Management buy-out saves Melbourne business

Management buy-out saves Melbourne business

Former Square One director Daryl Eames has bought several assets from the fledgling printer reseller’s Melbourne operations and established a new company to keep its Victorian business alive. Eames’ new company, Darkeri Investments Pty Ltd, will trade under the name National Consumables Suppliers. Pending organising a new lease, it will operate out of Square One’s premises in Sandringham. Eames was the manager of the Melbourne office of Square One since its inception and was shocked when the company was placed in administration. For several months he had been trying to negotiate a management buy-out of the business from his South African and Sydney-based business partners, but his offers were never taken up. “We made our first offer in November [2002],” he said. “It was becoming apparent to me that the South African contingent of Square One wanted to start moving in a different direction – to become more of a distributor of printer hardware. But working on the ground here in Melbourne I knew that 60 to 70 per cent of our revenues come from consumables. I got no response from them about my offer to buy the Melbourne business.” Eames said he quit as director of Square One just before Christmas. If all went to plan he would sign a new lease for the old Melbourne premises, continue using the same phone numbers and, more importantly, provide employment for his old staff. “That was such a big part of why I decided to continue with this business,” he said. “To give our staff, who have worked very hard, the opportunity to continue working.” As the business grows, Eames is also hoping to attract back some staff that had left the business as it began changing direction. Eames is aware of the hard work he and his staff have ahead of them. They are starting the business from scratch and the terms and conditions under which he previously traded with suppliers are no longer valid. “We will have to go through the heartache of dealing with all of our suppliers on a COD (cash on delivery) basis,” he said. “It’s tough, but that’s the nature of the industry.” He was confident that he would soon build a solid trading record with his suppliers. “I believe it was running effectively before — but it was weighed down by head office administrative charges that ate into its margins,” he said. “Now it is just a small group of people giving it a go. My accountant and I have worked it all out — we have quite a reasonable break-even point with a small office and low overheads. “I believe, and so do my staff, that this business can be made workable. I’m banking on myself being right.”

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