The family ownership lens — what underpins long-term enterprise value: normalized earnings, the value bridge, deleveraging, continuity and the quality items that protect the house.
At an illustrative 11× multiple, run-rate EBITDA of £33m frames £363m of enterprise value and £341m of equity value for the Stark family. The £8m run-rate-vs-reported gap is worth £88m of value, so keep the earnings quality defensible and close the Responsible-sourcing audit across mills/ateliers workstream.
4 of 4 headline metrics improving vs prior · still off target: Adjusted EBITDA £30m vs £33m, Free Cash Flow £14m vs £18m, Designer-Account Retention 108.0% vs 112.0%
Enterprise value is built on run-rate, not reported — at 11× that £8m gap is worth £88m of value for the family.
The lowest-% workstream is the top value risk: Fibre/atelier audits rolling out; ESG narrative.
Targeted collections on £0.9m; tighten deposit/milestone terms on long hospitality projects.
Rosewood (62d), Mandarin Oriental (59d), embassy/institutional (64d) lifting blended DSO to 55d.
Lock forward fibre where possible; reprice bespoke quotes for the new cost band.
Fibre prices up; risk to Custom Rugs gross margin if not passed through.
The cockpit is strong day-to-day — but this is the ownership lens. It cuts through to what long-term value actually turns on: debt, normalized earnings, the enterprise value that accrues to the Stark family, and the quality items that keep the house resilient. At an illustrative 11× multiple, run-rate EBITDA of £33mand £15m of gross debt frame the whole picture.
Reported → add-backs → Adjusted → unbanked integration → annualize → leakage → Run-rate normalized.
So what: enterprise value rests on run-rate, not reported — the gap is £8m of EBITDA. At the illustrative 11× multiple that gap is worth £88m of enterprise value, which is exactly why the earnings-quality bridge has to be defensible.
Enterprise value → less net debt → less notional advisory costs → Indicative equity value, held privately by the Stark family.
For the family: at an illustrative 11× on £33m run-rate EBITDA, net debt and notional costs take £22m off the top, leaving £341m of indicative equity value held privately. Illustrative only — Stark is family-owned and not for sale; this frames the value the family is stewarding, not a transaction.
Quarterly FCF sweep pays down the term loan; EBITDA growth does the rest. Self-imposed ceiling is 3×.
| Period | Beg debt | FCF sweep | End debt | EBITDA | Leverage | Kind |
|---|---|---|---|---|---|---|
| Q2 FY26 (act) | £18m | −£3m | £15m | £30m | 0.50× | Actual |
| Q3 FY26 | £15m | −£2m | £13m | £31m | 0.42× | Forecast |
| Q4 FY26 | £13m | −£3m | £10m | £33m | 0.30× | Forecast |
| Q1 FY27 | £10m | −£2m | £8m | £34m | 0.24× | Forecast |
| Q2 FY27 | £8m | −£2m | £6m | £35m | 0.17× | Forecast |
| FY27 ambition | £6m | −£2m | £4m | £36m | 0.11× | Forecast |
A modest senior term loan dominates; revolver headroom and showroom/equipment leases round out a conservative, family-owned structure.
| Tranche | Kind | Balance | Rate | Maturity | Note |
|---|---|---|---|---|---|
| Senior bank term loan | Term | £12m | SONIA + 250 (≈7.0%) | 2029-06 | Funds acquisitions (Fort Street) & showroom build-outs; conservative. |
| Property / equipment leases | Lease | £5m | ≈6% | rolling | Showroom leases & loom/finishing equipment. |
| Revolving credit facility | Revolver | £4m | SONIA + 225 | 2028-06 | £20m facility; mostly undrawn = working-capital headroom. |
| Cash & equivalents (offset) | Cash | £-6m | — | — | Cash on hand nets debt down to ~£15m (≈0.5× EBITDA). |
Designer-account retention dips at year 1 on integration, then recovers on cross-house attach.
| Cohort | Acquired | NRR at acq | NRR yr 1 (dip) | NRR now | Yr-1 churn | Note |
|---|---|---|---|---|---|---|
| Old World Weavers | 1992 | 98% | 96% | 112% | 7% | Long-integrated; cross-house attach drives expansion. |
| Stark Studio Rugs | 2014 | 97% | 95% | 110% | 8% | Stable base; bespoke reorders lift expansion. |
| Hinson & Grey Watkins | 2017 | 96% | 94% | 106% | 9% | House-of-Scalamandré brands; steady. |
| Scalamandré / House of Scalamandré | 2017 | 95% | 92% | 107% | 10% | Mid-late recovery; cross-house selling building. |
| Ashley Stark Home | 2021 | 96% | 91% | 102% | 11% | Recovering; lifestyle line still being absorbed. |
| Fort Street Studio | 2025 | 94% | 92% | 95% | 9% | Earliest; watch the base through integration. |
Integration dips the base in year one, then cross-house attach recovers it above 105 — except Ashley Stark Home and Fort Street Studio, still in the trough and the one soft spot to watch in the repeat-trade story.
The top value risk is the lowest-% item — Responsible-sourcing audit across mills/ateliers (68%): Fibre/atelier audits rolling out; ESG narrative.