Case Studies

Coffee Nation

Self Service Gourmet Coffee

Coffee Nation was the leading self-serve gourmet coffee company supplying the public through retail and forecourt partners such as Tesco, Moto, Sainsbury and Welcome Break across over 400 locations across the UK.

Milestone Capital backed the secondary management buy-out of Coffee Nation in March 2008 with Investec Growth & Acquisition Finance providing the mezzanine finance.  Mike Tait was brought in as chairman and an investor in the business.

Mike worked closely with talented management, Scott Martin CEO and Simon Vardigans CFO on a new strategy for Coffee Nation that would see dramatic changes to the R&D programme and expansion into new markets.

Stopped was the designing of their own machines and instead, R&D investment was concentrated on designing and building machines on an OEM basis, utilising coffee making technology from top manufacturers such as Shaerer in Switzerland. This new approach to machine design resulted in extended capacities, advanced user interfaces, payment systems, energy efficiency and a better quality coffee experience. Telemetry was also a key design addition which allowed real-time monitoring and maximising of uptimes of the whole estate – all managed by a support team working from an advanced dashboard system.

Many other initiatives such as a new showroom, promotion vans, building a marketing team and telesales function and moving into new markets such as universities, contributed to the number of Coffee Nation sites growing to over 900 with sales reaching over 1.5 million cups of coffee per month and £30m of sales.

Mike Tait felt that an exit was possible and he invited the CEO of Costa to visit and see how things worked in the ‘Coffee on the Go’ market.  It wasn’t long before the board of Costa and Whitbread also visited to hear the proposition. The strategic arguments for Costa to acquire Coffee Nation were well taken by the Costa and Whitbread teams and this led to a very successful exit.  Coffee Nation was sold for £59.5m which generated a 3.7x return on Milestone’s original investment in under three years. The company is now Costa Express.

Claims Management Group (CMGL)

Insurance Services

CMGL was a £40m turnover leading provider of outsourced claims and insurance management services that were offered to FTSE quoted companies, general insurers, Lloyd’s underwriters and London Market insurer companies.

CMGL was a widely recognised brand with a strong reputation for its operational practices and quality of service. It had an international network of 11 offices and managed over 165,000 claims worldwide representing US$5b in gross liabilities and over $1b reinsurance recoverables. In addition, CMGL administered eight Lloyd’s syndicates.

CMGL was acquired by Sovereign Capital through a buy-out from Zurich Financial Services. After only months into the investment which had a 14 year history of growth and profitability, the business fell into a significant loss making position. The business was running short of cash and had fallen outside of its banking covenants.

Sovereign decided to seek outside help and brought Mike Tait in as executive chairman. His brief was to very quickly get to understand the business, its services and markets – all of which were new to him, and then to propose and implement whatever was needed to recover the business and return it to profitability.

The key tasks were to reduce costs straight away by reducing staff from 650 people to 600 people, exit from unprofitable deals, and secure a number of new deals in pipe-line. The company was very quickly returned to a profitable footing.

Michael and his investors saw an exit opportunity to exit through the sale of the company to Capita plc. The company was sold to Capita Plc for £32m generating Sovereign Capital an IRR of 260% and 3.3x money.

Knowledge Technologies International (KTI)

Engineering Design Software & Services

Knowledge Technologies International was a company of 110 people and $18m turnover based in the UK, USA, Germany and France. KTI specialised in knowledge based engineering design software and managed services and were an Electra Europe investment.

The company was loss making to the point where an insolvency practitioner attended board meetings.

Electra Europe appointed Mike Tait as Interim Group CEO and asked him to evaluate what could be done to save the company and determine whether some value could be recovered for investors in a sale of the company.

Electra was not willing to support the company any further and on two occasions the board was advised that unless funds were raised from sales, the company would have to shut the doors in a matter of days. On one of these occasions £400k had to be raised within a matter of three days to keep the company trading. Mike Tait had to personally negotiate a deal with KTI’s biggest customer at a time when all the management and staff had declared the challenge as impossible. Mike secured a deal from Airbus and the company was able to continue.

