SME focus - Two months after buying most of Coverite, the roofer is still cautious over expansion

Two months ago, roofing contractor Prater saw one of its main rivals, Coverite, fall into administration. The collapse generated mixed feelings at Prater. On one hand, it was a poignant illustration of how a business can go wrong: the history of the two family-owned specialists is strikingly similar, and both firms had recently expanded after a decline in demand for their traditional core service, mastic asphalting.

On the other hand, the collapse presented Prater with an opportunity to instantly grow its £30m turnover: a week after news of Coverite's difficulties broke, Prater had completed a partial acquisition of it.

The deal, under which Surrey-based Prater bought all but a small section of the Coverite business, meant it increased its staff from 100 to 130. It has also given the chance to double its revenue.

However, Coverite demonstrated what happens to a firm that tries to grow too quickly - it had expanded its turnover from £20m to £33m in 2004. Tony Birkbeck, Prater's managing director (pictured right), wants to ensure he does not meet a similar fate. He has put in place a three-year strategy to consolidate the expanded company - and is planning to maintain a tight control over the process.

Birkbeck does not plan to make any further acquisitions during the three years he has set aside for the integration of Coverite. "We do not want to turn Prater, a successful £35m company, into a £70m overnight disaster with the part-acquisition of Coverite," he says. "So our intent will be to consolidate the business within a programme of controlled growth."

Birkbeck declined to comment on Prater's profit.

His first move will be to ensure that the former Coverite office in St Ives, Cambridgeshire, is integrated into Prater's management system. Birkbeck stresses that he does not want the premises, which will be Prater's fourth office and its only base outside Surrey, to become a "satellite".

Our growth is controlled, and will continue to be controlled

Tony Birkbeck, Prater

He says: "We are keeping the office because of the location of the ex-Coverite personnel. But it is not a Prater North, or a Prater St Ives. I will manage it directly as an integral part of the overall organisation."

The office will be a useful alternative base for Prater, which operates nationally despite having a stronghold within the M25. The company has completed work as geographically diverse as Robin Hood airport in South Yorkshire, GCHQ in Cheltenham, Gloucestershire, and the Eden Project in Cornwall.

Prater's work covers most sectors, including education, healthcare, retail and transport. "A broad span is far more healthy than putting all your eggs in one basket with something like the PFI," Birkbeck says. Prater has also branched into sports grounds with Arsenal's Emirates stadium. He says the firm is "certainly interested" in Olympic work.

Prater, like Coverite and a number of other specialists in the sector, has recently moved away from traditional roofing contracts to offer the more lucrative "envelope solutions": inclusive packages that include cladding and guttering. It is also developing its off-site capacity, a service that Birkbeck says "will play a big part in Prater's future".

One effect of the Coverite acquisition is that it gives Prater a stronger foothold with big clients. This includes work for Skanska, Taylor Woodrow, Laing O'Rourke, and for Multiplex at White City, west London. Birkbeck claims he has "no objection" to working with the Wembley contractor, but is negotiating commercial protection into the contract.

Birkbeck has a personal as well as a professional interest in ensuring Prater's success - he is now entering his 40th year at the company he joined as a surveyor aged 17. Time has not diminished his enthusiasm: "I'm as excited about the business as I have ever been," he says. "If you can still say that genuinely after 40 years, it has to be good."

Founded: 1950
Turnover: 2004 - £27.11m
Profit: £1.26m
Projected turnover: 2006 - £45m, 2007 - £50m
Chairman: Michael Prater
Managing director: Tony Birkbeck (pictured)
Number of staff: 130
Specialism: Building envelopes – roofing and cladding systems
Sectors: Airports, education, healthcare, leisure, retail