Sportswear retailers pocket £35m in private equity buyout of M&M

Two sportswear retailing entrepreneurs pocketed about £17.5m each yesterday after selling their company to venture capitalists.

Two sportswear retailing entrepreneurs pocketed about £17.5m each yesterday after selling their company to venture capitalists.

Martin Churchward, 46, and Mark Ellis, 43, have sold M&M Sports, an online and mail order discount sportswear business, to a management buyout team and ECI Partners, a private equity house. Although the price of the deal was not disclosed, industry sources suggested the deal was worth about £35m.

The deal could hardly have been imagined by the two men in the early 1980s. Mr Churchward, then a teacher, decided to start trading discounted, end-of-line sports goods on market stalls, while Mr Ellis was running a sportswear shop in Hereford that had been founded by his grandfather. They were later introduced to each other after Mr Churchward bought a shop in Stourbridge and shortly after decided to come together to increase their buying power. From here came a full merger, and the creation of M&M Sports in 1987.

One of their first successes was a shipment of more than 1,000 end-of-line football boots from the brand Patrick. Messrs Churchward and Ellis bought the boots and took out an advertisement in the News of the World to sell them. They were inundated with responses, and had to spend £3,000 in postage on returning cheques to disappointed customers. This gave them a customer database, however, and from here they started a business in mail order catalogue retailing. In 1999, the business started up an online outlet, which now accounts for 40 per cent of its sales. It had a turnover of about £40m and earnings of about £5m in the year to the end of February.

Leading the buyout team of the business is Mike Tomkins, the former head of New Balance's European business, who has been a consultant to M&M for two and a half years. He is joined by Mark Edwards, the managing director of M&M. He will stay in this position and Mr Tomkins will become chief executive of the new M&M.

"We work with the sports brands to mop up the 15 per cent or so of old stock they have left," Mr Tomkins said. "We can then sell goods on to customers at often half their original price. If you don't mind that you may not get the absolute latest design, you can get very good deals."

The founders will stay as non-executive directors of M&M. They will also retain a small investment in the company.

Peter Chappelow is to become a non-executive chairman. He previously ran Next Directory.