Manchester-based Character World was a family-owned business set up by Tommy Schweiger and his son Danny in 1999.
In 2006, the business – which produces bedroom accessories featuring the world’s biggest brands, including Arsenal, Disney, SpongeBob SquarePants, Spider-Man and more – was approached by an American firm looking to buy the business.
“We didn’t want to sell the business, but we did hire a corporate advisor to explore our options,” says Danny, who took over the business with his brother Mark at that point.
Six private equity companies, interested in investing in Character World, soon approached Danny and Mark.
“Our most important criteria was to find a PE investor that we could trust and build a relationship with,” Mark says. “We wanted someone who would have faith in our business and who could give us great input in how to grow.”
The two brothers finally struck a deal with PE firm RJD Partners, which had valued the business at £21m, and now controls 52 per cent of the business.
“The deal was really about taking on a partner rather than giving away equity,” Danny says.
Two years on, Danny says, it has been a “fantastic, great experience” working with RJD. “We were challenged in a positive way, and it has helped us do very, very well.”
Indeed, the company reported a record turnover of £20.7m in 2008, up significantly year-on-year.
If they had to give advice to entrepreneurs considering bringing in PE partners, Danny says: “You need to choose your private equity company very carefully, and look at the people involved. You’re going to work closely together for a long time, so you need to be unemotional about the whole process."
Private equity remains an important source of funding for Britain’s entrepreneurs, with over one in four saying they expect to use private equity over the next 12 months, according to the Investec Entrepreneur Confidence Index.
“If you’re looking at bringing in some private equity investment, go in with your eyes wide open. Have faith in what you do – they’re backing what you can achieve," Mark concludes.