John McGavigan Case Study

Maven helps John McGavigan to accelerate growth and support its international expansion
Enterprise value
Growth since intitial investment
Chinese Manufacturing Plant

The Company

John McGavigan supplies and manufactures decorative and electro-mechanical components and modules to the automotive, medical and consumer markets across global markets. However, its expertise extends far beyond simply product manufacture, as the business works with clients to take a product from concept stage through to optimising product design and performance. McGavigan’s innovative Marketing and Product Development team are constantly looking to develop cutting edge production and design methods, harnessing the latest product design trends, that will enable the business to overcome manufacturing and market challenges in an increasingly fast moving and technologically competitive world.

John McGavigan logo

John McGavigan


The John McGavigan business has been trading for 160 years, evolving from a small family business in Glasgow, producing signage and printed religious materials, into a global manufacturer and supplier of components for automotive, medical and consumer markets. Having steered the UK business out of administration in the aftermath of the 2008-09 global financial crisis, following its US owner’s forced restructuring, the senior team saw the opportunity to stabilise the business and capitalise on an expansion opportunity in the Asian automotive market.

Partnering with Maven to build a strong presence in that market, the team has established an impressive operation in China, including the acquisition a highly complementary tooling design and manufacturing business, the construction of a state-of-the-art manufacturing facility, and winning a number of high value new automotive and medical device contracts.

Alongside continued investment and growth in the UK plant and existing markets, Maven’s support has facilitated that growth and turned McGavigan into a global business that is now five times bigger than in 2011.

McGavigan sees platform for growth in global market opportunity

Steve Mathers, Director at John McGavigan, explained the genesis of the idea to buyout the business: “Our decision to launch an MBO in 2009 was driven by our knowledge and confidence that the business’s long-term fundamentals were excellent, despite the prevailing global economic challenges and their impact on the previous ownership structure of the business, which had ultimately forced it into administration and led to the US owner’s restructuring.”

Whilst capital was at best scarce, the team managed to rescue the UK business, notably with support from several clients. The immediate priority, post-acquisition, was to stabilise the business, and through 2010 the team steered the company back to a state of financial and operational health. Steve emphasises the importance of the backing of key clients at that point: “Client loyalty had been hugely important in restoring confidence and would be equally important in allowing us to look forwards – and, like us, those clients recognised a need in Asia for a business with McGavigan’s capabilities.”

Although international expansion would be a significant step for the business, Steve explains how McGavigan’s previous experience underpinned that ambition and strategy: “Having had previous experience of establishing a business in China, we were able to build a robust business plan using reliable financial assumptions, client expressions of interest and a knowledge of local and national government processes for overseas investing companies to set up. Once we were comfortable with the planning, we then turned our attention to the task of raising the capital needed to make it happen.”

John McGavigan employee pictured in one of their units

Experience and trust were crucial in choosing the right funding partner

The decision to bring in an external investor can be unnerving for a business, requiring not just a willingness to give them a financial stake but also absolute confidence that they share the vision of the existing team and are willing to work constructively to grow the business – through good times and bad. Steve Mathers explained that: “Entering into a process where as a business owner you face the prospect of diluting personal equity in return for investment is not simply a financial transaction - it is one which needs careful consideration because you are inviting someone into your decision making process, and for that to work you need to be aligned not only on the direction and pace of the business, but also to be confident the personalities around your board table work well, and add value to your business.”

Therefore, the time spent with the investor discussing their investment philosophy and process is absolutely crucial, including the practical aspects of exactly how they will provide support. As Steve recalls: “We met numerous potential funders, but it became clear to us that Maven’s approach was to treat the investment as more than just a financial transaction, they were investing time to understand more about the potential of the business and, crucially, our motivation and passion for the business in the years ahead. We also had the opportunity to speak openly and frankly with Maven about how the relationship could work. We were also very clear that we needed this relationship to develop and work effectively, which would need personal contact so that Maven could build trust in us, and we in them – so Maven’s Central Scotland presence, with a very experienced local team, was an added bonus in making our decision.”