Mike had to close the larger part of the USA company, leaving just a small support group there and this enabled European activities to continue.

A successful turnaround was achieved with the company showing profits for eight months prior to the company being sold. Electra did not want to spend M&A money and so Mike had to write the sale prospectus himself and make calls to the presidents of large international software companies to seek interest in acquiring KTI.

Mike managed to sell the company to Dassault Systeme, a large French public company, which gave a very good home for the KTI team and returned money to Electra Europe.

Interlink

Retail Banking Software & Services

Interlink was a London based retail banking software and services company of 125 people and £15m turnover and had made significant annual losses over a four year period. The company specialised in software to drive ‘hole in the wall’ cash dispensers and software for clearing payments through VISA and MASTERCARD.

CR2 was a 200 person, Dublin based, VC backed company that specialised in e-banking software and they wanted to acquire INTERLINK through funding from their backers. However CR2 was still to prove itself and the backers said they would only back the acquisition of a loss making business if a turnaround professional was engaged. Mike Tait was selected as INTERLINK’s Interim Group CEO.

The challenges were; four years of loss making, a dysfunctional board, lots of people leaving including key second tier management, cash problems, tired products and an unproductive R&D programme.

Mike managed to persuade all the leavers to stay and work with him. He personally interviewed over a hundred of the staff within his first few months which uplifted staff morale and motivation. Mike set up weekly staff update meetings to aid effective communication in both directions.

Mike compiled an assessment report on the issues of the business and his strategy on saving the company which was agreed and executed over a six month period. All the old directors left the business on acquisition and Mike carried out all their functions with the support of second level management.

Key achievements were: not a single person left the company throughout the assignment; staff morale was high; within three months cash was being sent to the CR2 parent in Ireland and the company had the highest sales month in history on Mike’s last month with the business.

UNISYS

Computer Systems

Burroughs and Sperry Univac merged in 1987 to form Unisys Corporation and became the world’s second largest computer company with revenues in excess of $12b. Both companies were seeped in a mainframe background and culture and knew they were not well equipped to manage the transition into a distributed systems business. Both Boroughs and Sperry had small and almost insignificant revenues in this area and had failed to build an indirect sales channel which was critical to success in distributed systems.

Unisys Europe-Africa Division decided to find someone who had the skills to build sales channels across all fourteen western European countries and Africa and commissioned an international search. Mike Tait was chosen because of his knowledge and experience in managing sales channels for Digital Equipment Corporation who had the largest channels programme in Europe. Mike was also considered to have the drive and personality to succeed in a fiercely demanding management environment and effect change in a resistant mainframe culture.

Mike’s brief was to go out to the countries and assess the situation and define what could be achieved. He then constructed his business plan and presented this and his change programmes to all top management across Europe-Africa and the main Unisys Corporation board.

The management style at Unisys was ‘hands-on’ and ‘lead from the front’ and this was very much Mike’s style. He therefore fitted in well with the top management at Unisys and was quickly accepted as a key member of the Europe-Africa top management team.

For Mike to succeed in recruiting Value Added Channel partners, distributors and dealers he had to redefine the role of all direct sales people across Europe and the marketing methods used in all areas and geographies of Unisys and drive these initiatives. He led the implementation of strategies and programmes across all Europe-Africa counties and often got directly involved with the recruiting of channel partners. Mike was travelling intensively and was often conducting business in three countries per week.

Mike’s programmes proved very successful and he was asked to take these programmes to the USA and other areas. Asia Pacific also adopted his strategy and programmes and were trained and supported by him.

Mike went on to define the direct sales of desktop level networks and systems and in parallel, ran this programme across Europe-Africa.

Under Mike’s leadership Unisys became one of the leaders in distributed systems and had recruited a substantial indirect channels network. He built a £500m UNIX, PC, and Client/Server Workstation business through over 1000 Dealers, Distributors, Systems Houses and Direct Sales units across Europe and Africa.