n Industries – focused on best-in-class small industrials in the UK

Gustaf Hakansson
January 29, 2024
“There is room in the market for a native UK champion of many of these great best-in-class established businesses…”

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Background: n Industries is a recently established serial acquirer focused on best-in-class UK small industrials (£2-15m in revenue). The business was set up by Jon Bates-Kawachi (CEO), a former Investment Manager in the public markets, alongside founding partners Paul Simmons (former Hill & Smith CEO and Halma Safety Sector CEO) and Duncan Penny (former XP Power CEO). They aim to scale the business at high IRRs to get to a listing within 6 or 7 years.

Gustaf: Hi Jon, you recently started the UK-focused acquirer n Industries. What led up to that?

Jon Bates-Kawachi: I’ve been following successful repeat acquirers – including the Swedish ones – closely for quite a long time now, and I became fascinated that there wasn’t a native UK acquirer looking to buy businesses within the lower end of the UK market. Our sweet spot is somewhere between £2-15m in revenue businesses – below the scale of where most PE gets involved.

You have the likes of Halma that buy in this market occasionally, but on average, they target bigger acquisitions. And Judges Scientific and SDI Group are active in scientific & analytical instruments, but there is not a specialist scalable UK industrial acquirer along the lines of a Lifco, Lagercrantz or an Indutrade.

I’ve always invested a lot personally in smaller listed businesses, and about 6-7 years ago, I started looking at private company listings in the UK through listings websites. Having been a specialist industrials investor for 13+ years, I was excited to discover the quality of businesses available as well as the valuations.

With a few friends, I looked into buying businesses during Covid – and we came very close to investing in a high-quality super small business in aerospace – but the time needed alongside the day job (fund management) and family made me think, how do I pursue this properly full-time? And I gave myself a couple of years to put plans in place back in late 2021.

I always recognised that I wouldn’t be able to do it alone and wanted to bring in experienced operators to work with me. Duncan Penny and Paul Simmons, my founding partners, have two of the best track records in UK Industrials over the last 10-20 years, and they bought in very quickly to the vision of n Industries and the opportunity available within UK Industrials for a successful repeat acquisition/decentralised business model. We’ve been scaling very quickly since a standing start in September and are progressing with our first acquisitions.

n Industries was set up to be a permanent home for, and long-term partner of, some of the many outstanding and best-in-class UK industrial businesses. Post-acquisition, we don’t really see ourselves as just a HoldCo – we plan to support and enhance the value of these businesses by working together with their management teams within our decentralised model.

Offer to sellers

Paul and Duncan, with their know-how, experience and track record, are key catalysts for this. Both have achieved double-digit organic growth consistently in their careers. Our current conversations with owners illustrate the value these managers think Duncan and Paul can bring as partners, advisors and mentors to their businesses. And we are finding business owners very keen to engage with us.

Gustaf: Could you give more detail on what you expect Paul and Duncan will contribute to n Industries?

Jon: Yes, to give you a flavour of who they are and what they bring to the table – Duncan was CEO of a company called XP Power between 2003 and 2020, where he grew EPS at a 20% CAGR, grew sales to over $300m while moving the company into higher value/more difficult to disrupt product areas. I invested in XP Power professionally while Duncan was at the helm and got to experience the value he generated at the time.

Before being CEO at Hill & Smith, Paul was the Safety Sector CEO at Halma, one of the best-known high-quality UK industrial businesses. Both businesses are repeat acquirers and decentralised businesses, and Paul’s involvement enabled both to generate double-digit organic growth for high-return business groups.

As founding partners, Paul and Duncan are engaged in the day-to-day of the business – probably not a day goes by without us discussing a particular acquisition candidate or some level of interaction. We actively meet management teams and review potential acquisition opportunities together, and they have played key roles in formulating our strategy, approach to due diligence, and how to work with our companies post-acquisition.

Both will be chairs for the operating companies we acquire, and given their track records and expertise, a strong part of our offering to management teams is the value as chairs, mentors and advisors they can add to the businesses that become part of our group.

Duncan Penny and Paul Simmons

Gustaf: What's the opportunity in the UK? How will n Industries capture it?

