CORPORATE ICAEW.COM/CFF ISSUE 218 GROWTH FINANCE DECEMBER 2019 OPPORTUNITIES FACULTY /JANUARY 2020 EXPERTISE Corporate Financier

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Dec 2019/Jan 2020 Issue 218

GROWTH @ICAEW_CORP_FIN OPPORTUNITIES ICAEW Corporate Finance Faculty EXPERTISE icaew.com/cff PEOPLE 05 POWER FACULTY NEWS Headpoint Advisors 31 Desire paths and TLT are the Daniel Jonas details how newest members of the Corporate important it is to develop Finance Faculty personal contacts within private equity firms

32 Connections Find out who’s on the move in advisory, private equity and corporate law

14 34 On my CV SWITCH IT UP How Mobeus Equity Partners 04 Editor’s letter has transformed its investment Marc Mullen talks strategy climate change

07 Myths and fables Henry Whorwood looks at the rise of Britain’s unicorns

09 In numbers The UK’s scale-up investment market is on course this year to top the record £7.6bn 18 invested in 2018 COVER STORY Dealing in the 11 Brief encounter world of family- Sir Martin Sorrell is building a owned businesses, how are corporate new empire following his exit finance advisers from WPP last year helping to boost investment, M&A and 12 Private equity wishlist economic growth? What buy-out investors look for in their top CFOs

24 Low countries deals Jason Sinclair looks at 34 M&A in the Benelux region BOX OFFICE 27 Annual reception Nicola Horton of FTSE 100 multinational Moore Kingston RELX receives the Corporate Smith talks about Development Award at the her leading role in faculty’s Annual Reception the sale of the famous Theatre Royal Haymarket

ICAEW.COM/CFF 3 WELCOME

Leave the lights on Iceland, population 360,000, with about 3.5 people per square kilometre, meets virtually all of its electricity needs from renewable sources. Of that, 80% comes from hydroelectricity and the remainder from geothermal sources on the Corporate Finance volcanic island. The country has an ambitious Faculty plan to be carbon neutral by 2040. Last month, I made a whistle-stop tour of Mo Merali Iceland – the aim being to witness the Aurora Chairman Borealis. Unfortunately, the northern lights are not simply turned on and off, David Petrie so in that regard it was a fruitless trip. As you drive through the wilderness Head of Corporate Finance during the long nights, darkness will be interrupted by isolated houses, Katerina Joannou every one of which has every single light on, and is often adorned with Manager, capital markets policy frivolous festive lights. In November! Meanwhile, in far hotter climes there has been a very different ‘issue’ – the Shaun Beaney Manager, IPO of Saudi Aramco, which valued the oil and gas giant at $1.7trn. The Corporate Finance Faculty listing on the Saudi exchange will reportedly generate a whopping $450m Grace Gayle of fees for advisers (but latest reports suggest this has been reduced). Services manager The world’s most profitable company is also the world’s biggest +44 (0) 20 7920 8656 contributor to hydrocarbon-based pollution. The fact that such a listing Chrissie O’Connor is happening while climate change is on the agenda elsewhere highlights Manager, operations +44 (0)20 7920 8593 the challenges of tackling the problem globally. That said, doubts among some non-Middle East investors about paying top dollar for shares in the fi [email protected]

float perhaps shows that different long-term views are being taken about Marc Mullen oil investment. Editor With the UK’s general election under way, shifting Britain to zero-carbon [email protected] status is one of the non-Brexit issues at the hustings. The Conservative Party David Coffman set a target date of 2050. Labour floated a 2030 target, but revised that to Rebecca Guerin Selina Sagayam 2050 – perhaps in the realisation that the earlier target date would never be Victoria Scott achievable. Editorial panel Who knows how many elections there will be between now and 2030, let For details about corporate and alone 2050? The UK is a far more complicated beast than Iceland. The individual membership, please visit icaew.com/cff former is almost 80 times more densely populated and doesn’t have or contact the faculty on: renewable energy sources as readily available to meet its needs – although +44 (0) 20 7920 8689 wind power is making inroads. Enormous investment is needed to move to To comment on your magazine, electric vehicles, from road to rail, to renewable electricity, away from air please email: publishing@icaew.com travel, and to greater energy efficiency in homes and workplaces. We’re a long way away from being able to tell the kids, without any guilt: “No, just leave all the lights on.” Corporate Financier is produced by Progressive Content Standard House 12-13 Essex Street London WC2R 3AA

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© ICAEW 2019 All rights reserved. The views expressed in this publication are those of the contributors; ICAEW does not necessarily share their views. ICAEW and the author(s) will not be liable for any reliance you place on information in this publication. If you want to reproduce or redistribute any of the material in this publication, you should first get ICAEW’s permission in writing. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by ICAEW, the publishers or the author(s). Whilst every care is taken to ensure accuracy, ICAEW, the publishers and author(s) cannot accept liability for errors or omissions. Details correct at time of going to press.

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4 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER NEWS & EVENTS

