Unloved? Unappreciated? Call the compounder

Michael Taylor meets Andy Dodd and Craig Richardson of PHD Industrial Holdings and finds out the secret sauce of the corporate compounder model

They get over 1000 approaches a year. 30 to 40 of which are seriously followed up, none of the businesses have a brand worth speaking of, most don’t do sales and marketing, and yet they are companies protected from competition by relatively high barriers to entry. 

Welcome to the unapologetically unglamorous world of the corporate compounder, and the unashamedly excited presence of Andy Dodd and Craig Richardson from PHD Industrial Holdings.

Both have built careers at the front line of corporate finance advisory work.

I first met Dodd when he was with KPMG, and Richardson when he was undisputed leader in the Lancashire market with PM&M. They think they’ve spotted an idea whose time has come.

PHD, based in Cheshire, originally started life amidst the turmoil of 2008 as a (very) private equity investment, attached to the advisory group Dow Schofield Watts (DSW), where both Dodd and Richardson had ended up. They made what they now describe as a “transition to the corporate compounder model” in 2021.

As it stands they currently have six trading businesses, employing more than 330 people, with a combined turnover in excess of £60m. 

They include Wigan-based sealants and adhesives specialist Hylomar; Lancashire hardware specialist Olympic Fixings; Goole-based chemical manufacturer Technikraft; Wiltshire-based castors wheels and materials handling equipment manufacturer BIL Group; and Auto Marine Cables in Manchester, and the decidedly non-industrial First Class Holidays, a luxury travel business. 

One of the businesses, but neither Richardson nor Dodd will say which, is about to make a bolt-on acquisition.

“The phrase ‘ride your winners’ has never been more appropriate,” says Dodd.