Going on a diet does you good
The market for buying and selling businesses
has gone through some curious twists and turns in recent months. And we are likely to witness more of the same. Whisper it, but these are boom times to be a dealmaker in the regions of England.
The fact that this has followed a period of relative famine appears to have focused the best minds in regional corporate finance. Having it too easy for too long makes any business lazy and slow to react. Having to fight to feed your children aids concentration.
Once upon a time it was the case that a strong deals market didn't necessarily translate into good news for the established business base. Companies would be advised on spicy acquisition strategies, highly geared expansion drives and ill-judged flotations. As long as there was a fee at the end of the process the advice could be reckless and the motives questionable.Business owners have sensibly battened down the hatches over the last four years, which has created a lot of time for a lot of people to come up with new ideas.
As the best ideas these days are more tailored, more crafted and more clever at creating value than they have ever been. So too are the financial models and funding structures to make these businesses work. Consequently deals take longer to do and everyone has learned to be a bit more patient.
The products on offer have got better and more sophisticated. It's more common to see a cocktail of debt, equity and so-called integrated finance. We have seen more complex levels of debt with different warranties. We have seen the rise and rise of invoice discounting. Meanwhile, the accelerated IPO (initial public offering) where a special-purpose vehicle floats and immediately acquires an existing business has shattered perceptions about floating a business. And whatever they tell you in the capital city, the spiritual home of this lies in the activities of the "shellmeister", Michael Edelson and his brainy young advisers in Manchester in the late 1990s. Its refinement and widely aped strategy is now a much more appropriate fund-raising strategy for a growing business in a proven niche. As one director of such a business told me recently, it was the cheapest money on offer.
But it is the ability of private equity investment to extract greater value from a business and motivate a management team that has caught the eye. I wish I had the price of a long lunch in Piccolino for every time a green-eyed corporate financier sneered at the investment record of the Manchester office of LDC over the last four years; yet the performance on LDC's investment in retail business Ethel Austin - based on its cash generation, not the ability to flog the business to Matalan in three years - has been eye-wateringly good.
The hunt for such gems also led to a situation where the bid list for interested parties looking to invest in Pets At Home ran into double figures. It read like a who's who of private equity. And the eventual purchase by Bridgepoint Capital represented what everyone is describing as "a very full price". Not that Anthony Preston, its founder, is complaining.
There has emerged a much richer and more sophisticated approach to corporate finance than we have witnessed at any other point in corporate history. There are at least a hundred people listed in the magazine this month that have at least 30 million very strong reasons to applaud that.
Michael Taylor, editor
Profits are on the rise, wealth is increasing and there's a new man at the top of the definitive regional rich list. Michael Taylor and Philip Beresford report
With consumer debt in the UK now topping £31trillion, Charlotte Dalgarno meets Jim Rowley head of The Funding Corporation who aims to take that figure even higher.
Manchester city centre is raising the stakes in retail, and as Charlotte Dalgarno discovers success is building on success, rather than eating each other's lunch.
The calibre of advertisers in Midlands Business Insider speaks for itself. Whether promoting deal activity or selling internet services, the advertiser list reads like a who's who of the business community.
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Unrivalled information. The quality of the editorial, original research and statistical data has helped position the Insider magazines as an unrivalled source of regional business information.
Unrivalled information. The quality of the editorial, original research and statistical data has helped position the Insider magazines as an unrivalled source of regional business information.
Unrivalled information. The quality of the editorial, original research and statistical data has helped position the Insider magazines as an unrivalled source of regional business information.
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