Jon: Thanks for asking. We think there is a huge opportunity. Firstly, the UK is – probably underappreciated! – as a great hub of high-quality industrial businesses. To give some examples, the UK plays a key role in the global aerospace supply chains. It is also home to businesses that serve the high-tech, material science and medical/pharma value chains concentrated around the UK’s world-class universities and research hubs, including Cambridge and Oxford, as well as many others. I could go on…

There is room in the market for a native UK champion of many of these great best-in-class established businesses, and we see a large part of our role is giving longevity to and enhancing these businesses as they change ownership and look for long-term partners to help them grow and become even better companies.

To put some numbers to this, we estimate that there are around 55,000 companies in our target sectors in the UK with between £2-15 million in revenue and around 10,000 companies with at least mid-teen margins.

We are specifically looking for companies that have both best-in-class products and services and that are also embedded into their value chains. For a variety of reasons, customers might be extremely reluctant to change suppliers – for example, a cost of failure if things go wrong vs. the small cost the product/service makes up of the customer’s product or production process. Or, to give another example, switching you – the supplier – out requires a regulatory approval process.

We also seek underlying GDP+ growth drivers for our businesses, which is a core component of our selection process. We have identified six key drivers we look to align with: ageing demographics, productivity, energy efficiency, sustainable solutions & clean energy, safety standards/regulation & security, and technology/digitisation. We think aligning with markets or niches that grow strongly makes everyone's job easier.


Higher levels of growth really do create a very compelling flywheel for everyone involved – it motivates and drives our management teams as their incentives are linked to the profit growth of their companies. It drives superior growth in the balance sheet that can be deployed for further acquisitions – creating a powerful win-win-win for our operating company managers, employees and our investors, and enables the expansion of multiple champions of UK business.

It is no surprise to us that industrial acquirers that have focused on organic growth within high-quality businesses (and incentivised managers accordingly) have created a flywheel capable of generating high teens plus IRRs on value per share from operational growth, balance sheet and cash flow reinvestment alone – even before taking into account how investors might value the business. This is exactly what we plan to emulate – and our partners, including Paul and Duncan, have a track record of having done this.

‍Gustaf: What have you picked up from Duncan and Paul? How will you manage the operating companies?

Jon: I see first-hand the value they can add to our operating companies every day – as they are also fantastic mentors and advisors to me. They also bring a high level of discipline to our acquisition processes.

They have made 25 acquisitions combined over their lengthy careers and have not seen an impairment of one of the companies they have bought. We are quick to reject companies that don’t have a good fit in terms of macro drivers, quality of business, businesses that are not within our circle of competence or management alignment – although, given Paul and Duncan’s networks, for the right company, we will think of parachuting in a high-quality manager if there is not somebody already at the business.

How do we manage our operating companies? It is all about working with them effectively – we think the decentralised model is proven within high-quality small businesses as it aligns with a high level of accountability and, with the right structure, incentivises management and employees to perform and share in the reward of the outcomes produced. The model also attracts employees who want to make a difference, get things done and deliver superior results. We think the best results are achieved by allowing our managers to focus on their businesses fully.

Prior to acquisition, we ensure that we have alignment with the management teams – we agree with them a detailed growth plan for the business before completion. Paul and Duncan will chair the operating companies and advise/mentor their management teams to help achieve their targeted growth and value accretion.

We back well-thought-out capital allocation at the operating companies that can achieve returns in line with or above the returns we can generate through reinvesting in fresh acquisitions. In many cases, there are significant opportunities that we identify quite early on in our conversations with owners to tweak pricing or professionalise sales and marketing – to give a couple of examples – that can be meaningful growth levers.

We have monthly reporting structures, meetings, and other structures that give an appropriate level of oversight. We encourage insider ownership of n Industries stock among our operating company management teams so that they can share in our growth and to encourage the sharing of best practices within the group. This is in addition to the management team’s retained ownership in their business – up to 25% in our model – and their incentives aligned with profit and cash flow growth, which enables them to share in the continued success of their business.

Gustaf: When can we expect to see a listing of the firm?

Jon: We aim to get sufficient scale to achieve this over a period of 6 and 7 years. To be clear, we see the drivers in place for n Industries as enabling multiple-decade compound growth and value creation, and we are all very committed to this journey.

Gustaf: How can people get in contact with you?

Jon: We very much welcome contact from both business owners who are interested in working with us and investors who are keen to learn more about us. Please feel free to reach out to us at

Thank you, Gustaf, for the opportunity to talk with you today – it's been a real pleasure.

Readers can find more information on how Duncan and Paul think about their involvement with n Industries and the kind of businesses we look for in articles on our website here:

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Chris Mayer
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