GET AHEAD IN 2020

Individual Corporate Finance Faculty YOUR members can now renew their membership for next year online. High on the faculty’s agenda for FACULTY 2020 will be initiatives including: corporate finance, business investment and Brexit; how environmental, social and corporate governance factors are reshaping M&A; the UK’s most acquisitive companies and busiest private equity firms featured in Corporate Financier magazine; a new edition of Private Equity Demystified; a new version of the Business Finance Guide published by ICAEW and the British Business From left: Leander Ots, M&A associate, Liza Wilson, Bank; marketing director, and Mark Wilson, managing director prospective financial information to support capital-raising; NEW ADVISORY FIRM HEADPOINT JOINS THE FACULTY developing the themes in the ground-breaking AI in Corporate Headpoint Advisors, a Midlands-based Wilson said: “It’s important for our Advisory report; and corporate finance advisory firm, has nationwide network that we join the ongoing collaboration with joined the Corporate Finance Faculty. Corporate Finance Faculty. We value Innovate UK and with the It was founded in January 2019 by being able to access good up-to-date creative industries. Mark Wilson, a former partner at Alantra technical information for client projects The faculty will also be taking (previously Catalyst Corporate Finance). and the faculty provides that. We also part in corporate finance events Wilson was a Birmingham-based enjoy the opportunity to network with the across the UK and beyond. So far in partner at Alantra/Catalyst for almost 15 broad range of faculty members, which is 2019, staff have taken part in years. He previously worked for Benelux- particularly important for a small, growing forums and conferences in Belfast, based private equity firm Greenfield adviser like ourselves.” Birmingham, Valleta in Malta, and Capital Partners and before that was an He said that the firm is recruiting more – as well as supporting industrial engineer working for Siemens, ‘traditional’ ACA-qualified corporate colleagues in Dubai with events in UPS and TNT. financiers. He also placed a lot of stock the Middle East. Leander Ots, who also worked at in ICAEW’s Corporate Finance Grace Gayle, the faculty’s services Alantra, is an associate at Headpoint. He qualification, which he holds, and will manager, said: “Policy development was previously at the Dutch government’s be encouraging his staff to take the to boost investment, as well as department of business. At Headpoint he Diploma: “That’s very important for technical expertise, guidance and is responsible for origination, research attracting quality staff.” networking, have always been at and transaction execution. Headpoint completed its first deal in the heart of what the faculty does. Wilson’s wife Liza is marketing director November – acting for the shareholders “If members have any questions at the new firm. She has 20 years’ of Jaffabox, a Birmingham-based, about its services or about renewing business experience, having worked at family-owned cardboard packaging for 2020, they’re very welcome to Celerant Consulting, Dun & Bradstreet manufacturer, on its sale to Schumacher get in touch.” and Nyenrode Business School. Packaging GmbH, which is itself a Grace can be contacted via Andrew Garcia is special industry family-owned business. “Given the icaew.com/facultyrenew or by adviser and brings 25 years’ industry and uncertainty around Brexit among other phoning +44 (0)202 7920 8689. M&A experience, with senior executive things, the sale to a world-class German If you are interested in your roles at Dragon Infrastructure Services, company demonstrates the underlying organisation becoming one of South Staffordshire Plc, Veolia high-quality nature of the Jaffabox more than 80 member firms – listed Environmental Services (formerly business as well as benefiting from strong at icaew.com/cff – then please get Cleanaway), SIG Plc and Navigant trading through the entire deal process,” in touch with David Petrie, head of Consulting. He was also an industrial said Wilson. “Schumacher has grown very corporate finance at ICAEW, or services adviser to Alantra. quickly and this represents its first major Shaun Beaney, Corporate Finance Headpoint operates nationally, with a investment in the UK. We fully expect that Faculty manager. strong Midlands focus, as well as across more investment in the Midlands and the the south of England and Scotland. wider UK will follow.”

ICAEW.COM/CFF 5 FACULTY WELCOMES TLT TLT has become the latest law firm to TLT was awarded for their new roles from April 2020. join the Corporate Finance Faculty. The Webber said: “We’re delighted to have legal advisory firm has more than 130 ‘corporate deal of the joined the ICAEW Corporate Finance partners and 1,000 staff based in its year’ at the Business Faculty’s professional network alongside offices in Belfast, Bristol, Edinburgh, its 7,000 members and 80-plus member Glasgow, London and Manchester. Leader Awards for the organisations. The connection to a wider TLT’s corporate team advises on a wide sale of Lorient Group global community of financial experts, range of complex corporate transactions, world-leading information resources and including in capital markets, IPOs and technical guidance will provide us with secondary issues, public company the tools we need to continue the expert takeovers – including public-to-private acquisition of the remaining shares of advice that we are known for providing.” – as well as UK and international British furniture designer, naughtone; The corporate partners are: acquisitions, disposals, group re- shareholders of the UK-based surface Alice Gardner, Jon Gill, Kay Hobbs, organisations and property joint ventures. repair specialists, Plastic Surgeon, on its Nina Searle, Antonia Silvestri, Robin The firm’s clients include RBS, TUI, acquisition by Polygon Group; and Staunton, Andrew Webber and John TK Maxx, Vivienne Westwood, Triodos, several-high profile disposals for Wood in Bristol; Elmscot Group, Perfect Start, Harvey AM100 Plc, Inchcape, including Andrew Jennings in Belfast; Nichols, Santander, Sainsbury’s, franchises and dealerships. Elizabeth Delaney, Andrew Needham, WHSmith, Greene King, BT, Boohoo, This year, TLT was awarded for ‘corporate Richard Life, Ian Roberts and Mark BBC, Ecotricity, Crown Commercial deal of the year’ at the Business Leader Traynor in Manchester; Services and Savills. Awards for the complex cross-border Damien Bechelli in Glasgow; and The sectors the firm has a specific preparations and sale of Lorient Group, Patrick Somers in London. focus on are: clean energy; digital; which designs and manufactures high Webber added: “We continue to act on a financial services; leisure, food and performance sealing systems, to global high number of inward investment deals drink; retail and consumer goods; and door manufacturer ASSA ABLOY. into the UK and this is growing in sectors real estate. The corporate team has also been like digital and clean energy, where the Recent projects include: recognised as the top legal deal adviser UK is seen as a leader in innovation and Open Bionics, a pioneer of low-cost in the South West by Experian MarketIQ. new technologies. We have clear plans in prosthetics using 3D printing, on a Andrew Webber has been appointed place to continue to build our full-service £4.65m Series A investment; as the firm’s new UK head of corporate, national practice, including our Herman Miller, a global designer succeeding John Wood who was elected transactional offering in corporate to and furniture manufacturer, on its TLT’s next managing partner. Both take up support our core sectors.”

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ICAEW has launched its debut podcast series More Than A Number, which explores how business leaders unpack numbers to make important decisions. The podcast is hosted by financial journalist Louise Cooper and features guests from across business, charity and society, including Dame Helena Morrissey Alice Gardner Jon Gill and Lord Malloch Brown. The series will examine topics including sustainability, the gender pay gap and the ageing workforce. The first episode, which is available now, looks at climate change and the questions it raises, with a panel that includes: Amelia Womack, deputy leader of the Green Party; John Kornerup Bang from shipping company Maersk; Mardi McBrien from the Climate Disclosure Standards Board; and Michael Izza, ICAEW’s chief executive. Robin Staunton Nina Searle

