Magic Whiteboard founders buy shares from Dragons’ Den investors to make succession smoother

Green energy installer Chris Hopkins, who won £120,000 backing from Theo Paphitis and Deborah Meaden on BBC’s Dragons’ Den, bought back their shares in 2011. However, by 2012 his firm was put into administration and his 15 members of staff were made redundant

According to Hopkins, winning the backing from two Dragons’ Den panelists may not have helped because it meant an explosion in the volume of his business.

“We were used to turning over around £2m a year and suddenly it went up to £10m,” he said. “I had to take on all kinds of new staff and computers to handle this and then business suddenly dropped off when the solar subsidy was cut [for the first time].”

But it’s by no means a sign of what happens when you buy shares back from a Dragons’ Den investor.

Laban Roomes, who was backed by James Caan in 2007, is one of only a handful of entrepreneurs to have successfully bought back shares from his investor.

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He had asked the Dragons for £60,000 investment in his gold-plating business, which Caan took a chance on. Roomes claimed Caan “has a track record of turning people`s dreams into reality”, but that he wanted to continue on his own two feet.

Roomes described this victory simply as “one of [his] proudest moments”.

Then there’s Denise Hutton-Gosney, founder of Razzamataz Theatre Schools. The school provides part-time training in dance, drama and singing to youngsters aged four to 18, and has gone from strength to strength since she plucked up the courage to appear on Dragons’ Den.

In 2007, Duncan Bannatyne paid £50,000 for a 25 per cent stake due to her pitch on franchising the brand. This changed in 2014 when she bought back the stake for £70,000.

There are now 40 schools across the UK.

But for the latest company to join the ranks of being fully owned by its founders, the reasoning for doing so was far more personal than business success.</p >

Having secured £100,000 investment from Paphitis and Meaden in 2008, founders Neil and Laura Westwood gave the Dragons a 40 per cent share of Worcester-based Magic Whiteboard. For an initial £50,000 investment, each has received £400,000 in six years.

The couple hoped to pass shares onto their children</a > and approached the two Dragon’s about selling back their shares.

Neil Westwood explained that it only took two weeks to complete the deal.

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• He said: “I will always remember sending over £300,000 (having checked sort code ten times to make sure it was correct) to both Theo and Deborah from the Lloyds Bank desk in Worcester, just like I was paying a gas bill.”He also admitted that “it was an unsettling three weeks”. All focus on increasing sales and cash flow had fallen unto him.”But we now get to keep 100 per cent of the profits which is a great incentive to work hard,” Westwood said. “Six months later, sales have increased thanks to new products such as the reusable Magic Notebook and the Magic Blackout Blind. Cash flow has increased and is back to normal.”He added that the move was crucial. “We needed to have far more handle more than our foreseeable future, and eventually shift the whole business to our children.”Indeed, the indicator of a successful Dragons’ Den buy-back story seems to be confidence.By Shané Schutte

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