Specialist Suppliers Of Tubular Products And Accessories For Sale

Business description

Specialist suppliers of tubular products and accessories to the oil, gas and petrochemicals sectors

Established almost fifteen years ago by the current Owner following a longstanding and successful career in the same industry, this business has rapidly grown to become one of the leading providers of pipe and tubular products and accessories worldwide. Specalising in the oil, gas and petrochemical sectors, the business has a worldwide Client base – with its main markets in the energy producing countries in Africa, the Far and Middle East and the Gulf. Clients range from engineering contractors, local stockists and distributors right through to the end users themselves- the oil and petrochemicals companies, who make up between 60% and 70% of turnover. Approximately 5% of sales are to the UK domestic market.

Based in very well suited, low overhead premises within easy reach of Heathrow and Gatwick airports, this business provides the complete package of materials for any particular project. The business offers the widest range of tubular products in steels, alloys and plastics, together with associated valves and accessories. Orders placed or won by the business range from as little as £250 for a small part in a single order right through to 23 million Euros for a project recently won, spanning several years. Materials - linepipe, OCTG, fittings, flanges and valves etc - are procured from the most appropriate manufacturers from across Europe, consolidated and shipped usually direct to site and according to agreed contractual arrangements, using European based warehouse and logistical support facilities.

As would be expected by customers operating in some of the most demanding of environments, the business and its sub contractors operate to the very higest quality standards – specifically designed procedures monitored via in-house and external inspections/audits according to ISO 9001-2000, an accreditation the business has held since 1999.

The cornerstone to the success of this business is the excellent combination it offers of professionalism, reliability, quality of product and competitive pricing. This business prides itself on never letting its customers down. With a detailed knowledge of the manufacturers combined with a clear understanding of the technology involved, this business succeeds where other brokers, without its detailed technical knowledge and manufacturer relationships, fail.

This business has been consistently profitable throughout its many years of operation. With turnover for the financial year ending December 2009 of approximately £2.9 million generating pre-tax net operating profits of approximately £170,000, this is a rare opportunity to acquire a leading operator in its worldwide marketplace.

Key strengths:

This is a very well managed, niche business with an excellent international reputation and is regarded as one of the strongest contenders whenever a project is considered. It is widely considered to be a very ‘safe pair of hands’. Having operated in the oil, gas and petrochemical sector throughout the world for many years, the business has a clear understanding of the technology involved, has built up unrivalled product knowledge and maintains very close relationships with manufacturers, subcontractors and freight agents – able to decide the best resource from which to obtain its requirements and get them shipped. As a result it has established a very reliable and competitive supply chain for the widest possible range of goods required by its customers and is able to respond quickly and accurately to all forms of materials’ requests – anywhere and at any time.

Outsourcing testing, warehousing, the consolidation of goods, packing etc, this is a very lean organization with very low overheads for the size of operation. Consequently it is able to adapt to market fluctuations – able to sustain high levels of performance even in low periods of trading whilst benefiting greatly from high levels of market activity.

The business has a very strong second tier of management in place. Although the Owner is responsible for the overall performance of the business, he is involved less and less on a day-to-day basis, involved only at key points in customer negotiations, for example.

Key opportunities:

This is an outstanding opportunity to build on the existing business levels and customer base of this company. With a strong demand for the business's products, a new owner contributing fresh ideas, motivation and enthusiasm will have every advantage of building on an excellent platform

This business has the technical expertise and the infrastructure to handle levels of activity far greater than those at present – turnover in the financial year ending 2008 was well in excess of £12 million, for example. The major ‘brake’ on significant increases in turnover and therefore profitability is access to bigger projects, which in turn is reliant upon the availability of working capital and letters of credit. An organization with greater access to funding could significantly increase turnover by leveraging the excellent reputation the business has built to access the larger projects which frequently to date have been passed up by this business.

Financial information:

The business is offered for sale as a going concern. All financial discussions will take place directly between the vendor and all interested parties under the auspices of Turner Butler.
Turnover for the financial year ending December 2010 was approximately £2.5 million, generating an adjusted pre-tax net operating profit of approximately £90,000. The Asking Price of £1 million is for a sale of the shares in the business based on a Balance Sheet value of £695,000 a large proportion of which is cash.

Property information

Property:

Leasehold

Lease terms:

Rented, the lease expires at the end of December 2010, but can renewed as required. Rent is approximately £12,000 per annum. Rates are approximately £1,000 per annum.

Location:

The business operates from very well suited premises within easy reach of Heathrow and Gatwick international airports.

The business occupies part of a floor in a shared office block. Rented, the lease expires at the end of December 2010, but can renewed as required. Rent is approximately £12,000 per annum. Rates are approximately £1,000 per annum.

Business Operation

Competition / Market:

Well established and with an excellent reputation, aside from literature produced to outline its scope of services, this business has little need of heavy investment in marketing and advertising. Its Commercial Manager is very active frequently traveling to maintain and build its network of contacts. The business also supports the marketing activities of its excellent network of Sales Agents – at local exhibitions, for example. The business also has a very well designed, informative and easy to navigate website which performs very well in all of the major search engines for all appropriate search terms and enjoys high levels of repeat business – frequently being taken from one company to another when a contact switches jobs. By far the most effective form of marketing for the business, however, is the strong word of mouth recommendation the business enjoys, testimony to the very high regard with which the business is held throughout the industry.

Reasons for selling:

The current Owner wishes to retire early due to ill health.

Employees:

The Owner is ultimately responsible for the financial performance of the business – but is increasingly divorced from its day-today running supported by a Sales Manager, a Commercial Manager, a Project/Sales Co-ordinator together with two further employees in administrative and accounts support.

Other information

Support & training:

The current Owner will provide all necessary support and training to ensure a smooth transfer of the business to new Owners.