6 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER COLUMN

HENRY WHORWOOD

Unicorns are no longer mythical grown rapidly to a very lucrative size creatures in the UK. There are now 21 MYTHS (provided they’re able to exit). Hut Group British start-ups valued at $1bn-plus. founder Matthew Moulding’s various Some have even had exit events which shares in e-commerce business are (perhaps) give more validity to the BECOME estimated to be worth £330m – on paper. valuation. I’d expect to see more in 2020. But is the number of unicorns in the Of course, that expectation is set against LEGENDS UK actually a useful measure of our a backdrop of not only general political high-growth ecosystem? The reality is it and economic uncertainty, but also The UK has been only tells part of the story. The high increasing uncertainty around how such number evidences the current health of high-value businesses can actually exit. creating $1bn-plus the later-stage funding market. It also WeWork’s recently shelved initial valuation businesses in speaks to the ability of entrepreneurs to public offering highlighted two scale businesses from a UK base, their problems. One – it’s not easy 2019 faster than ever, talent and the talent they hire. transitioning from a private-market but can we expect the However, it also obscures the larger valuation to a public-market valuation. number of exciting smaller businesses. And two – public investors can pour herd of unicorns to For example, of the UK’s 1,216 spinouts, cold water on any cultish following of grow and does it matter only two have so far become unicorns, a charismatic founder. The latter is even though 121 have exited, particularly, but not exclusively, specific if they don’t? developing world-leading technologies to WeWork, while the former applies to along the way. all unicorns. UNDER THE RADAR BIG BUCKS, BIG BANG Desktop Genetics, a company More money is being raised privately unicorns should find it easier to list or be developing a DNA search engine, was by high-growth businesses than ever acquired than those across the pond. acquired last year by Elixir, but had only before. A small number of new investors I fully expect the UK herd to grow reached a pre-money valuation of £3.5m with enormous firepower (SoftBank, for more quickly than the number of exits by that point. Oxitec, a company working example) have allowed some ventures does. At Beauhurst, we are tracking 26 to prevent the spread of diseases by use to remain private longer. In doing so fast-growing businesses each worth over of sterilisation, was acquired by Intrexon they’ve pioneered a new kind of £250m. In our most recent report, we for £103m in 2015 – not a unicorn, but transaction. Private investments of picked out four ‘dead-certs’: Bulb; certainly its investors would have made a hundreds of millions of dollars in return PaymentSense; SumUp; and Zopa. All healthy return, while also creating for minority stakes. These transactions are growing turnover and valuations. technology for the global good. generate headlines for these private Bulb is in cleantech, and PaymentSense, With 21 unicorns in the UK, they’re companies, and other investors, who SumUp and Zopa are all fintech certainly no longer mythical. But there previously would have focused on companies. The UK has a track record of are many other species in the country’s public markets, such as pension funds, creating unicorns in both those sectors. I high-growth ecosystem. If we spend too are starting to back these megadeals. wouldn’t be surprised if this time next much time hunting unicorns, we risk This has created demand for a very year we toast the UK’s 30th example. destroying the habitat of other scarce asset, among buyers. It is not innovative businesses that are driving surprising that valuations at the top end HOLD THE ICE UK growth. of the market have ballooned. Should we be focusing so much That said, UK unicorns appear good attention on unicorns in particular? It’s Henry Whorwood, head of research value compared to US ones. Of those easy to see why founders and early- and consultancy, Beauhurst, a publisher that are still private, the Hut Group is stage investors are interested in the of data and analysis of investment in UK reportedly worth just under £2bn. UK $1bn milestone: it means their stake has high-growth companies

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IN NUMBERS UK VCs saw an increase in investment in Q3 2019, but UK quoted companies issued the highest year-to-date total of profit warnings 235 £2.4bn Profit warnings issued by UK UK VC investment in Q3 2019, quoted companies in the nine up 19% on Q2 2019 months to the end of September – the highest year-to-date total since 2008 (323)

£7.4bn+ of UK listed Invested by VCs in UK scaleups in companies have the first nine months of 2019, on 18% issued a profit course to exceed the record warning in the £7.6bn invested in 2018 past 12 months – the highest figure

SOURCE: KPMG ENTERPRISE’S GLOBAL VENTURE PULSE REPORT SOURCE: KPMG ENTERPRISE’S GLOBAL since Q4 2008 REPORT WARNINGS PROFIT SOURCE: EY

$3.03trn Global M&A in first 10 months of 2019 – 12% down on the first 10 months of 2018

79 £2.84bn Megadeals ($5bn+) Raised on AIM during the globally so far in 2019 – first nine months of 2019 down from 102 during – down 42% on 2018 same period in 2018 SOURCE: REFINITIV

New joiners to AIM in 5 Q3 2019 – two IPOs, two reverse takeovers and one 51 IPOs on AIM joiner from the main market in first three quarters of 2018 AIM companies have 26 been acquired in 2019 20 IPOs in first three quarters of 2019 – down 71% SOURCE: ALLENBY CAPITAL SOURCE: ALLENBY SOURCE: AIM

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ThinCats is a trading name of Business Loan Network Limited (BLN). Registered in England & Wales No. 07248014. BLN is authorised and regulated by the Financial Conduct Authority (No. 724062). ILLUSTRATION CREDIT/HERE ICAEW.COM/CFF had been“helpfulbutnotessential”. added that hisvastpersonalnetwork benefited from its“smallbeginnings”. He highlighting howS4’s strong growth had before we’llgetworried,” headded, the their clientswanttochangeit,” hetold They wanttomaintainstatus quowhile paranoid aboutincumbent relationships. “Traditional advertising agenciesare pretty WPP: witheringinhiscriticismof organically by2021. Sorrell hasbeen S4 Capital expects todoubleinsize BOSSSPURNED FT . “There isalongwaytogo

Sir Martin Sorrell, havingleft WPP underacloudlastyear, is buying andbuildinganewempire. This time, it’s digital Old skool, new build market around capitalisation of Tradelab. The combinedentityhasa Jellyfish, and ismerging itwith majority stake indigitalmarketer empire. InNovemberitacquired a Lacharrière, isbuildingitsowndigital by French billionaire Marc Ladreit de Fimalac, theholdingcompanyowned NOFREERUN FRESHSTART? expectations, bothtopandbottom ambitious internalandexternal to £112.3m. 46% to£144.6m, gross profit also46% founded. Year-to-date revenue grew being forcedWPP, outof whichhe founded S4Capital justamonthafter the three monthstoSeptember. Sorrell and gross profit by50%to£42.1min increased itsrevenues 54%to£56.6m Sorrell announcedthat S4Capital had “We continuetotrade inlinewith • April 2019–Brazilian • April 2019– Amsterdam- went ontheacquisitiontrail: £11m from backers. Hethen He invested£40mandraised about creating S4Capital. Derriston Capital, andset Exchange-listed cashshell, acquired aLondon Stock In May2018, SirMartin Sorrell DIGITAL BUILD specialist, ProgMedia; programmatic advertising company, Caramel Pictures; based videoproduction

Jellyfish’s executive. chief opportunity,” said Rob Pierre, and we’re lookingat thesame because we’re rightinthesameplace aggressive ambitionstoS4Capital, and advertising. “We’re takingsimilarly deploys digitalanalyticstomarketing £500m. Founded in2005, Jellyfish also achievedUS-dollarunicornstatus.” time forHalloween2019andwehave peanut hasmorphedintoapumpkinin Mixing metaphors, headded:“The very welltoourpurely digitalmodel.” indicates that clientsare responding wellover40%sofarthisyear of line,” saidSorrell. “Ourorganic growth BRIEF ENCOUNTER: S4CAPITAL advised onallS4deals sofar. BDO and Travers Smithhave a pre-tax £6.5m. profit of “non-recurring” costs, itmade related expenses andother when adjustedforacquisition- £8.5m inthefirsthalf, but S4 madeapre-tax lossof • October 2019– • August 2019–Dutch agency, IMA;and influencer marketing ConversionWorks. MightyHive merged with 11