For a private equity backer like Maven, which manages and invests funds on behalf of external investors, the analysis and decision-making process before choosing to support any potential investee business is wide ranging and comprehensive. That process benefits the business as well as Maven and its underlying investors, as it can help identify and manage risks that the business will frequently not have seen before. As Steve outlined: “Once both we and Maven had concluded that there was a potentially good fit, an outline investment offer was made subject to formal due diligence. Whilst a due diligence process is detailed, as it is not limited simply to financial aspects, our experience was that it was a very positive step, as it made us focus on aspects of our business which you might otherwise think are not relevant to the investment, when in reality they are crucial as they affect the stability of your entire business model. We found that it challenged us to cast a detailed and critical eye over areas such as marketing, IT, organisational structure and talent management, all of which have been important foundations in our success to date.”

Maven supports overseas expansion strategy

Post investment, Maven’s team started to contribute actively to McGavigan’s growth, and particularly in helping to maximise the immediate opportunity for international expansion in Asia. Steve Mathers outlines the importance of that close working relationship: “Our relationship with Maven from day one was as more than a funding source in providing expansion capital to establish a manufacturing facility in China, and also provided a catalyst for growth. Although we had a strong senior team and business plan, we also needed to make sure our underlying business remained operationally strong and undistracted from our expansion.” That additional support was pivotal, with Steve adding: “We worked closely with Maven to appoint a part time FD who added valuable support for the day-to-day operation, and also agreed a 100-day plan, allowing us to focus on a set of milestones which helped us keep on-track.“

The contribution of a good private equity backer, however, should not end there and should continue to offer expertise and insight across a range of areas as the business grows. One key benefit, once the project was delivering results, was that Maven, through its established relationships, was able to help McGavigan build a credible base with the institutional banking community, which for smaller businesses was especially challenging so soon after the economic crisis. However, there was other important support from Maven in providing an important base for continued growth, as Steve explains: “The investment supporting our expansion in China, which had been funded by Maven’s VCTs, delivered excellent results for all concerned, seeing the enterprise grow from c.£7m at the time of the investment in 2011 up to c.£30m in 2017 (EBITDA CAGR or 39% p.a. over the same period). During that time, we had also added a non-executive Chairman and appointed a full-time experienced Finance Director. This gave us a wider management bandwidth and enabled us to develop a more strategic focus on the business.”

By 2017 McGavigan’s consistently strong growth in China merited a significant expansion of the company’s local presence in that market, but the specific restrictions around VCT qualifying investment prohibited Maven’s VCTs from supporting this further stage of growth. Both Maven and the McGavigan team were, however, keen to continue the positive partnership and a secondary buy-out was the logical next step. As Steve describes: “During 2017 Maven had launched its Maven UK Regional Buyout Fund, which targets investment in mid-size growth opportunities on behalf of institutional investors. Given our consistent performance and growth prospects, our business was viewed as a strong candidate for the new fund, and Maven Partner Andrew Craig and his team initiated the process of structuring a buy out, funded by the new fund alongside management investment, that was appropriate for our long-term aspirations.” That process was completed at the end of 2017 and delivered a total return of 4.2 times cost over the life of the investment for the Maven VCTs.

Why was Maven’s support so pivotal?

The active support, and critical commercial and market insight of a private equity investor, can play a crucial role in determining the growth and success of a business, particularly where it is embarking on major strategic initiatives such as breaking into new global markets and internationalising its operations. Steve Mathers outlined how Maven’s backing enabled the company to achieve its growth ambitions: “Without access to the necessary capital to expand into China, we would simply not have managed to achieve sustained growth. Securing the support from Maven at the outset facilitated that expansion and helped us build McGavigan into a global organisation capable of supporting global clients. Since 2017 we have also added through acquisition a high quality polymer injection tooling design and manufacturing business in China, purchased land and build a new 22,000m2 state-of-the-art manufacturing and development facility in Suzhou, which included successfully relocating existing production sites to the new facility, and secured a number of additional high value automotive and medical device contracts from the new site. We have also continued to invest in the UK plant, to help service key clients in the UK, European and North American automotive markets.”

As Steve summarises, the business has achieved impressive growth since the time of Maven’s first investment: “In simple terms our business is now five times the size it was in 2011, but without the investment needed to grow, it is likely the business would have failed to double in size over the same period. It is also unlikely that we would have had the financial resilience to withstand global economic shocks such as we have seen in 2020, whereas McGavigan has continued to be highly cash generative and financially robust throughout the COVID pandemic.”

Maven supports MBO and enables the business to complete the acquisition of a key customer to fulfil its growth ambitions.

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