KRL on acquisition trail with sights set on Leeds after MBO

The Hull-based business, which dates back to 1985, is looking to make an acquisition in Leeds early next year, according to managing director George Baker.

Mr Baker told the Yorkshire Post that he and his business partner, Glenn Parrish, began the MBO of KRL Group in 2009.

“At that time the banks wouldn’t help at all, so basically we’ve had to fund it through cash flow and it [the shareholding] was supposed to be paid off in February 2013, but we’ve managed to pay them off last month”, said Mr Baker.

The full £1.38m has now been paid to the former shareholders and founders of the business, Mike Sanderson and Julian Harper, who have retired, said Mr Baker.

“It’s been quite a hard task to achieve in that time during the recession. But we’ve brought in various software packages and various changes to the business to bring it up into the 2000s. We spent a lot of money on training and development so that the staff were more qualified and trained to do the job and we also let them know how important it was to be able to keep their jobs.”

KRL sells and services office equipment such as printers, scanners and copiers. The company’s suppliers are Japanese manufacturers Konica Minolta, Kyocera and Ricoh, which have UK and European outlets.

Employing 25 people, KRL recorded a turnover of £2.5m in 2011, up from just under £2m three years ago. This year, Mr Baker is hoping it will hit £3m. He said profits are “quite stable”, adding: “We usually make around about £400,000 a year after taxes. We are trying to increase that.” The goal is to achieve £5m revenues in the next two years, Mr Baker added.

The last few years have been “a major struggle”, he said, but KRL has invested £200,000 in the business in the past three years and has secured the financial backing of Finance Yorkshire and Lloyds TSB during this time.

“It was touch and go at some points. It was difficult but it made us work harder to make sure we got to where we needed to. The success has been down to the staff”, said Mr Baker.

Originally from Leeds, Mr Baker, who started with the company at the age of 18 before leaving and then rejoining in 1995, became a shareholder and director in 2000. He initially held 12 per cent of the shares, but this has now increased to 70 per cent. Sales director Mr Parrish, from Hull, owns the remainder.

Now that the MBO has been completed, the company says it is focused on achieving further growth. “Our focus is developing the business so we expand over the next couple of years”, said Mr Baker.

Although KRL does have a presence in Leeds and Bradford, it is aiming to have a permanent base in the Leeds area by buying another company.

Mr Baker said: “In this industry there’s quite a lot of people coming up to retirement age and there’s quite a few businesses that because of the climate have not succeeded so there’s opportunities to buy.

“We want to set up a telemarketing and sales outlet with a showroom facility.

“That will probably be early next year, the way things are going at the moment.”

And an acquisition will create opportunities to employ more people, he added.

This would not be the first acquisition made by the business – it bought three companies in the 1990s, in Hull, Bradford and Sheffield.

In December last year, KRL Group partnered with a new business called Evolve, also an office equipment supplier, but based in Preston. KRL is now supplying the company with its own products, allowing it to better reach areas such as Manchester and Liverpool.

“It’s created a lot more business and it’s been creating more opportunities in the last three or four weeks to be honest”, said Mr Baker.

KRL operates across a diverse range of sectors from the Midlands to the North East, with the group’s customer base including companies such as builders’ merchant MKM, a Hull-based firm that operates nationally and Bradford City Football Club. “We’ll supply to accountants, solicitors, we’ll supply to construction companies, anyone that needs a photocopier or a printer,” said Mr Baker.

Financially the company is in a sound position, said Mr Baker. He said cash flow is still a challenge, but added that if the business didn’t sell anything it would still survive due to revenues generated by the servicing of the equipment.

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