GETTY Most CFOs said real-time and predictive information would be of great value, but needed more resource to WHAT implement new systems and understand all the benefits technology can bring. Currently 95% of respondents have some analytics capability and 70% PRIVATE use predictive analytics. CURRENT STATE VS DESIRED STATE IN DIFFERENT EQUITY ANALYTICS AREAS Management information Predictive analytics Data analytics 100%

WANTS 80%

Buy-out houses are in an interesting position 60% – multiples are high, debt is cheap and many 40% of them are sitting on record levels of capital 20% to invest. Two reports look at how firms are OF RESPONDENTS PERCENTAGE driving value from their investments 0 Current Desired Current Desired Current Desired state state state state state state

In place Advanced Limited/basic None

SOURCE: DELOITTE Private equity-backed businesses pose a different set of challenges for the CFO than owner-managed companies, family-owned businesses or listed Buy-out firms sometimes change the CFO or FD when ones. What does a buy-out firm look for? Deloitte’s third global survey of they first back a company – and will often remove one more than 100 CFOs, PE investors, CEOs and chairs bears the doom-laden if a portfolio business is underperforming. Assisted by name: The Meteor Is Coming. technology, the private equity-backed CFO function will Andy Halls, lead partner of Deloitte’s private equity-backed programme, become even more dynamic. Being ‘chief value explains the reason for the title of the report: “The most powerful theme to extractor’ means there will be greater use of predictive emerge from our interviews was the dominant and pervasive role that analytics, with more emphasis on projections, rather technology is expected to play in shaping the future of finance. Data than a focus on historic financials. Private equity analytics, automation and predictive technology will bring about a investors taking part in the survey want greater revolution in the finance function over the next 10 years. commercial insights to aid an understanding of the “Private equity investors want CFOs to drive this technological change. market they are in and anticipate future challenges. From a traditional, backward-looking number- cruncher, they want the role of the private THE FOUR FACES OF A CFO equity-backed CFO to switch to a forward-looking Catalyst Strategist ‘chief value extractor’, with sufficient vision to 85% Catalyse behaviours across the Provide financial leadership in foresee and navigate the changes ahead and make organisations to execute strategic determining strategic business the greatest contribution to value from day one.” of CFOs and 82% of and financial objectives at the direction, M&A, financing capital PE investors state that same time market and long-term strategies Respondents to the survey believe it is down to automation and the CFO to drive change generally - 82% of private technology will have a key impact on finance LEADING EDGE equity investors said the CFO had a fundamental functions over the next impact on the creation of business value. 10 years

TRANSFORMATION HOW OFTEN HAVE YOU HAD TO REPLACE A CFO AS A RESULT THRESHOLD OF THEIR FAILURE TO UNDERSTAND THEIR ROLE IN CREATING VALUE? PERFORMANCE

ALIGNMENT SOURCE: DELOITTE FINANCE 50% FUNCTION 47% EXECUTION 40% PROTECTION

30% 29% 24% 20% PERCENTAGE OF RESPONDENTS PERCENTAGE 10% Steward Operator Protect and preserve the critical Balance capabilities, talent, 0% assets of the organisation and comms and service levels 0 Very common, this is the Relatively common, this Less common, this is the This is accurately report on financial to fulfill the finance organisations case with over 50% of is the case with 50% of case with fewer than very rare position and operations to internal core responsibility

CFOs we move on the CFOs we let go 50% of the CFOs we and external stakeholders SOURCE: DELOITTE move on

12 DECEMBER 2019/JANUARYMONTH 2020 CORPORATE 2018 MAGAZINE FINANCIER TITLE PRIVATE EQUITY INSIGHT

WHAT ARE THE ‘DAY-ONE’ PRIORITIES FOR THE PRIVATE EQUITY PORTFOLIO COMPANY?

80% Priorities at day one: actual Priorities at day one: if the deal was to be done again 60% 61%

44% 47% 40% 44% 39% 37% 30% 28% 27% 20% 8% 9% PERCENTAGE OF RESPONDENTS PERCENTAGE 4% 14% 6% 0 Value creation Operational Rebranding Changing operating Client/ Human Talent stability model customer retention capital optimisation retention

SOURCE: PWC

With widely available cheap debt, private equity price multiples are high, “The level and sophistication and exceptionally high for the best assets. With cost reduction and the ability to generate returns through leverage being squeezed, how can private equity of cloud-based data and create value from its latest round of investments? That is the focus of PwC’s analytics that are available latest private equity report: Creating value beyond the deal. allow the kind of granular analysis that provides a LOSS OF TALENT IS A KEY CHARACTERISTIC OF ‘VALUE-DESTRUCTIVE’ DEALS powerful new tool” 57% of PE dealmakers say cultural issues hampered value creation

More than half (52%) of respondents said that for PERCENTAGE OF RESPONSES PERCENTAGE 10 % + future divestments they would aim to start planning earlier, to create greater value from the sale. Being employees left the company following completion in all deals where value was eroded prepared for an opportunistic divestment is key, because the potential for significant value from such

SOURCE: PWC sales is high compared with planned deals. Some 79% of opportunistic deals delivered significant or HOW MUCH VALUE DID THIS DEAL GENERATE IN COMPARISON WITH THE moderate value, (higher than the 61% of planned ASSETS’ VALUATION BEFORE THE DIVESTMENT PROCESS STARTED? sale processes, which delivered similar value). And then we come to tech and data. Malcolm 100% Lloyd, global deals leader at PwC, sees the use of data and data analytics as presenting a great 80% 32 opportunity for value creation in private equity- backed businesses: “Across the sector, private equity 60% has always used data and private equity investors are 21 data hungry, analytically driven and grounded in the 40% facts. But until recently it’s been difficult to embed 64 data into the way the business operates. Now, the 46 level and sophistication of cloud-based data and 20% 0 analytics that are available allow the kind of granular 12 analysis that provides a powerful new tool to allow 0 0 -17 private equity to better understand value creation.” PERCENTAGE OF RESPONSES PERCENTAGE 0 -20% -50 Data and analytics enable granular insight into -4 operational improvements, sales effectiveness, All divestments Carried out VDO -40% pricing, churn reduction and manufacturing -12 efficiency. David Tapnack, a PwC partner in financial -60% decisions and analysis, adds: “While private equity Did not carry out VDO uses data a lot they are nowhere near reaping the full benefits that current tools and technology can -80% deliver. I think building this capability is the defining Significant value gained Moderate value lost feature of who will be successful and who won’t, in

SOURCE: DELOITTE Moderate value gained Significant value lost SOURCE: PWC the digital age.”

