Enterprising family business on fast track to success
While Astrak is under 20 years old, the founding family’s enterprising spirit dates back over four decades. It started with Ian Paterson being made redundant in the 1970s. Then only in his early 20s, Ian was inspired to do something for himself, and launched a business by purchasing stationery wholesale and selling it on. He pivoted to selling photocopy paper when the copy machine took off, with all four of his sons joining the business at various stages in the 1980s and 1990s.
“The model was basic by today’s standards, but it worked,” explains Dick Paterson, Astrak CEO and son of Ian. Once it reached reasonable market share in Scotland and the North of England, it was approached by a trade buyer and the family sold it in early 2000.
But this wasn’t the end for the ambitious family, and in fact Astrak’s roots took hold shortly after that sale. In 2007 Dick joined his brother’s rubber track business to bring it to the UK, and their two other brothers joined in 2010 after selling another family business.
The family ethos continued for around a decade, with acquisitions in Ireland and France boosting their footprint as well as organic expansion into Germany taking the company from a single office in Denmark to seven stocking locations across Europe with over 100 members of staff. Following a stellar stint of growth, the father and two sons wanted to take a step back. “With some family members not as involved and others keen to join or do more, it created some challenges,” Dick recalls.
A trade approach got the family thinking about the company’s future and in early 2021 they discussed a shareholder restructuring. “For years we’d known we needed to grow the business with an exit in mind,” Dick says, adding that having sold two businesses previously meant they were acutely aware of the need to add value through a strong business plan.
The family met with some private equity firms as an alternative to the trade buyer.
The agreement with Inflexion came after thorough diligence and chemistry was formed with the people involved. “A friend with PE backing told me it’s like a marriage and that’s a big thing, so we talked to others in the portfolio who spoke very highly of Inflexion’s approach. Their appetite for growth also really stood out and that’s ideal for the upcoming management and family members,” Dick explains. Inflexion’s ability to support expansion into the US also resonated with the Paterson brothers, who were interested but lacked the knowledge and resource to do this themselves. Ultimately the buyout enabled John and two brothers to cash in and step back, with the rest of the family keen to drive Astrak further forward invigorated to do so – what Dick describes as “the best of both worlds”.
Three months in and it’s clear the business is on track for even more success. A bolt-on acquisition they’d started on at the end of last year was signed within the first 100 days with Inflexion, who Dick says were very supportive in pushing ahead. “They didn’t want us to bed down together as a new investment, but rather wanted us to progress the acquisition swiftly and early on. They secured a line of credit for early acquisitions which was very handy in helping us complete on this easily. It’s helped us realise they’re keen to grow quickly.”
Inflexion has also been instrumental in sourcing talent as well, including the appointment of a CFO within a few months of the buyout signing. “He was known to Inflexion already and they’d worked together before. I don’t think he’d have joined our business without a strong private equity firm behind us.”
Looking ahead, Astrak is looking to accelerate its organic growth, aiming to double in size over the next five years. This will be complemented by select acquisitions, with another two in the works after the first was signed just three months into the partnership.
The US market is also in Astrak’s sights. Its recent acquisition has nearly half its business from North America and so there will be learnings and possible leverage points for the business, while the fragmented nature of the market there may make additional acquisitions state-side an opportunity.
While the plans are ambitious, Dick is reassured that Inflexion are empathetic to the reality of the market backdrop. “It’s clear that headwinds are coming across the board, and Inflexion have already said they know business growth isn’t linear and are asking incredibly probing and insightful questions to offer real strategic insight. I’ve never had this experience and their knowledge, experience and capability means they’re an excellent resource but don’t breathe down our necks.”