Build or Buy (or both?)

You’ve a toe-hold in the UK market with a minority share in a failing manufacturer and distributor of construction products.

Divest yourself of the asset, or leverage it to something worthwhile? Nobody expected what happened next.


The Company

Max Frank Germany was keen to expand into the UK market and owned a minority share in Creteco – an underinvested commodity producer with a run-down manufacturing facility in the Potteries. Frank used them as a distributor for the majority of their low-value construction accessories alongside a well-established rebar processing firm (BRC Special Products) for their higher value items. It was recognised by the Frank board that establishing their own operation in the UK would be seen as a potential threat to BRC, so a degree of sensitivity was called for.


Randla Hunt were engaged to assist in the acquisition of the remainder of the capital of Creteco, the creation of a NewCo – Max Frank Ltd (MFL), and the identification of, and relocation to, a new manufacturing facility capable of scaling the business across the UK and Ireland. This took place over a 9-month period, with all of the Creteco staff being transferred under TUPE. This included the director of Creteco, with whom Robert Hunt worked alongside during the M&A process

At the same time, because of the political sensitivity of the relationship between MFL and BRC, a significant amount of relationship building took place between the two companies. Robert Hunt was the director of the newly formed MFL responsible for this process and the transition was deemed a success by all sides

And then....

Just when everyone was beginning to relax

18 months into the process, BRC’s parent company – Acertec plc – was in difficulties due to its exposure to the motor industry around the time of the 2008 crash. This left Frank’s business in the UK exposed as it was likely that BRC would be sold on to a competitor to raise cash and the status quo disrupted, if not destroyed.

It wasn’t helped by the arrival of abrasive new management at BRC who, under clear instructions from the Acertec board, were intent on maximising margins across the business, including those of its distributive products. It was also clear that the well-publicised problems were diffusing down to the sales staff, at all levels. The relationship built by Robert with the BRC team was such that several sales managers were dropping hints about opportunities within MFL.

In parallel with this low-level activity, Randla Hunt and Max Frank Germany were exploring the options to purchase BRC. These were firmly rebuffed and our choices soon became clear.

Abandon Ship!

With the groundswell of discontent within BRC reaching crisis levels, Robert Hunt and the Max Frank board developed a plan to effectively decapitate the BRC Sales and technical operation. At the heart of the plan were some loopholes in the personnel contracts from the board down. By mapping these and taking high-level legal advice, we were able to negotiate the obvious pitfalls – including non-compete clauses – and provide a secure life raft for those wishing to leave.

As with everything, timing is all and the preparations, which lasted several weeks, had to be executed in a single night. Of the seventeen (yes – seventeen!) staff party to this action, all but one resigned en masse on a single Sunday evening. These included three sales directors, the technical director and substantially his whole team, the production and finance directors and some eight sales staff.

It’s said: “the best military plan never survives first contact with the enemy” and this was no exception. One sales director was persuaded to remain and a mass injunction was served on MFL in the high court. This was challenged and the restrictive covenants deemed not to have been broken. Within three months, the staff were fully integrated into the now massively enlarged MFL and some nine months later an offer made for the residual assets of BRC at a fraction of the original asking price.

Robert remained with MFL as a non-executive director until 2013.