ICAEW.COM/CFFICAEW.COM/XXX 13 TREVOR HOPE JUSTIN MALTZ

JANE REOCH

TRAN

Blessings can be heavily disguised. Back in November 2015, the government changed the SFOR venture capital trust (VCT) rules so that such capital could no longer be used to fund buy-outs. Instead, in most cases, VCT money could only be invested in companies that were less than seven years old, and the initial investment was limited to less than £5m. Funding could not be used for replacement capital or for buy-and-build strategies. MERS For Mobeus, a member firm of the Corporate Finance Faculty, the change represented a strategic Big changes to VCT rules four years ago crossroads. “We had a very successful buy-out investment strategy using VCT capital,” says partner meant Mobeus Equity Partners had to Ashley Broomberg. “That link was decoupled. rethink its entire strategy. Marc Mullen Overnight we had a large pool of VCT capital, but no investment strategy for it. And we had a great looks at an investor transformed buy-out strategy, but no capital. We had to address both issues simultaneously and pivot quickly.”

14 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER PROFILE

MOBEUS’S COMPLETED BUY-OUTS Company Adviser City Kinneir Dufort Momentum Corporate Finance Bristol Advantedge Wilson Partners Maidenhead Ludlow Seneca Manchester Active Travel Livingstone London Cooper Coated Coil Odyssey Corporate Finance Birmingham Geobind WK Corporate Finance South East T&G PwC London Ventrica Forward Corporate Finance East Anglia ASHLEY BROOMBERG Star Brands DSW Corporate Finance Leeds

HOPE SPRINGS

Changing the remit of Mobeus’s different verticals and risk VCT funds meant creating a new profiles. I’ve been through investment team. Some skills numerous cycles and, as we are were there, some were currently experiencing the transferrable, but the aim was to longest bull market in history, I put together a growth investment think it’s reasonable to plan for a strategy and build the expertise potential marketplace correction needed to deliver on it. In March in the short to medium term. Just 2016, Trevor Hope joined to lead under 50% of our VCT portfolio the growth capital investment companies are currently team from Beringea, where he profitable and we have robust was CIO for the ProVen VCT fund. plans to drive our businesses to “I certainly didn’t want to lose profitability in the short to the expertise that Mobeus had of medium-term. Some will burn working with traditional SMEs,” cash over the next few years, says Hope. “The fundamentals of others won’t.” looking at a business and Follow-on rounds are common. working out where its value lies, In 2017, Mobeus invested £2m in assessing the quality of the MyTutor, a digital platform that management team and the provides school pupils with market opportunity, are the same. one-to-one tuition from high- Mobeus had strong technical performing Russell Group ability for reviewing balance university students, as part of a sheets and in forecasting £3m Series-A round. In June sustainable profitability, which 2018, Mobeus led a £5m Series-B So how did the firm turn such a big challenge can be an area of growth round, investing a further £3.6m. into an opportunity? To begin with, it had to build investing that’s a secondary “MyTutor is looking to disrupt a a venture growth team from scratch. The first step consideration. You still need an market that is worth £2bn in the was recruiting Trevor Hope from Beringea, where interpretation of the detail.” UK,” says Hope. He expects at he led investments from its ProVen VCT funds (see This year, Matt Mead joined as least one further round to ‘Hope springs’, right). “You have to look at the venture partner in the VCT team. support market-demand-led style of your approach to investment processes. Through its four quoted venture expansion and importantly take It’s fundamentally different in growth investing to capital trusts, the growth team the company to profitability. a traditional buy-out business,” he explains. expects to invest £25m-£30m a While on the buy-out side At the end of 2015, Mobeus also started raising year, and about two thirds of that there is perhaps greater its first limited-partnership fund from institutional will come from new deals. The emphasis on it, Mobeus does investors, so that it could continue backing UK run rate is around 10 new deals a have dedicated deal origination SME buy-outs. Broomberg explains: “We were out year and the stakes the firm takes resource looking at specific of the blocks before anyone in a similar position. are typically 20-45%. companies and sectors. Hope Our track record helped, but we were fundraising Hope says they have been stresses the importance of a in a difficult environment and were launching a “very careful” in building the strong network of advisers and maiden institutional fund. portfolio: “It’s important that our chairmen to source “In such circumstances, most funds would have portfolio is balanced across opportunities. been cornerstoned by the European Investment

ICAEW.COM/CFF 15 Fund. However, the fund was launched just prior to the UK referendum on EU membership and so EIF ZOOM IN ON GROWTH was closed for UK investments. In spite of that, Mobeus reached its first close less than a week after In July 2019, Mobeus skilled management team,” the referendum. So that was our second blessing in participated in a £9m Series-C says Mobeus investment director disguise – as a result of Brexit, we ended up with a investment in MPB, a Sussex- Jane Reoch. “At Series C, Mobeus diversified, high-quality international investor base based online platform for was joined by Acton, which has a in our fund.” trading high-end photography strong history in building and In 2016, Mobeus invested in two management and filmmaking equipment. exiting e-commerce and re- buy-outs (MBOs) from that inaugural LP fund – the Backing MPB throughout its commerce businesses, so it was a £6m MBO of Kinneir Dufort, a British design and growth journey, Mobeus first perfect fit.” innovation consultancy, and the £9m MBO of invested in a 2016 series-A Co-founders Matt Barker and Advantedge (then known as Factor 21), a UK invoice round and led a £5m Series-B, in Kat Mitchell have been joined finance provider to SMEs. 2018. Mobeus co-invested by CFO Scott Ryan, chief In 2017, the fund reached its final close with total alongside the German VC fund marketing officer Sophie Collins commitments of more than £166m from Acton Capital in the company’s and chairman Howard Bell, 10 international blue chip investors (two-thirds recent £9m Series-C. previously head of product at from the UK and Europe, one third from the MPB already sells to Germany PayPal Europe. US). The firm’s total private equity funds under from the UK and has more Exit is not on the immediate management stood at £360m. than 135,000 active users. horizon. “We’ve got to the right As part of the plan to build growth investment The new funding will be used to team for scaling the business activities, Mobeus hired Jane Reoch as investment open its first US operational now. They’re not rushing towards director in the new team, from Panoramic Growth centre in Brooklyn, with a an exit as the company Equity, in August 2017. She has 12 years’ growth German site to follow in 2020. is seeing some very positive equity investment experience, having also worked The business has grown from results from its recent expansion for the Cass Entrepreneurship Fund and for Bank £8m turnover in 2016 to a run into the US and German markets of Scotland Growth Equity. She trained as a rate of £40m this year. and is continuing to target a chartered accountant in London at PwC. “MPB has experienced rapid £100m-plus turnover business,” Fast-forward four years and Mobeus has growth led by a driven and says Reoch. transformed itself. It has a full growth team

