How is the Seismic Succession Fund helping manufacturing businesses?

Posted on 2 Dec 2021 by Tom St John

At this year’s Digital Manufacturing Week, Ewan Lloyd-Baker spoke with Tom St John at The Manufacturer to explain more about the Seismic Succession Fund.

Watch the full interview here

Interview highlights

Could you give us a bit of background on Seismic Venture Partners?

We’re a family owned and family lead investment firm and we’ve set up the Seismic Succession Fund because we’ve identified, particularly in the manufacturing and engineering space, that there are lots of older business owners wanting to retire.

These owners might be in their 60’s, 70’s or 80’s and want to retire but keep their name above the door. They’ve often worked for 30 or 40 plus years and treat the business as their baby – they want to look after their people.

The sort of exit options for them are very limited, so what we’re trying to do is keep those assets owned here in the UK, because the underlying belief in that is if you own and invest in the UK, that’s where the jobs will stay. That also benefits future growth for apprentices, for graduates and ultimately, for the UK economy and UK PLC.

Why do think this is needed at this time?

Often there’s a limited range of choices for these business owners. There’s a lot of negative publicity around private equity and some of these businesses are probably too small to take to the public markets. They don’t want to sell necessarily to trade buyers, because they might see the business closed down and then the people made redundant and the assets move overseas.

We’re trying to create a long term intergenerational hold – almost like the UK equivalent of the Mittlestand – we’re trying to do that via this succession fund.

What’s the benefit for people looking to exit or sell their businesses?

Ultimately, it’s that you’re handing over the baton of the business to somebody who has got experience of buying, turning around, running, developing and growing two of the oldest engineering companies in the UK. Hayward Tyler is over 200 years old and Peter Brotherhood is over 150 years old. You’re also handing the baton to somebody who’s passionate about UK manufacturing, and touch wood, as long as I remain in good health I’m here for the long term

What’s the benefit for investors?

We’re very much hands on. We roll up our sleeves and get stuck into the business operations and business improvement. From an investor perspective it’s a way of not only investing in something that they can believe in, i.e. UK manufacturing, we’re also looking to generate around 25% of annualised returns, doubling your money over a three year period, tripling it over a five year period. Doing that through business growth and improvement rather than having to be forced into a tied sale of a business. It’s that long term hold, but also that combination of investing for a wider social good, and knowing that you’re supporting UK manufacturing at the same time.

How big are your aims?

They say never boil the ocean, so it’s very much one step at a time. We made our first acquisition back in late June with the  i3 Group, which is bringing together businesses with about 100 years’ worth of combined experience in design testing, automation and production solutions.

That’s an example of where the names are staying the same above the door, but bigger opportunities now exist as part of the wider group. I’d like to think that was the first of what could become dozens businesses that could sit under the succession fund over the next five or ten years.

Look back over some of the highlights from day 1 of this year’s Smart Factory Expo