Aat Case Study

Chic Paints Ltd
Company history and management
The date is early September 2013. Your name is Alan Turner, and you are employed as an Accounting Technician
with Chic Paints Limited (CPL).
CPL was formerly part of Ashstead Plc, but was the subject of a management buyout (MBO) from its previous
owners six years ago by five of its directors – Greg Pearce, Jane Yip, Ruth Jones, Ahmed Khan and Susan Mather.
These five directors had formed the board of CPL when it was a fully owned subsidiary of Ashstead Plc.
Six months ago Dave Whistler joined CPL as Finance Director, replacing Jane Yip who left the company at that
The current board composition of CPL, their line management responsibilities, and their shareholdings in the
company are:
Greg Pearce Managing Director 25% shareholding
Dave Whistler Finance Director 25% shareholding
Ruth Jones Sales Director 20% shareholding
Ahmed Khan Production Director 15% shareholding
Susan Mather HRM Director 15% shareholding
By 2005 Ashstead had decided that its future as a long standing manufacturer of everything from bricks to butter
was no longer viable, and decided to change its business model away from being a conglomerate. This meant a
change to specialising in niche product lines and over the next few years selling off or closing down those of its
subsidiaries that were no longer considered to be a strategic fit. Ashstead put CPL up for sale in 2007.
At the time of the MBO the CPL directors had managed the company for many years. They believed that their
extensive contacts in the paint industry, together with their sales and production expertise and the excellent
reputation of CPL, would enable them to raise the money to buy the company. Once they had done this and
negotiated the terms of the MBO with Ashstead, their plan was to steadily exit the general household paints sector.
Competition here was the most intense and, therefore, profit margins the lowest. They decided to replace this work