16 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER PROFILE

investing its VCT funds, having completed 15 new PORTFOLIO STRATEGY growth investments and about to complete its tenth UK SME buy-out. “We’re encouraged by the progress made to date,” Split between buy-out and growth teams, says Broomberg. ‘We now have two distinct Mobeus’s portfolio management takes a investment teams, each with a very clear focus but 52 supportive rather than intrusive Total assets operating overall in a very cohesive way. We’ve in portfolio approach. positioned ourselves as a business that can provide In 2016, Justin Maltz joined Mobeus as funding through the full life cycle of an SME, from director from 3i, where he’d spent almost early-stage, through growth, to realisation of a 20 years. In July, he and Guy Blackburn founder’s shareholding.” were promoted to partner and portfolio Its first limited partnership fund is already more partner respectively in the buy-out team. than 50% invested. The plan is to start raising a new Maltz says it is critical that management fund next year and Broomberg says the firm is in a teams get continuity through deal strong position to do so. In the lower mid-market, in completion and the life of the investment. which Mobeus operates, there are, he says, During due diligence and negotiations, significantly fewer investors than in the mainstream he or Blackburn will get involved in mid-market, which is highly competitive. strategy, often taking the main board “We’re typically the first private equity investor 41 seat, allowing investment partners to in a company, working with management teams Total transactions since either take a second board seat or stay VCT rule change and founders to grow and professionalise involved in supporting investments businesses. Generally, these assets are not (through board observer roles) while optimised when we invest and therein lies the hunting down new deals. opportunity,” says Broomberg. “We’ve effectively got two roles on the Broomberg adds that there continues to be board,” says Maltz. “First, our own LP opportunities notwithstanding the levels of liquidity investors know the outcome we are creating competition in the marketplace. “In some targeting with a specific investment, and I sectors, pricing is clearly a challenge – tech and IT try to make sure that happens. Second, as services businesses, for example. However, in other £ a director of the company, my interest is in sectors, such as financial services, traditional promoting its success alongside the other manufacturing and business services there are still members of the board. I spend time opportunities with strong buy-side dynamics.” making sure Mobeus, the management 25 team, non-execs and vendors are all REALISING THE DREAM New investments pointing in the same direction. Since 2015 Mobeus has sold nine buy-out investments. (16 growth, “If we’re making an acquisition, 9 buy-out) since 2015 This year the firm completed two exits. Its stake in undertaking a refinancing, or dealing ASL, an independent managed office services with senior people issues, I might spend business, was sold in July in a secondary buy-out to two or three days a week with one Primary, generating a 2.2x return on the firm’s total company. If little is going on, I might investment of £9.7m. ASL augmented its organic spend no time with them. I will always be growth with an expansive M&A programme – it there to help with the strategic issues – completed 10 acquisitions during Mobeus’s nine-year £ but I will not interfere with day-to-day investment period. management.” In May, Mobeus sold Plastic Surgeon, a UK surface In 2017, Mobeus invested £8m in repair specialist, to Polygon, a European property financial planning business Ludlow Wealth damage restoration business, which is backed by Management. This year Ludlow has Scandinavian private equity firm Triton – generating a completed three acquisitions. Maltz says 5.6x return on investment and an internal rate of 7 there is a strong focus on post-acquisition return of 20.5%. Follow-on growth integration, to make sure the target Environmental, social and corporate governance investments business and its people settle in quickly. factors have become a big focus for Mobeus, as it has Maltz also represents Mobeus on the for many private equity firms. board of Active Travel Group (ATG). In Another particular development of note is its 2017, Mobeus backed premium ski trip scholarship programme. The programme helps business Ski Solutions with a £6m young people from less-privileged backgrounds go to investment. This was followed in 2018 by university, with financial assistance to help with backing the acquisition of high-end tuition fees, a paid internship and mentor from adventure operator Wilderness Scotland Mobeus. “We want to work with talented young with a further £3m investment. This adults and alter their career trajectory by providing created a more balanced year-round experience and opportunities they would otherwise activity holiday group, which was not have. As we grow, we are mindful of our broader 9 renamed ATG. “Now it’s a lot more responsibilities in the corporate and social Exits since VCT scalable,” says Maltz.

PHOTOGRAPHY: JON SNEDDEN JON SNEDDEN PHOTOGRAPHY: environment,” says Broomberg. rule change

ICAEW.COM/CFF 17 FAMILY FORTUNES

The UK’s family businesses have had a good decade. Since 2010, gross value added has increased almost three times faster than other private companies, while employment grew nearly seven times faster. Grant Murgatroyd explores the role of corporate finance in ensuring the next decade is as prosperous

!

ACCESS TO SKILLS

f small and medium-sized enterprises (SMEs) are the backbone of the I economy, then family businesses are the vertebrae. There are 4.8 million family-owned businesses in the UK, according to the Institute for Family Business (IFB) Research Foundation. Businesses that are family controlled employ 13.4 million people (50% of private sector employment), generating £1.7trn of revenue (42% of private sector turnover), contributing £598bn to UK GDP and £182bn in taxes in 2017. The majority of family firms are microbusinesses with fewer than 10 employees, but there are 120,790 small family-owned enterprises with 10-49 employees, 16,505 with 50-249 employees and 1,464 with more than 250 employees. The UK’s seven largest family businesses by turnover according to Forbes are food and retail group Associated British Foods, steel trader Stemcor, conglomerate Swire Group, construction firm

18 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER COVER STORY

4.8m family-owned businesses in the UK

SOURCE: INSTITUTE OF FAMILY BUSINESS RESEARCH FOUNDATION 13.4m employees in UK family businesses (50% of private sector employment)

£1.7trn revenue produced by UK family businesses (42% of private sector turnover)

£598bn GDP from UK family businesses (42% of private sector contribution)

£182bn paid in taxes by UK family businesses

Laing O’Rourke, Arnold Clark Automobiles, IT businesses which is different from advising group SCH and cash and carry retailer Bestway. large corporates,” says Dominic Davis, a In many ways, UK family businesses have corporate finance partner at Burges Salmon. been victims of the success of capital markets, “You have to understand the family dynamics which provided successful entrepreneurs with behind the deal. There are certain issues that a route to cash out. In scale terms, they are come up time and time again with family dwarfed by foreign rivals, such as Walmart (US, businesses, so it’s helpful to be able to advise $340bn capitalisation), Volkswagen (Germany, how other families have dealt with them and €84bn), Exor NV (Netherlands, €15bn) and the different ways you can approach them.” Tata Sons (India, 28 listed companies with a The key is remembering that you are combined capitalisation $145bn). However, a advising the whole family. “These are new generation of British business dynasties complex relationships,” explains Anna-Louise could technically be created by succession, as Shipley, a corporate finance manager at entrepreneurs such as Sir James Ratcliffe and Buzzacott. “The most important thing for us is Sir James Dyson near the end of their working that we’ve got all the right people round the lives. The general consensus is that having table and have everyone involved. You need more than one family member in a director to make sure you’re not isolating anyone or role puts a business in the ‘family’ category. giving anyone special privilege. You’re And there is a nuance to advising them. working for all of them – not just who shouts “There’s a distinct element to advising family the loudest.”

