Preparing Phoenix Scientific Industries for a Successful Retirement Sale

The Challenge: Turning a Post-Covid Struggle into a Strategic Sale

In 2021, Alasdair Smith joined Phoenix Scientific Industries Ltd, a £5m turnover SME specialising in metal powder processing equipment, powder production, and R&D projects. Emerging from the Covid-19 pandemic, the business faced significant operational and financial challenges. The Directors, looking towards retirement, aimed to prepare the business for sale — but the company was far from ready.

Key challenges included:

Severe cashflow constraints following Covid-19.
Restarting business operations after a year-long pause.
Lack of historical data and structured management information.
No coherent strategic planning history to support a sale.
Unrealistic valuation expectations by the Directors.
Absence of patents or formal protection for the company’s intellectual property.

Alasdair was brought in as a part-time Financial Director to stabilise the business, professionalise operations, and prepare it for an eventual exit.

The Solution: Financial and Operational Transformation

Alasdair's approach was not just about improving short-term cashflows; it was about professionalising the business to achieve an optimal exit value. Here's how he helped reposition Phoenix Scientific Industries:

Stabilised cashflow: Secured £250k in CBILs funding from a major bank.
Unlocked growth funding: Secured a £3m Government Grant for R&D activities.
Professionalised management information: Introduced a segment-based financial reporting system highlighting gross profit by customer and division.
Operational overhaul: Implemented an integrated procurement, design, and build system, exposing inefficiencies and improving delivery.
Process improvement: Enhanced powder processing machine setups, significantly reducing aborted run time.
Strategic growth plan: Developed a five-year plan shifting focus from one-off equipment sales to recurring revenue streams.
Sale preparation: Initiated a data collection process for historic knowledge, engaged patent lawyers, and prepared financial projections.
Market engagement: Organised a beauty parade of sales agents and engaged directly with a trade buyer.
Negotiated deal terms: Secured a trade offer , including structured earn-out terms.

Despite challenges around data completeness and valuation discrepancies, Alasdair steered the business towards an achievable, realistic sale framework.

The Outcome: Business Transformation and Strategic Positioning

Through strategic financial leadership, Alasdair repositioned Phoenix Scientific Industries for a retirement sale, improving business operations, financial controls, and future growth prospects.

Key Achievements