Context

Longwood Engineering is a long-established manufacturer based in West Yorkshire, with roots stretching back to 1902. What began as the engineering workshop of a local woollen textile mill has, over more than a century, evolved into a specialist designer and manufacturer of machinery for the wastewater industry. Today the company employs 57 people and works predominantly with UK public-sector water companies.

In 2021, Engineering Director James Taylor and his business partner Laura set out to buy the company from its existing shareholders through a management buyout. They had run the business for years and knew it well, but a transaction of this kind sat well outside their day-to-day experience. They needed guidance, structure and a partner who could help them through the process from start to finish.

The underlying challenge

On the surface, the task was to complete a management buyout. The real challenge was broader than the transaction itself.

James and Laura were running a profitable, well-regarded business, but they were not accountants and were aware they didn’t have the expertise required to be confident about running the management buyout process alone. Acquiring the company meant navigating funding, company valuation, tax considerations for directors and shareholders, and a clean separation from the previous shareholders’ professional advisers to avoid any conflict of interest. Each of these elements touched the others, and getting any of them wrong could have had lasting consequences for the business, as well as for them personally.

The buyout also did not happen in isolation. Conversations began in 2019, but COVID-19 intervened and delayed the process by the best part of a year. The work needed advisers who could hold the bigger picture together over an extended and uncertain period, rather than simply processing a single deal.

Underlying all of this was a question of trust. James and Laura needed advisers who spoke their language, who could translate accountancy terminology into something an engineer could act on with confidence, and who could grow with them as their needs changed.

What was at stake?

This was not simply a financial transaction; it was the future ownership of a 124-year-old business of which James and Laura see themselves as custodians, with a responsibility to pass it on in good condition for current employees and those who will join in years to come.

Getting the structure right mattered for the continuity of the business, for its employees, and for the personal financial positions of two directors taking on significant commitments. With the previous shareholders’ accountants no longer available to them, the company also needed to establish entirely new accounting and audit arrangements without disruption to its ongoing work.

Our approach

Simpson Wood worked alongside James and Laura throughout the management buyout, providing guidance and support across the full process rather than on any single element in isolation.

From the outset there was a strong fit. James describes “Finding advisers who spoke the same language as the business and who shared its outlook was key to this,” says James. “The relationship with Simpson Wood felt right from early on and it was clear it was built on a genuine sense of working together rather than on the precarious weight of a sales pitch.”

As the relationship developed, the breadth of Simpson Wood’s expertise meant that as each new need arose, it could be met from within the same partnership. Crucially, complex matters were explained in plain terms, allowing the senior leadership team to make informed decisions and then get back to running the business.

Key Decisions

A number of decisions have been worked through together over the course of the relationship:

  • Establishing new accounting arrangements following the buyout, independent of the previous shareholders’ advisers.
  • Bringing the statutory audit in-house with Simpson Wood with minimal disruption to operations.
  • Moving the directors’ pensions from a standard workplace arrangement into a more actively managed structure through Simpson Wood’s financial services team.
  • Placing a portion of the company’s reserves into investment accounts to generate additional return, rather than leaving them idle.
  • Looking ahead to longer-term planning, including eventual exit, as part of an ongoing advisory relationship.

These decisions were taken steadily over time as the relationship grew, rather than all at once, with each one building on the initial foundation.

Outcome

With the management buyout complete, James and Laura have a single, joined-up relationship covering accounting, audit, funding, valuation, tax, pensions and investments. The confidence they feel in the relationship comes partly from knowing that complex matters will be explained in terms they can act on.

In practice, this has meant:

  • Greater clarity, with accountancy terminology translated into plain language they can understand and use practically.
  • A consolidated set of services under one trusted partner, removing the need to coordinate multiple separate suppliers.
  • Audit handled with minimal disruption, supported by advice that helped the business get its information in good order.
  • Pensions and reserves working harder, with early results from the investment arrangements that the directors describe as encouraging.

Above all, the senior leadership team at Longwood Engineering are able to focus on what they do best: designing and manufacturing in West Yorkshire, while continuing to grow the business with a long-term view of its future.

Because of the support we get from Simpson Wood, and how much trust there is in the relationship, we’re able to get on with our work on a daily basis and continue growing the business. They break things down into words and phrases that I can understand. I’m not an accountant, I’m an engineer: they make life a lot easier for us and, without them, so much of our day-to-day decision-making and approach would be a lot more difficult.

James Taylor – Engineering Director, Longwood Engineering

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