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The Works

The Works is the UK’s leading retailer of discounted and remaindered books and also sells art materials, gifts, stationery and DVDs. The company carries more than 40,000 different product lines, including many well-known brands.

Background

The Works was first established in 1981. The founders started by selling remaindered books on a table in their chemist shop and gradually realised that this entrepreneurial idea had real potential. By 2003 The Works was operating from 175 stores in the UK and had widened its product range to include non-book lines. The company was still owned by its founders, who were starting to think about succession, and the management team were keen to become owners.

The Big Idea

After a failed auction process in 2002, we were approached by the management team’s advisers and incoming non-executive chairman in Spring 2003. We saw the opportunity to enhance the company’s market leading position and grow the business via further store roll-out and acquisitions. We completed the £25 million management buy-out in July 2003.

The Grand Plan

We put together a straight-forward package with a modest amount of bank debt which allowed the company’s cashflow to be used for rapid expansion. Within five months we acquired 27 shops from The Works’ main competitor and then added a further 30 new stores over the following 18 months. We also helped the company to upgrade the look of their stores, introduce more effective management systems and to add a range of new products.

The Bottom Line

Sales and profits grew substantially in the relatively short period of our ownership. The company was sold for £50.5 million in April 2005, generating 3.7x our original investment.

The Works logo

Investment Summary

Date of investment:  July 2003
Deal status:  Realised
Date of realisation:   April 2005
Investment return multiple:  3.7x cost
For more information talk to:  Graham Hedddle or Rob Foreman


“I led a management buyout of The Works in 2003. We needed to raise £25 million to fund the buyout and provide funding for expansion. We chose Primary as our partner due to the enthusiasm shown for the project and because we met all of the key executives within a week of approaching them. Within 2 years we achieved an exit having increased the store portfolio from 170 to 230 stores and paid off the £11.5 million bank funding. The investors and management achieved £40 million gain. The relationship with Primary was excellent throughout with a combination of support for the implementation of the business plan, fast decisions and positive input.”

Terry Norris, Chairman, The Works

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