Growth Investment

Featured Deal - Kappler

Kappler Limited

The BUSINESS
By Mark Wheathall, Managing Director

Kappler are suppliers of high end chemical, biological, radiological and nuclear protective clothing as well as disposable dust and chemical splash coveralls.

We are based in Mansfield. We have a wide range of customers from fire brigades to petrochemical multinationals. We export across Europe.

Founded in Alabama, USA in 1976 by George Kappler, the business expanded into Europe in 1986, basing operations in Nottingham. In late 2006, at the end of a 5 year exclusive global distribution agreement with Dupont and myself and my colleague, Paul Ashurst, negotiated an MBO of the European business from George Kappler. We also secured our own five year distribution licence for the Kappler materials in Europe. Since re-entering the market, we have already passed through the £2 million turnover mark.

The MANAGEMENT

The management team consists of:

Mark Wealthall, Managing Director

Mark trained as a textile engineer with Courtaulds before joining Kappler in 1991. He has held a number of senior operational and commercial roles, including a two year secondment to Kappler Inc. in the U.S.

Paul Ashurst, Commercial Director

Paul also has a long association with Kappler and has had responsibility for purchasing, manufacturing and sales, including a period based in Hong Kong, focusing on the sale of seam sealing tapes.

Nick Hill, Sales Director

Nick joined Kappler in 2006, having previously held senior sales roles with Arco and Hagemeyer within the personal protective equipment sector.

The OPPORTUNITY

We operate in a large and growing market driven by Health & Safety legislation and the increased biological and chemical threats from such events as terrorism,bird flu and MRSA. The market across the Europe Union represents a tremendous opportunity as the newer members adopt more stringent safety practices...

Our range of quality apparel and the technical properties of the Kappler fabric make us first choice in many of our market sectors. We also have the advantage of our own manufacturing facility within our premises, which allows us to tailor the product to the precise requirements of the customer.

However, one of the challenges we have been facing is that our cash constraints during rapid growth have forced us to buy the lower end disposable products via a European intermediary rather than directly from the Chinese manufacturers.

The FUNDERS' VIEW
Peter LeNoury, Catapult Venture Managers

I believe that Kappler represents an excellent investment opportunity. For us, it ticks many of the key boxes namely:

• A growing market sector
• A core range of products which meets all of the sector requirements with technical specifications acknowledged as market leading
• Opportunities already identified to diversify into complementary product ranges
• A sales focused management team with high levels of experience, drive and expertise
• Opportunities to increase gross margins through direct bulk sourcing from China
• Excellent customer research feedback on the business and its offering

The business was clearly innovative in its product range and I felt they had a niche in their market mainly due to the relationships they develop with their customers and their ability to react to market demand.

It's not just about the MONEY

While we saw the clear strengths of the management team, we felt that the business would benefit from the introduction of new skills and attributes. As part of the funding package Catapult has introduced executive chairman, Jon Towler and non executive finance director, Colin Fuller to the management team.

Jon was previously Managing Director - Sales of Kingfield Heath, a £250m t/o office products wholesaler based in Sheffield. Jon participated in an MBO of Kingfield Heath in December 2004, backed by Legal & General Ventures, and successfully refinanced the business in July 2007 in a deal which gave the investors an IRR in excess of 40%.

Colin has a long history of helping companies to achieve growth while keeping tight control of working capital and has been involved in business such as ERF trucks, Kingfield Heath and JT Frith.

What does Mark Wealthall say?

“We are delighted to welcome the involvement of such highly experienced business partners as Jon and Colin. They bring with them incredibly valuable knowledge about good corporate governance, controls and disciplines in addition a wealth of useful contacts.”