The Opportunity
Family owned Hancocks appointed corporate finance advisors to help it sell the company in 2012. There was no succession within the family to continue to manage and build the business and the decision to sell 100% of the business had been taken. H2 Equity Partners was introduced to the opportunity and during the first meeting with management immediately recognised the potential of the business to further develop and grow both sales and profitability.
Hancocks, headquartered in Loughborough, was the UK’s largest confectionary specialist, selling confectionary and chocolate via a network of cash-and-carry depots, direct to retailers and had just started selling online. Annual revenues amounted to ca. £110 million. Being a true specialist, the company managed over 4,000 SKUs and combined own brand ranges with leading A-brands and servicing various routes-to-market. Hancocks was led by an excellent CEO, but he had a clear desire to retire within a few years and the company had not invested in building a strong 2nd tier management team. Shareholder and management succession were key issues that needed to be addressed.
H2’s Investment and Approach
In November 2012 H2 acquired Hancocks within a short period of being introduced to the company. H2’s investment thesis for Hancocks focused on covering all routes-to-market, increasing the share of own branded product (through own product development and packaging design), various operational improvements and managing the CEO succession over time. We had identified pricing as a major opportunity for profit enhancement and within three months had improved the EBITDA run-rate by ca. £1 million on the back of specific pricing actions. During our investment period Hancocks executed three add-on acquisitions, adding online capabilities and a delivered solution. Revenues grew to ca. £160 million per year and EBITDA doubled. A well planned and executed management succession plan was implemented and allowed the original CEO to first move to a non-executive chairman position and later fully retire upon our exit of the business.
The Outcome
Hancocks achieved a market-leading position in the UK confectionary industry and in 2017 was acquired by a trade buyer with obvious sales and procurement synergies. The new management team remains with the business and the combined group is set for continued growth.
