William Kendall: How I sold Green & Blacks to Cadbury

William Kendall has engineered two large and successful exits. He tells Growing Business how he did it

William Kendall has engineered two large and successful exits, from luxury chocolate manufacturer Green & Blacks and the New Covent Garden Food Company. He tells Growing Business how he did it

Market presence attracts my attention, however small. With Green & Blacks and New Covent Garden Food Company, I've entered two very mature markets in the food and drink industry, where the major players felt there was no growth potential. But I've come out with two radically different propositions that proved attractive to buyers.

When I started working with Green & Blacks, the consumers liked the chocolate, but the product hadn't moved on. I always try to look at products in mature markets with a fresh pair of eyes. It's all about considering what is wrong with the current proposition and how you can do it better. That is my general approach. One of the tests I always run is to invite passionate consumers of the product into the business and listen to their ideas. I think the day you start to say: “We've already tried that,” is the day to move on. It might have failed four years ago, but markets change.

Businesses benefit enormously from change as it's easy for things to get stale after a time, which makes you complacent. You can have a family business owned for 100 years, which I think is a good thing, but if the family doesn't have the right skills, then inevitably it won't do as well as it should. So exiting can often be less about legal ownership and more about the day-to-day running of the business.

With Green & Blacks, a takeover exit wasn't at the top of my mind. We had brought in money from friends and family, however, and when you do that you realise you're going to have to return it to them with a profit. If I hadn't thought the business was sellable in the future, then I probably wouldn't have done the deal. I don't buy businesses to pass on to my children. That's not what I do.

Deciding to exit

In some ways it was quite an easy decision for the original founders, husband and wife Craig Sams and Josephine Fairley, to part with equity. This was partly because they were struggling and the business had got into financial difficulties. We persuaded them that we could work with them, leaving the founders  with a minority stake. I took an 80% share, but encouraged them to believe they could have a role going forward as spokespeople.

The possibility of the business flourishing with a new management team and the removal of the stress of running a struggling business made the decision to sell equity easier. However, that's not always the case. Quite often founders are incredibly nervous about handing over their babies. Many tend to be in denial about the difficulties they are in and probably don't believe anyone can do it as well as them. More often than not, the reason they eventually give up is because there is a financial third party beating them over the head, saying the choices are sell-up or something that could be far more unpleasant.

Preparing to sell

We have now sold Green & Blacks to Cadbury Kraft, but the original founders are still on the board, as am I. So we've effectively got two generations of owners working with Cadbury Kraft to run the business. That's a nice story, but it doesn't always happen that way. It is difficult working with new owners after running Green & Blacks for seven years, as you have to readjust the way you operate. But bringing in a new approach is a great way of maintaining some continuity.

To make Green & Blacks profitable, we did all the things you need to do – reduced the costs and grew the sales. Boosting sales was relatively straightforward in the sense that there was a growing interest in organic food and quality chocolate, but we had to keep our costs under control by monitoring them closely. The grocery industry is one where you can quickly lose a business footing if you don't have very accurate financial reporting. We introduced an excellent reporting system, which enabled us to see the lines that were profitable, and worked out the best time to run promotions. However, we really hooked the customer by reversing the marketing of the products from an organic and ethical sell, to it being a sinfully delicious luxury chocolate that was also organic. It was that shift that I think gave us a huge marketing lift.

Timing the deal

Exits differ. With Green & Blacks, we organised it years before we executed, which made it hard to work out the perfect time to push the button, as effectively we had already done it. Whereas with the New Covent Garden Food Company we had less time. This meant we may not have got our timing 100% right. Most people don't exit at exactly the right moment, and if they do it's often down to pure luck.

However, exiting Covent Garden was much harder than Green & Blacks, because we left it much later in the process after doing what I suspect most people do – we rumbled on and started doing very well! In which case, people tend to contact you interested in buying, but you say: “No thanks, we're independent and going to stay independent forever.”

Then one day it becomes difficult to break into new markets and you begin to run out of steam. In the end, the company had plenty of potential suitors lined up, but when they all looked at the business they said: “We love what you've done, but it's difficult to see how we can grow it better than you.” From this experience, I learnt it's important to leave something for the next owner – exit when you still have room to grow.  The warning sign for any business that it's time to exit should be when you have achieved success.

I don't like starting businesses particularly, but I'm in awe of those who do. What I really enjoy is fixing things that are going wrong and understanding the bits that are going right before moving the business into profit. After that, if I'm honest, I find it less interesting. What gives me a real kick is the feeling that's like fixing a car engine and hearing it run when you turn the key. After that I think it's quite boring. That's why I always exit.

Kendall's top exit tips

“If you can turn an unprofitable business profitable, then I always feel you're off to a good start,” says William Kendall. Here's his advice on the route to a successful exit:

  • Always have a target in mind – From the start, think about what point in your business plan you should bring in a new investor
  • Decide whether you want to sell a majority or minority stake – Carefully consider the pros and cons of each option. Often it's not so much about legal ownership, but rather ownership of the strategy
  • Be flexible – The best time to sell your business may not be the time you had been working towards Ensure your business is ready to sell – Even if you don't plan to sell, this will help keep your options open
  • Find a good adviser – Without  the right help, damage could be done to the value of the business
  • Don't leave it too late – Make sure you leave something in the business for the next owner


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