Buy-in takes Lindsay on to another stage

brother Jim went public on a #10m-plus deal to sell control of the

excavation plant hire business they have built up over the past thirty

years.

George Lindsay, the driving force behind Kilmarnock-based Lindsay

Plant, and Wiseman's central dynamo, executive chairman Alan Wiseman,

have been close friends for years.

Indeed, when George Lindsay decided, in February last year, in the

days leading up to his 49th birthday, to take the first concrete steps

towards a possible sale, it was Alan Wiseman who advised him to seek

advice from the Glasgow office of financial advisers Arthur Andersen,

Wiseman's own auditors.

''I knew we would always unload the company some day,'' said George

Lindsay this week. ''People had been telling us for years what a

wonderful plant hire business we had. So I thought: That's fine but

let's get some indicative value on what all that effort's been worth.''

So he walked into AA's St Vincent Street office on that very birthday

and set the ball rolling. Within weeks Lindsay had his indicative

figures. By November last year, with the latest audited results for the

year to June to hand, a sales memorandum had been prepared.

On May 23, the paperwork was finally signed off on a deal which values

Lindsay Plant at #8m, leaves the Lindsay brothers each with a small

stake, gives a personal stake to three other Lindsay staff, and brings

in new management in the shape of Paul Garvey, backed by Royal Bank

Development Capital. Acronym enthusiasts face a new challenge. After

MBOs, MBIs and BIMBOs, how are we to characterise every feature of this

multi-faceted deal?

More seriously, why should the Lindsay brothers want to sell what is

widely regarded as a well-run, quality service, significantly profitable

business? ''Basically we were testing the market,'' Lindsay says. ''For

me it was just another possible deal. Even Andy Cole of Newcastle was

for sale for the right kind of cash.''

But behind that studiedly unsentimental approach to the sale of a

business he and brother Jim fashioned out of nothing from 1966 on, lie

other rigorously practical concerns. George is now fifty. Brother Jim,

who has masterminded Lindsay's service operations down the year but

leaves corporate concerns to George, is 53. Lindsay Plant now boasts a

fleet of more than 170 modern units, employs 200 people and has a

turnover touching #8m.

''I was conscious,'' explains George Lindsay, ''that, as the company

got bigger, I was sitting at the helm all on my own. If anything

happened to me, the company would be rudderless. So I was looking for

ways to beef up our corporate management.''

He and Paul Garvey have clearly hit it off. The former managing

director of Alexander Ross Holdings, the Carronshore-based family-owned

group which makes speciality soaps and distributes industrial chemicals

and janitorial supplies, 42-year-old Garvey had been looking for a fresh

opportunity.

''I joined Alexander Ross in 1989 as finance director and was made

group managing director in 1992. Although Scottish Fine Soaps is very

much the fashion side of the group, I concentrated on building up the

distribution business. I spent a lot of time acquiring companies down

south and, by the time I left, we had raised turnover to #14m.

''Alexander Ross is still a family-owned business and the reason I was

on the look-out for a new challenge like Lindsay was that, ultimately, I

was building the Ross business for someone else.''

Garvey was introduced to Douglas Kearney at the Glasgow office of

Royal Bank Development Capital. Together they began to explore various

options. There was a buy-out in northern England which didn't come off.

And talk of a start-up. Then the Garvey/Royal Bank team heard that

Lindsay Plant might be for sale.

''I wasn't interested in either a high turnover, low-margin business

or a turnaround situation,'' adds Garvey. ''In a turnaround, if you go

in with high leverage, you are just looking for trouble. And low-margin

businesses are that much harder to grow. I was looking for a well-run,

profitable company.''

Before Garvey got to hear about the Lindsay option, the rest of the

plant hire business was, inevitably, looking very closely at the

opportunity presented. Lindsay Plant has stuck to the excavation market

which has been its hallmark since George Lindsay first looked for

business in the sixties around local farms on Fenwick Moor with a #500

Whitlock tractor, fitted with a ditching arm.

Today's entire 170-strong fleet consists of just excavators and

dozers, seven versions in all. Throughout the early nineties recession

Lindsay went on replacing plant with newer machines when rivals were

battening down the hatches and relying on existing ageing equipment.

''All our machines are less than four years old,'' says George. ''In

fact, for the entire fleet, the average is only two years old.'' In the

past year, every excavator has been fitted with a Quick Hitch system, at

#2000 a time, which allows operators to change buckets in seconds rather

than the usual ten minutes or more.

Regular service schedules, under the scrupulous scrutiny of brother

Jim, have ensured that fleet utilisation seldom falls below 95%. ''It's

a very simple recipe,'' says George Lindsay. ''We purchase the highest

specification, most reliable equipment and we team that up with top

quality operators, all 180 of them on our own books, most with their own

transport to get to sites, and we couple that with a meticulous

maintenance programme.

''On-site breakdowns are virtually unheard of. That's why we don't

have to give our shirts away when we put in quotes.''

That is also why Lindsay makes very acceptable margins on its near-#8m

turnover when some rivals are get by on what George Lindsay describes as

''a shoestring''. Lindsay does not do business with people who do not

return the compliment on quality service by paying their bills on time.

He will pull equipment off a site rather than get into that spiral. Bad

debts in the past years were around #4000.

George Lindsay realised that, when news of a possible sale got out to

the trade, some of the bigger players in the market would face a

dilemma. ''We expected a bidding war among some of the majors. They

certainly showed interest.

''But I think some of our big-name competitors were a bit concerned

abour what the company would be like without George and Jim Lindsay

running it.''

It was January before the idea of bidding was put by Royal Bank

Development Capital to Paul Garvey. ''If I'm totally honest, my first

reaction was: Construction? No thanks. But I decided I'd like to take a

long hard look at the business. Only after I had looked at it, did I

discover that the more I looked, the more I liked what I saw.''

There are, he points out, some strong comparisons with the

distribution business he was leaving behind. There's a lot of

fragmentation and clear opportunities to pull bits of the sector

together. There are further opportunities, given the fact that Lindsay's

customer base in concentrated in central Scotland, for geographical

expansion.

''Lindsay has got itself into a virtuous circle of investing in the

most up-to-date plant and being able to offer the minimum operational

down time'' says the new Lindsay Plant managing director. ''There is

tremendous future potential.''

That view is echoed by Douglas Kearney. ''George Lindsay's now got

someone he can bounce ideas off. And Paul Garvey's got a good track

record on acquisitions. It's a good deal for both of them.''

Garvey readily acknowleges that he will have to lean on George

Lindsay's deep experience of the plant hire sector, as he himself climbs

a new learning curve. He is also determined to stress the team approach

in what lies ahead for Lindsay Plant.

George remains as part-time chairman and holder of a 2.5% stake in the

business. Brother Jim also retains a similar stake and will continue to

have a role on the service side. Three other members of the Lindsay

staff -- Robert Taylor, the depot manager at Kilmarnock, Gerry Millar,

plant manager, and Margaret Dempster, company secretary -- all take a

personal stake in the business.

''We've not just jumped into this like a couple of daft young boys,''

says George Lindsay. ''We think the chemistry's right and this deal

gives us all the impetus and enthusiasm to take the company to another

stage.''

Paul Garvey agrees. ''The overall growth expected from our sector is

minimal. But what matters is Lindsay's share of that market.'' In the

early 1980s Paul Garvey, newly arrived in Scotland from Ireland, helped

take the Glasgow-based PCT Group to a market listing. Could he have a

listing on his mind again?

''It's very early days, but looking down the road a bit it has to be a

goal to aim for. We must all, as a team, get this business into the

shape where it's a legitimate goal.''