Case study


“Thanks to Fortus’ support, I now have a bank who is confident to support my business’ growth" Akio Hayakawa, Managing Director

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"Buying a company in a complementary sector can give your business the pop it needs to find growth", says Akio Hayakawa, of bubble wrap manufacturer Sansetsu.

Sansetsu is a family-run business that’s been producing bubble wrap in Milton Keynes for the past 40 years. One of the first Japanese-owned firms to arrive in the ‘New Town’ in the 1970s, it’s now cornered about 35% of the market for its main product. According to Managing Director Akio Hayakawa, this means there isn’t much scope for future growth.

Transforming bubble wrap into other related products offers more potential, which is why it’s become a strategic focus for the company. Indeed, Sansetsu has around 15% of the market for products such as protective packaging and, thanks to online shopping trends, is seeing demand soaring.

Taking a strategic view

However, the leadership team has also been asking itself more recently how it can reduce the business reliance on this core base product. This isn’t just to reduce risk, but to make the most of future opportunities. Akio called a board strategy meeting in 2017 to tackle this dilemma, and invited Fortus along to provide support.

“I’ve worked with Fortus for many years, so it seemed natural to invite the team along,” Akio explains. “It gave us a chance to tap into their expertise as we talked about the future of the business.

“The result was we all agreed that because transport represented 10% of our costs at the time, this would be a suitable sector to move into through acquisition. Fortus was then able to suggest a small local transport firm called Truckwright that we could buy, which ticked all the right boxes.”

Acquire to grow

The purchase of Truckwright in 2018 has proved a huge success, with the new transport division able to provide about 35% of the group’s transport needs. Akio adds that, where it’s still using third-party transport firms, it now has the expertise in-house to negotiate better contract terms. The benefits have been cyclical, he says: “We’ve retained the transport firm’s profitability while reducing our costs and it’s meant that our annual turnover as a group is now £17 million. That’s an increase of almost £3 million.”

Of course, expanding into new product lines, such as packaging, and an entirely new sector takes investment. “Things are going well at the moment, so now’s the time to invest in the company,” Akio says.

Fortus Corporate Finance has been able to advise the business on how it can strategically borrow to fund these changes. This includes a total of £2.5 million over the past year to pay for the new production line, refurbish existing machinery and increase the size of its Truckwright fleet. Fortus has also helped the firm to apply for R&D Tax Relief for its work on production techniques – saving it £20,000 in tax over the past year.

Managing risks to growth

Times are good but it’s wise to keep an eye on upcoming threats. Akio knows that his business operates in a saturated, stale market and that packaging is coming increasingly under the spotlight as consumers become more aware of materials they buy and their impact on the environment. “Our products continue to sell, but we’re aware that we need to stay flexible to deliver what the consumer wants,” he says.

“That means retaining flexibility in our business. We could automate more processes, but we’ve steered away from that. We’re lucky that, here in Milton Keynes, we’ve access to the right staff. As well as 80 permanent staff, we also have 25 seasonal staff – most of whom have worked with us for many years and know our business. This means that, rather than turning work away, we always find ways to do it. That’s down to the quality of our people.”

Changing business structure

Market changes are not the only challenge. A moment Akio remembers as being particularly hard was when the relationship with a banking partner and major shareholder broke down a few years ago.

“So, Fortus helped me to successfully conduct a management buy-out. They also have the knowledge to help you deal with the banks in the right way. As a result, we’ve found banks have the confidence to support our growth plans, and we’ve performed strongly. The Corporate Finance team are now working to help us reclaim some of the banking costs we incurred during that difficult period.”

Akio has worked with several members of the Fortus team over the years, both for his personal finances and for the business. What he’s come to value most is that he feels listened to. “What I’m always impressed by is that, no matter who I’m dealing with, they’re always up to speed about conversations I’ve had with other partners,” he enthuses.

“I like working with the Fortus team. They’re all impressively knowledgeable, and it’s always enjoyable talking to them. No matter what I ask, and how complicated it is, they know just how to explain it to me.”

On the road to growth

I love working with Akio. He has a decisiveness, fairness and sense of humour that his people love. But we also work well together because he knows we, at Fortus, have the experience to guide him through the big decisions and help him get the details right.

Take the acquisition of Truckwright, for instance. We were able to identify that it was a suitable opportunity, negotiate the right price and complete all the financial due diligence ahead of raising finance for the purchase. And it’s been a huge success.

Looking to the future, I can see exciting times ahead for Sansetsu. This is a company which is at the forefront of innovation in the protective packaging world. It already has a range of fully recyclable and biodegradable products and works with its customers to continuously improve theirs. Now it will take that spirit of innovation and apply it to the world of haulage. That’s why I think this is a business with a bright future.

“Fortus Corporate Finance has been able to advise us on how we can strategically borrow to fund changes. We’ve secured a total of £2.5 million over the past year to pay for a new production line, refurbish existing machinery and increase the size of our truck fleet"

Akio Hayakawa Managing Director, Sansetsu