A fast-growing Devon e-commerce business has completed a seven-figure management buy-out backed by an SME loan from Mercia.
Letterfest, which is based in Barnstaple, supplies handmade personalised gifts to customers in the UK and the US. The deal gives control of the business to James Reader, one of its first employees, and provides an exit for the founders Robert and Wendy Harrison, who will stay on as consultants.
Established in 2008, Letterfest supplies products ranging from personalised books and illustrations to portraits and engraved pottery. James, a fine arts graduate, joined the business in 2012 and left four years later to take on a role leading the digital team at the Met Office.
Since he rejoined Letterfest in 2019, revenue has more than doubled from £1.8m to £3.6m while staff numbers have risen from 11 to 20. The company, which had previously sold via third-party sites such as Etsy and Not on the High Street, now sells to customers directly via its own e-commerce site.
In March it launched a US operation which is on course to turn over $200,000 this year, and it is planning to target other overseas markets in the coming years. The company was recently selected by Google to join its Growth Accelerator programme and receive mentoring from Google experts. It has also partnered with a reforestation project with the aim of planting a million trees by 2030.
James Reader, Managing Director, said: “It’s a real honour to be taking over the reins at Letterfest and I look forward to pursuing our growth plans. With personalised gifts increasingly popular, we are growing sales in the UK and our business model – which involves working with local manufacturing partners – enables us to expand into foreign markets while minimising our carbon footprint.”
Mike Rogers of the Mercia SME Loans team added: “Letterfest is an established and successful company, however James has breathed new life into it by diversifying its sales channels, building its brand and driving its overseas expansion. As one of the few funders currently providing loans for management buy-outs at this level, we are pleased to be able to help him take control of the business and continue its growth story.”
Vivek Seda of Funding Options provided fundraising advice to the company. John Kemp of Weightmans provided legal advice to Mercia.