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Company name
Rainbow Dust Colours
Location
Preston, Lancashire
Founded
2008
Business activity
Decoration glitters and colour edibles for cake-decorating
Reason for sale
Business growth
Sold
January 2015
Acquirer
Real Good Food plc

Carol and Gary Brown – Rainbow Dust Colours

Established in 2008 with three staff, Rainbow Dust Colours – a specialist provider of edible glitter, food paints, pens and brushes for cake-making – was an innovative, niche business in the buoyant food sector. But sometimes a business can almost grow too fast.

An accidental business

It’s a great problem to have. You’re running a fast-growing business with a clear niche, the best products on the market, and excellent margins. But suddenly, the scale of the business overtakes you, and what started as a great idea has transformed into a commercial powerhouse. This is what happened to Carol and Gary Brown, who sold their Preston-based food products business Rainbow Dust Colours to a stock market listed plc for £7.5m.

“Rainbow Dust Colours was actually a bit of an accidental business,” Carol and Gary explain. “We owned and operated a cake shop for over 30 years and over that time learned the trade and gained vast product knowledge of the sugarcraft market.”

This long-term sector experience gave them the insight to branch out.

“We saw a gap in the market to manufacture and supply our own range of quality edible glitters and associated products, knowing if we didn’t do it, someone else would. We literally started with a load of little pots and 70 colours of glitter in a small room at the cake shop. It grew rapidly; we moved to bigger premises and started to employ people. We wouldn’t call ourselves entrepreneurs, but we loved developing the products and growing the business.”

This is a common refrain among business owners. They love the excitement of innovation and the thrill of creating something new. But there often comes a point where they need to make tough strategic decisions about the future direction of the business.

“Initially, we found the potential sale of our business a little daunting. There was a lot to do and we had a lot to think about…”

Out of their comfort zone

In 2012 – just four years after starting the company - Carol and Gary began to take stock of their position.

“The company had grown enormously. Turnover had reached £3.5m, we employed 30 people and the product portfolio was complete. We felt that running such a strong business was getting beyond our comfort zone and we both decided that in order for the business to contintue to grow, it needed to be part of a much bigger operation."

They knew they needed some advice.

Carol remembers: “Initially, we found the potential sale of our business a little daunting. There was a lot to do and we had a lot to think about. The BCMS Business Manager explained the whole process to us during our first meeting – he told us about the other meetings we would have with the different BCMS teams. We remember thinking, ‘That seems too easy; where’s the catch?’ But from day one, we experienced a well-structured process; each meeting was valuable, each with its clear objectives.”

“The research list from the Research Team was spot on. They’d been really thorough and looked at the whole market, not just the obvious players.”

The BCMS process

One key aspect in every business sale is getting the market research right: profiling potential acquirers. Carol and Gary are clear on what BCMS brought to the table:

“The research list from the Research Team was spot on. They’d been really thorough and looked at the whole market, not just the obvious players. And there were companies we hadn’t even considered but were very relevant.”

BCMS identified 179 potential buyers, of which 36 signed a binding non-disclosure agreement (NDA). Ultimately, Carol and Gary met with 11 companies – from the UK, Europe and the Middle East - five of whom made offers.

A good job, then, that Carol and Gary were prepared for the deal-table, via roleplay-style negotiation coaching by BCMS – known as the ‘Dry Run’.

“We found the Dry Run Meeting really useful. It was our first meeting without it being our first real meeting. The Lead Advisor helped us understand the kind of questions a potential acquirer could ask, how we should respond to these questions, what to say and how our body language could be interpreted. It was fascinating.”

Management and staff are a key factor in any sale, and in a competitive bidding environment, the acquirer’s attitude to company culture can often be a major factor in the deal: “It was really important to us that we chose the right deal for the sale, for our staff and for our existing customers.

“Our acquirers, Real Good Food Company, were keen to retain our staff and their vast knowledge of the industry. They really valued the team as a true asset of the business. Everyone is positive about the future of Rainbow Dust Colours and can see that the business is growing and still developing. They were keen to be part of this next stage of the business too.

This positivity is reflected by Carol and Gary, as they adapt to their new lifestyle.

“Our time off is genuinely our time off and we have found that we are not contacted much outside of our working days. It’s great. We could do more in the business if we wanted, but we’re enjoying pursuing interests outside of the business.”

Looking back now, how do Carol and Gary feel about the role BCMS played? For these business owners, it’s very much a case of you get what you pay for: “The process was well executed and we believe BCMS helped us achieve the best deal possible. We got exactly what was promised in our first meeting. We thought the fees were expensive at first, but as the process progressed we were learning new things every day.

“We know we could have found companies to process the sale for less money, but in the end it was worth every penny.”

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Company name
Rainbow Dust Colours
Location
Preston, Lancashire
Founded
2008
Business activity
Decoration glitters and colour edibles for cake-decorating
Reason for sale
Business growth
Sold
January 2015
Acquirer
Real Good Food plc
Rainbow Dust Colours acquired by The Read Good Food Company