBI).
- Andrew chose to work with Santander on the basis of the deal and the working relationship, and the bank provided Invoice Finance, as well as Day-to-Day banking facilities. Andrew has built up a close relationship with Santander and regularly talks to Relationship Director Mark Dolphin.
- One of the key reasons for buying the business was the potential for growth, and Santander’s simple approach to financial backing has helped to escalate the expansion process.
- Andrew is now developing opportunities outside of the North East and exploring different finance options with Santander.
Andrew Esson is the MD of specialist hydraulic engineering business Quick Hydraulics. Founded in 1977, the business grew organically to reach a turnover of £2.5 million by serving high-profile customers, such as Nissan and Caterpillar in the automotive business, as well as oil- and gas-related companies such as GE Energy and Duco.
The original founders’ decision to sell coincided with Andrew’s decision to look for a new business opportunity and Quick Hydraulics had a good reputation, room for growth, and it was in an industry that he knew. Plus, Andrew had a list of investors that he could approach to help fund a Management Buy In (MBI).
However, it wasn’t as straightforward as he imagined. “What I didn’t know is that the private equity market isn’t interested in MBIs,” he says. In order to meet the shortfall between his existing funding and the purchase price, Andrew approached a corporate finance house and they put him in touch with three banks – including Santander – that could potentially help him purchase the business. Andrew chose to work with Santander on the basis of its competitive, straightforward deal and personable approach, and the purchase proceeded with an Invoice Finance facility, along with funding from private equity loans.
Accepting an offer
“Santander put the best deal on the table, in terms of both the finances and the working relationship,” says Andrew. “The team came across as being personable and very keen to do the deal.”
As far as Santander Relationship Director Mark Dolphin was concerned, working with Andrew was a win-win situation. “Here’s a business that is technically very good at what it does, and has an award-winning MD with a corporate background and a network of contacts. Put the two together and it’s a recipe for growth.”
Staying in touch
Andrew keeps in touch with Santander on a regular basis, and this close relationship has led to a strong element of trust. He regularly talks to Mark – and Mike Sissons on the invoice discounting side – and meets up with them in person on a regular basis.
The relationship means that Santander is able to help Andrew with more than banking support, as he explains. “When we expanded our business in 2013, Santander co-funded the launch event and helped give us an opening that a small business like Quick Hydraulics wouldn’t have been able to otherwise afford.”
This potential for expansion was one of the key factors for Andrew’s decision to purchase the business. The customer base at Quick Hydraulics was largely static, with the business mainly serving existing customers. Andrew planned to grow the business quickly and set a turnover target of £5-10 million by 2016 – a goal he hoped to achieve by attracting new business in the North East.
Although the company has been on track to achieve this target, Andrew has faced certain stumbling blocks. “Due to the seasonal nature of some of our work, we encountered some constraints within the Invoice Finance facility but our regular contact with Mark and the team meant they were able to put an overdraft facility in place to give us an additional buffer.”
A good year for revenue
So far, 2014 is going well and Quick Hydraulics is on track to grow revenues to £4.1 million this year. The business has also doubled employee numbers to 32 and doubled its premises space.
Andrew is also looking to create new business opportunities outside the North East, and is starting by opening an office in his home town of Aberdeen. It was a natural choice due to his local knowledge and the range of potential customers in sectors familiar to the company, particularly gas and oil.
Andrew intends to keep Santander firmly by his side as he realises his ambitious growth plans for Quick Hydraulics. As well as help with funding this new branch of the business, he is also looking into Trade Finance Solutions and mezzanine finance options available through Santander’s unique Breakthrough programme as he plans for future growth.
Download this client story as a PDF file (315KB)
Relationship Director Comments
Here’s a business that is technically very good at what it does, and has an award-winning MD with a corporate background and a network of contacts. Put the two together and it’s a recipe for growth.