Where credit’s due

A small management buy-out in the midst of the recession may prove to be a smart bit of business.

A small management buy-out in the midst of the recession may prove to be a smart bit of business.

A small management buy-out in the midst of the recession may prove to be a smart bit of business.

When Wyse Leasing was acquired by CHG-Meridian UK last July, Richard Hogarth and Dan Hancocks saw an opportunity that was too good to miss.

Both men had worked for Wyse Leasing for a number of years and were convinced of the potential of the company’s online credit reporting division. They embarked on a 50/50 management buy-out and rebranded the Buckinghamshire-based company CoCredo.

It was a straightforward deal for Hogarth and Hancocks as CHG-Meridian had little interest in the company’s credit reporting arm. In fact, the transaction only took a fortnight to complete. ‘We knew the balance sheet and liabilities, both written and unwritten. I put the purchase contract together myself,’ recalls Hogarth.


Money for the deal came from Hogarth’s and Hancocks’ personal resources. Jeremy Hall, one of the previous shareholders, stayed on as a non-executive director. ‘With just Dan and I running the company, we can agree much more quickly, without the need to consult other shareholders,’ says Hogarth.

Since the buy-out, ten additional sales staff have been hired and the balance sheet of the company has improved, albeit marginally, Hogarth claims. ‘CoCredo had previously not made large amounts of money, but we have managed to make a profit in the seven months to the financial year end.’

There have been inevitable operational costs involved in breaking away from Wyse, such as new premises and IT services. The upside, claims Hogarth, is that costs have been reviewed and cuts made accordingly to run the business with greater efficiency. They have also had to work on re-branding the company and have launched a new website.

It remains a tricky market and it’s fair to say that CoCredo is very much a work in progress. For all the client wins since the buy-out, a number have been lost as they became victims of the recession. Hogarth says CoCredo is currently on target to grow customers by 20 per cent in 2010, although revenue is still shy of £1 million.

Grand plans

Looking forward, they have ambitious plans to grow and develop the company, particularly with what amounts to a white labelling service. ‘We offer sales facilities for other credit report companies, such as MacIntyre Hudson – we do the checks for their customers under their name,’ explains Hogarth, noting that he’s looking to take on three to four such contracts each year as the company expands.

The immediate goal is to keep pushing sales to achieve growth, which seems reasonable given the demand for creditworthiness in the current trading environment. Says Hogarth: ‘We would definitely consider future acquisitions. In the next three to five years we hope to quadruple our sales, without a huge increase in overheads.’

The eventual hope is that once the company is ‘worth a few million’, a suitable buyer will emerge. ‘[We could] possibly sell to a similar small company or back to the original owners,’ says Hogarth.

Nick Britton

Nick Britton

Nick was the Managing Editor for growthbusiness.co.uk when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...

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