ICAEW.COM/CFF 19 “There’s a distinct element to advising family businesses which is different from advising large corporates” Dominic Davis, Associated British Foods corporate finance partner, Steel trader Steamcor, part of the Tata Group Burges Salmon

“It can be quite difficult to persuade people to review their structures until they absolutely have to. Leave it too late and you risk disputes” Doug Streatfeild-James, Volkswagen senior corporate finance associate, Cash and carry retailer Bestway Burges Salmon

DOING DEALS There comes a point in the lifecycle of out what it is that they want to achieve those family businesses have been every family business where a and then we help them decide how it is around. In terms of exit, trade sales are transaction is required, even if it is just best to get there. Sometimes they are common. Where a family doesn’t have managing the transition to the next very clear about their options and are family succession but has a generation. Doug Streatfeild-James, a aware they can sell to a trade buyer, but management team who have been part senior corporate finance associate at sometimes don’t realise that other of the business, an MBO can be a useful law firm and Corporate Finance Faculty options, such as MBOs or employee way to transition the values and core member Burges Salmon, explains: buy-outs, are available.” purposes of the business and release “Ideally, handing over the reins should Preparation is even more important cash and value to the family. have been addressed well before the than for corporate businesses. Often, “While there is sometimes less of an event, but one of the things you find family empires are composed of obvious fit with private equity, it is not with family businesses is that they can seemingly unrelated operations, such as out of the question, particularly to be quite conservative and tend to stick when a sibling or child with particular support an MBO with funding, for to the status quo. It can be quite difficult expertise has taken family support and example. We are also seeing more to persuade people to review their funding to build a business in a different investment from family offices, who structures until they absolutely have to. market. Similarly, the lines between typically have slightly longer time Leave it too late and you risk disputes, business and personal assets such as horizons than private equity.” which can be difficult to resolve if properties and equipment can be Anna Faelten, an EY partner and head feelings are running high.” blurred. If these issues are not properly of TMT, says private equity has become Family business owners can be very addressed there will inevitably be increasingly attractive to family focused on their own business and problems. businesses: “They’re often very savvy, immediate competitors and less aware In today’s market, family businesses very knowledgeable and do a lot of of trends in corporate finance. Matt are not short of financing options. Tim improvements to the business. A Katz, head of corporate finance at Armstrong, lead advisory partner at family-owned business might be more Buzzacott, says: “Sometimes, the first PwC, says: “Traditional clearing banks inclined towards some sort of employee part of our job is educating the family have been operating with and lending or management led buy-out, but you about the different options and finding to many family businesses for as long as often need a financial backer for that.”

20 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER COVER STORY

SPEAKING FAMILY 2 FAMILY

“The nature of a family business is that the family has this fantastic OUT OF THE WOOD degree of trust among each other, and they expect to have similar Not many family businesses trace Heathrow and Stansted Airports. trust with their advisers,” says their lineage back to a founder De Lotbiniere’s sons, sister and Jim Keeling (pictured), chairman and chief being duped by a conman. Seven cousins all work for the business, executive of advisory firm Corbett Keeling (CK), decades ago Giles De Lotbiniere’s which also employs multiple which he co-founded 25 years ago. “They can spot grandfather fell for a compelling generations of other families. In it a mile off if you don’t have integrity.” sales pitch for a new type of the downturn, directors took a How does integrity manifest itself? “We may concrete block made of wood, 50% pay cut and the workforce meet with a family business and they say they want sand, cement and a magic 10%, helping the business to sell, but an hour later we’re telling them that ingredient. The retired engineer through difficult times and would be a mistake as they obviously have some agreed to start production before positioning it for growth preparation to do. As our fees are largely realising the magic ingredient was afterwards. In 2019, the company contingent on the transaction happening, it’s clear a fraud. featured in The Sunday Times’ we are putting their interests first.” But there was magic to one of Profit Track 100. Sector expertise particularly resonates with the ingredients: wood. In building family-owned businesses, says Keeling. CK has 26 bricks, the addition of wood sector specialists, who both advise and originate makes them light, smooth, warm, deals. These specialists cover six broad sectors: able to manage moisture and consumer, healthcare, financial services, industrial, perhaps surprisingly – good in a support services and TMT. fire. Today, Lignacite’s wood- CK focuses on the three Cs – cash, chemistry and enriched cement bricks lock up so certainty. “Often, business owners will have an idea much CO2 that a block can be of the cash proceeds they want in the end. There transported 100 miles and still be will need to be some chemistry with the eventual carbon neutral. Lignite bricks have buyer, because they want to trust that the family been used in the Gherkin, the legacy is left in the right hands. And then there is Olympic Stadium, and both certainty – once started they want to know the deal will be completed.” Family businesses are often known to Corbett Keeling’s sector specialists. Gee Lawson, a London-headquartered family-owned distributor of life sciences ingredients, for example, was introduced by the firm’s chemicals sector specialist. In 2016, the firm advised on the sale of Air Charter Services, another family business. Its founder chairman Chris Leach had been looking for the best exit route for a long time. The sale of a 30% stake to Alcuin Capital Partners allowed Leach and his wife to cash out and their son to stay in the business. In December 2018, CK advised John and Maxine Murphy on the sale of their East Anglian-based restaurant chain, Arbuckles, to an employee ownership trust. “The employee ownership route to exit actually plays very well with family businesses, as it gives the seller a ‘good feeling’ about selling the business on to staff, who often will have helped them build the business and to some extent feel like family.” The last thing that resonates, says Keeling, is that ! CK is a family business too – his wife Emma is COO and his brother Simon is a non-exec. “We NEED TO empathise. Often there is a lot of emotion caught INNOVATE up with a family business sale – are they the generation that let it down? They need reassurance.”

