Ted Dowty, the founder and owner of Hydraulic Equipment Supermarkets (HES), has sold the company to three of its managers. Dowty, who founded the company more than 35 years ago, is acting as the financial backer for the trio and has converted his shares into loan stock which the directors will repay over a ten-year period.

The new owners of HES are managing director Stuart Diesel, operations director Jim Ruxton, and financial director, Brian Read.

Dowty, who retired recently, decided on the unusual course of action because he feared that selling the company to a third party could have led to a break-up of the company. Such a sell-off would have threatened jobs and could have led to the scrapping of a recent £500,000 investment in a computer-based infrastructure and inventory management system.

Diesel suggests that the management buy-out will provide long-term security for HES staff. Selling off the company or securing backing from a venture capitalist organisation, "might have created too much pressure for short-term profit," he says.

The new management team estimates that HES is currently worth more than £2.5m. It acts as an official distributor for 20 hydraulic equipment manufacturers, including Commercial Hydraulics, Webtec and Danfoss, and a stockist for eight others.