On the Road with Team Sky
With a finance package from Santander, Muc-Off was able to make a clean sweep of the road bike market.
- Company turnover: £4 million (increased since time of deal)
- Sector: Retail supply
- Muc-Off is a popular brand of cleaning and lubricant products used predominantly by cycling enthusiasts, but also in a range of sports where equipment needs to be cleaned and well oiled.
- Muc-Off wanted to sponsor Team Sky to raise its profile and make greater inroads into the road bike market. Sponsorship proved costly, and Muc-Off needed help to meet the target through cashflow.
- Santander offered a £1.1 million invoice discounting facility and £850,000 of Breakthrough Growth Capital.
- The solutions were tailored specifically to Muc-Off’s unique needs: it wanted breathing space to grow and not be encumbered by tough repayment terms.
- In addition to enabling the company to win the Team Sky sponsorship, Santander also provided a funding package in tune with Muc-Off’s needs. Muc-Off now hopes to hit £20 million turnover in five years.
Muc-Off is a cleaning and lubricant brand for top bike riders and racers. The company started life supplying a series of products to help mountain biking fanatics keep their machines clean. The brand grew steadily, as enthusiasts loved the products and they now supply to, and sponsor, many top adrenaline-filled sports – from Formula 1 to surfing.
However, Muc-Off had its sights set on an even bigger prize: the fast-growing, highly lucrative and hugely popular road bike market. So the business, led by Alex Trimnell, hatched a plan to work with Team Sky (the professional cycling team) who are followed all over the world by a legion of dedicated fans, and who have won some of the world’s biggest and most famous races.
Muc-Off knew that working with Team Sky would almost guarantee a steep sales lift, but their turnover stood at £4 million at the time, so the business couldn’t invest with cashflow alone. Muc-Off’s incumbent bank had an arm’s-length relationship with the business, so a change was needed. Muc-Off approached Santander, who worked closely with the business to agree solutions that would fuel growth without a heavy repayment schedule.
“Muc-Off came to us because they heard we supported growing businesses and wanted to know more about our solutions,” says James Cooksey, Director at Santander Growth Capital and a cycling enthusiast.
“They needed money to collaborate with Team Sky, develop the product range and pay upfront for stock. The finance requirement was almost £2 million so we had to think creatively with a funding package that suited both parties.”
The Santander team, which included Relationship Director Katie Loder, paid several visits to the business and – between lengthy and enthusiastic chats about cycling – heard the management team’s growth plans, inspected the product and conducted further research into the market’s scope.
“In the end it was a straightforward deal,” says James. “They are growing and therefore absorbing cash, so we provided £1.1 million through invoice discounting – because Muc-Off has an extremely reliable debtor book – along with £850,000 Breakthrough Growth Capital, which is interest-only for five years.”
Relationship with Team Sky
Muc-Off’s relationship with Team Sky went live earlier this year. The business is forecasting to increase turnover to £20m per annum within the next five years.
“I’ve seen more than 125 business cases in the last two years and I get a gut feeling when I go into a business,” says James. “You start by asking what the market is doing, then where is your business going, what’s your niche, what’s your right to exist, and why do you think you’re going to grow?
“Muc-Off had the answers. The road bike market is growing, they believe they have the right products and they know that if they get it right, an association with Team Sky would bring great results. You look at the big picture and you think, ‘You’re right’.”
Alex says Santander’s holistic, detailed approach was “unusual and refreshing”. And the positive experience didn’t stop when the deal was done. “Now we are many months into the deal, it is the ongoing support that has been absolutely fantastic. It has not just been banking-related, but support for all facets of the business,” says Alex.
“James and Katie are regularly in touch because they are genuinely interested in the business. It’s a more natural relationship, which is more beneficial,” he adds.
With an interest-only loan and an invoice discounting facility in place, Muc-Off finally has the spare cash it needs to invest and grow. Turnover has since increased, and now the company is looking forward to developing its relationship with Santander. “We’re just at the start of this new chapter in our history,” says Alex. “It’s an incredibly exciting time.”
What is Breakthrough?
Breakthrough is a programme of funding, business support, events and consultancy to help high-performing small and medium-sized enterprises (SMEs) leap to the next level of sustainable growth. Taking part in Breakthrough does not guarantee access to all elements, as each programme is tailored to meet the individual requirements of the business. To find out more, register your interest, and to see if you are eligible, visit the Breakthrough website.
All lending is subject to status.
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Relationship Director Comments
Muc-Off needed money to sponsor Team Sky, develop the product range and pay upfront for stock. The finance requirement was almost £2 million so we had to think creatively with a funding package that suited both parties.