Adam Bannister: Why a dating agency?
Roland Stringer: We’d always worked in business to business, so we wanted to do something that actually touched end customers for a change.
We wanted to do something that actually touched end customers for a change
We looked around for something with a track record of decent returns and a regular level of revenue.
We’ve been used to working with consultancy-type businesses, where you have to actively go out and get new business all the time. This was more of a going concern.
AB: And why this dating agency in particular?
RS: It probably has a more sustainable business model than the others.
AB: How so?
RS: All our members pay a monthly fee, whereas with most dating agencies you pay a fee up front and that’s it.
AB: How do you justify charging monthly payments?
RS: We’re one of only two or three agencies in the UK offering events and we offer far more than anyone else. We arrange meals out, cinema trips, dances, a couple of grand balls... Last weekend we did parachute jumping and this weekend we’re doing some helicopter flights.
AB: How many staff did you inherit?
RS: We employ about 15 people, about half of which were there when we took it over. The general manager, who ran the business day to day for the previous owner, volunteered to stay on and has been really helpful.
AB: Tell us about how you financed the deal...
RS: We invested about 20% of our own cash and the rest was debt-funded. It’s a mixture of bank loans and loans from the vendor.
AB: How did you decide on this form of financing?
RS: We suggested it. It’s a technique that I’d seen used mainly in MBOs [management buy-outs] at big companies.
There isn’t much in the way of assets with RSVP; the value is in the 15,000 lifetime members. It’s therefore quite hard to raise money on, and secondly, we wanted to retain the vendor’s support.
We stay in touch with the vendor and all payments have been met on time.
With so many business deals, the deal gets done and you never see or hear of the vendor again.
Although that deal was done two years ago, vendor loans would be even more effective in today’s market, where sellers have to lower their expectations of what the buyer can afford. If you’re a vendor it can help with your tax bill and provide other benefits.
AB: How much did your accountancy experience help during the deal?
RS: Hugely, on two levels, really.
One, we were able to assess the business ourselves, to see value first hand. If a lawyer or accountant does it on your behalf, how do they know if the business is right for you?
Secondly, our experience allowed us to explore innovative ways of putting the deal together. Vendor loans are a good example of that.
