Sofa Brands International

Deal summary

Sofa Brands International (SBI) is one of Britain’s most successful furniture manufacturers. It designs and handcrafts high quality sofas and chairs which are available in more than 600 retail outlets nationwide.

Established in 2007 to acquire a number of businesses, including the G Plan, Parker Knoll and Duresta brands, SBI had a shareholder base consisting of the banking syndicate that backed the original business. The shareholders wanted a strategy to withstand the pressures from lower cost imports and so SBI focused on implementing a branded product strategy into independent retailers. Following a re-launch of the Parker Knoll brand in 2012, the company secured listings in a number of major UK furniture retailers, resulting in significant profits growth.

Early in 2014 the shareholders decided to appoint an adviser to help them prepare the business for a future sale process. Following a rigorous selection process Catalyst was appointed and quickly began to develop a strategy to present the positives, and deal with the issues, arising from the new growth phase SBI was entering, involving a number of new strategic initiatives, infrastructure investments and key succession changes planned during the second half 2014 and early 2015.

What difference did we make?

Following individual discussions with all the shareholders and a thorough review of the business and market, we explored the strategic options available including a trade sale, an IPO and private equity backed management buy-out.

As part of our assessment of a trade sale, we established there was a small number of potential trade buyers, all of whom were unlikely to move to a transaction process very quickly. We entered a care and monitoring stage – being ready to transact if approached but planning to go to market in mid-2015 when a number of key internal strategic initiatives would have been delivered by the business.

In the second half of 2014, the shareholders were approached by Promethean Investments, a mid-market private equity investment firm backed by ultra-high net worth individuals. They demonstrated a strong understanding of the strategic position of the business and put forward an offer that valued the future benefits still to come from the partially complete strategic initiatives.

Having prepared the business to be ready to transact, we managed the transaction to a smooth and efficient completion. We were instrumental in agreeing the Newco structure, the management team’s terms and resolving a number of highly complex transactional issues, including employee tax structuring.

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What our client said
"Catalyst have a calm, no nonsense robustness to their approach. When combined with their attention to detail, tenacity and innovation they are a deeply impressive team." Scott Malvenan
CEO, Sofa Brands International