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Tim Gray – TCL Transport

It’s fair to say Tim Gray’s first steps as an entrepreneur didn’t get off to a flying start. Working as Sales Director for leading UK milk transporter manufacturer Melton Tankers, Tim commanded a six-figure package.

But after the UK dairy industry was deregulated in 1989, the rules on replacing tankers changed, and Melton’s market share – at one point estimated to be 80% of the UK market – began to shrink.

Tim could see the writing was on the wall and began exploring a new business start-up with fellow employee Chris Imrie. A couple of exploratory confidential conversations with TCL clients were somehow leaked to the owners of Melton. Tim and Chris were called into the Managing Director’s office and summarily fired!

Broken windows and bank managers

The next day, Tim woke up with no car, no job, and a big mortgage. Surprisingly, he found the moment quite refreshing.

The same day they found and rented “a horrible but adequate building”, and Tim rang around to get some business. The first order came from a milk haulier in the Yorkshire Dales to refurbish a single tanker. Tim and Chris both took bank loans to get them through their first job.

After a year in business, TCL moved to new premises in nearby Brighouse – five times larger than the workshop in Leeds.

Tim’s warning to his previous employer proved accurate. In 1994, Melton went into liquidation, and hauliers began to look elsewhere for new tankers. Orders started flooding into TCL’s office in Brighouse, and by the end of 1995 the business was turning over £6.5m.

The price of growth

But this rapid growth came with a price. Although turnover had soared, the team was working flat out, yet the business only increased profit by £2,000.

Something needed to change, but Tim’s prophesy was coming true. With a new deregulated market and fewer owned tankers on the road, hire rates went through the roof, and TCL seized the opportunity.

This time Tim borrowed £14,500 from his dad, and bought TCL’s first old tank. The team refurbished it, financed it, and rented it out. That enabled two more tanks to be acquired, which in turn led to four, then eight, finally peaking at 280 tanks on hire by the time that TCL was sold.

This opportunity and Tim’s dad’s small loan enabled the rental business to start. This was also the start of true success for TCL, because rental was where the profit was; and it was the rental income which proved attractive to TCL’s eventual acquirer.

Rent hikes and burnout

In 2000, seeing the rapid growth and success of TCL, the landlord decided to increase its site rent by 200% overnight. The team endeavoured to negotiate, only to be served seven days’ notice to quit.

That morning, in what both shareholders saw as a serendipitous act, Chris drove into their office a different way, spotting an empty shed two miles away from TCL’s premises. Approaching the owner, they struck a deal and moved in seven days later.

But for both Tim and Chris, the landlord episode was a sobering warning, and shortly afterwards they located an appropriate site and built their own factory.

In finding a site, the TCL deliberately set a ceiling on size of 11,000ft² to improve work-life balance. The new building allowed them to build four tankers per month and no more.

“No one else but BCMS would have thought of putting us together with the company that bought us.”

To sell or not to sell

Few shareholders approach exit with the opportunistic flair of Tim and Chris.

Tim explains: “We weren’t approaching BCMS saying we must sell. We had already been to a number of accountants, and they had come back with a wide range of valuations. Some were ludicrously low, predictably none were ludicrously high.

“I said at the time, the only way we will ever know the true value of TCL is when an acquirer is sat there, with a cheque book and pen.”

The catalyst for exploring a sale was Chris’s health. Both his father and uncle had died relatively young, so Chris had been clear from the outset he wanted to be retired well before he was 50.

Deal or no deal?

Eight months after BCMS was appointed, the deal was done.

The final acquirer surprised both Tim and Chris. Tim recalls: “No one else would have thought of putting us together with the company that bought us. Our buyer, Gordon Turner, the MD of Turners, had a penchant for rental businesses. He saw the opportunity at TCL, and ultimately outbid all the others.”

But it wasn’t quite that straightforward at the time. The first offers all came in by 10 am, and by noon, Tim had sent an email to all three, effectively thanking them for their interest, but making it clear that the offers were simply too low.

Then in an unexpected twist, Gordon Turner rang up expressing concern, genuinely believing he had made a really good offer. Tim and the BCMS Deal Leader jumped in a car to meet Gordon in Edinburgh.  In the conversation that followed, it became clear to both parties that there was a simple misunderstanding about the performance of one division of TCL. When it was explained and fully understood, a revised offer was made, and the deal agreed.

“Selling a business was a strange feeling, akin to sending a child to university.”

Life after selling up

On 20th May 2008, Chris and Tim were sat in the office watching their online bank statements. A few seconds after 11.30am, a seven figure sum dropped into their bank accounts, and reality hit home.

“It was a strange feeling, akin to sending a child to university,” Tim remembers. Tim spent 12 months doing very little commercially. He and his wife bought a large Georgian mansion. Tim also bought a 46-foot yacht in Greece, and began exploring the Mediterranean. He also passed his Association of Racing Driver (ARD) qualification at Silverstone and now instructs all over the country.

Tim the entrepreneur could not stay house bound for long. A customer approached him wanting to acquire a tanker on lease purchase. Tim found himself back in business, and now has 57 vehicles on lease purchase.

Chris got to retire before 50, and he’s delighted with the change of lifestyle, and improved health. He has built a property portfolio, which provides an income without undue personal involvement.

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Company name
TCL Transport
Location
Leeds, UK
Founded
1992
Business activity
Milk tanker hire
Reason for sale
Lifestyle change
Sold
2008
Acquirer
Turner & Co (UK)
TCL Transport acquired by Turner