ICAEW.COM/CFF 21 GUARDING THE FAMILY SILVER

Honest and open simplicity and not pass the communication is burden of a business down to the difficult at the best next generation?” says Sheehan. of times. When it’s “The big thing is understanding about money, that people’s aims and getting them difficulty increases to think about different scenarios.” exponentially. Planning for what to do with But families the proceeds should start as soon avoid these as possible, says Paul Martin conversations at (bottom, left), an investment their peril. “The decisions you management and financial make around a family business planning director at Brewin and making an exit from it have Dolphin. “Any deal will start with a repercussions that can last number; this might have been decades,” says Keith Sheehan offered by a potential buyer or it (above, top), wealth director at might be a number that the Brewin Dolphin. “I’ve seen a family have always had in mind – number of different situations the latter will not always have a where these decisions were methodology behind it.” “You’re working ! made incorrectly and families But once a reasonable estimate for all of them – were wrecked.” has been agreed, what that not just who CYBER As important as selecting and number translates into in terms of shouts the SECURITY structuring an exit or investment is replacing lost income and loudest” making sure that family members’ providing a capital base will objectives and objections are influence decisionmaking. “This Anna-Louise Shipley, known. “What do they want? Do can provide some flex should a corporate finance they want to pass it on as a going reduced purchase offer be made manager, Buzzacott concern? Do they want to create during negotiations,” adds Martin.

HARE AND TORTOISE Family businesses can pursue a longer-term and getting the relevant skills around the strategy than public and private equity- board table to address the changing world.” owned companies. “A lot of family Families have to adjust to allow non-family businesses weathered the downturn well,” executives to drive change and work out “Family says Hannah Harris, UK family business how to compensate them, such as by businesses leader at PwC. “At one of the respondents issuing different classes of shares, allowing to our annual survey, the family directors the family to retain voting control and face a specific took quite a significant pay cut to avoid issuing growth shares tied to the challenge closing a plant when their competitors performance of the business from the were closing theirs and they’ve now point of joining to new talent. PwC found attracting emerged as the leader in their industry.” the proportion of family businesses senior level This longer-term approach is highlighted achieving double-digit sales growth fell in PwC’s 2018 Global Family Business from 42% in the first generation to 32% for talent and Survey. Top of a list of challenges for the the second generation, 27% third, 32% getting the next two years are the need to innovate fourth and 22% for subsequent generations. (66%) and access to skills and capabilities Of course some of the decline can be relevant skills (60%). Hot areas such as digitalisation explained by the growth of those businesses around the (44%), cyber security (39%), data and the inevitable slowing down as the management (39%) and AI/robotics (22%) business matures. board table to are in the list of concerns, but not given the But, as a group, UK family businesses address the same priority. have prospered since the global financial “Talent is an area of concern far above crisis. Employment at family businesses changing Brexit and political uncertainty for family rose 38.2% and gross value added (GVA) world” businesses,” says Harris. “It’s an issue for all 51.6% in the period from 2010 to 2018, businesses, but family businesses face a compared to just 5.7% and 18.8% at specific challenge attracting senior level talent non-family firms, according to the IFB. SOURCE: INSTITUTE OF FAMILY BUSINESS RESEARCH FOUNDATION OF FAMILY SOURCE: INSTITUTE

22 22 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER ! COVER STORY

DATA MANAGEMENT CASE STUDY: SEASALT

In September 2018, BGF invested £11.5m in Cornish clothing and lifestyle brand Seasalt, with £4.5m “Family of debt provided by Santander businesses Corporate & Commercial. face a specific Seasalt’s turnover was £51m, with 50 stores challenge employing 689 people. CEO Paul Hayes, who attracting senior joined in 2013, said the investment would allow level talent” the company to go much further on all fronts. Seasalt was born in 1981, when the Chadwick Hannah Harris, UK family business family bought a general clothing store shop. The leader, PwC Seasalt brand took form in 2001, when the three brothers, Leigh, David and Neil, took over from their father. Neil Chadwick’s wife Sophie is the textile expert and print designer. Relationships were crucial to the deal. Gary Partridge of Lexington Corporate Finance in Cardiff met the family five years ago. The aim was to find a deal that would allow two of the “While there is brothers to continue with the business and all sometimes less three to realise some value. of an obvious “The key was not only to get the right financial fit with private terms, but to have an investor that shared their equity, it is values, that wanted to work in partnership with not out of the them,” explains Partridge. “BGF has refined its question” investment style and model, and has got some Tim Armstrong, people who have a good bedside manner with lead advisory family businesses.” partner, PwC

NOT ‘JUST BUSINESS’ One attraction of family businesses is their sense of values and purpose, a feeling that business isn’t just business. “A family-owned In the PwC survey, 79% of respondents business might felt they had a strong sense of values be more inclined and purpose. towards some For example, Mars Inc, a fourth sort of employee generation family business with 115,000 or management employees and turnover of more than led buy-out” $35bn, is governed by five principles: Anna Faelten, quality, responsibility, mutuality, efficiency EY partner and head of TMT and freedom. “From one generation to the next, it was always about how we do business rather than what we do as a business,” Victoria Mars, chair of the business from 2014 to 2017, told PwC. “Purpose is – on average – more obvious within family businesses,” says Harris. “A family business doesn’t necessarily always “It was always articulate its purpose and spend as much about how we do time thinking about it as some large business rather corporates do, but the purpose within than what we do them is often more obvious when you as a business” actually look at how the business operates Victoria Mars, in its community, and the way they look former chair, after employees and other stakeholders.” Mars Inc ALAMY, GETTY ALAMY,

ICAEW.COM/CFF 23 and logistics. Luxembourg is the technical home of ArcelorMittal and a raft of financial companies BUYING BEBELGIANLGIAN, including private equity (PE) giants CVC, KKR and Blackstone. GOING DUTCH The region traditionally has significant manufacturing business. Ford, Opel, Audi and The Benelux region is the meeting point Volvo have auto plants in Belgium. Industrial, of several cultures. But is it the meeting petrochemicals and shipping are other key sectors. In one of the largest deals announced this year, point for M&A? Jason Sinclair finds out Dutch oil and chemicals storage company Vopak has sold three terminals in Amsterdam, Hamburg and Algeciras to London-based First State, the Current talk in European football is of top-flight investment arm of Colonial First State Global Asset Dutch and Belgian teams competing in a BeNe Management for €723m. League. The idea is they compete for attention, sponsorship and players with the big five PRIVATE EQUITY PROSPERING European leagues. That’s just sport, but when it PE in general has become a dominant force in comes to M&A, Benelux is already a big player in deals across the region. Boris Kawohl, an its own right. Amsterdam-based partner at 3i, says, “Benelux has AnheuserBusch InBev, for example, was the “Everyone in always been an open market for PE, without all the world’s largest brewer even before its $107bn Holland speaks negative discussions you get in Germany. In acquisition of SAB Miller, and is Belgium’s largest English, and Benelux, PE has been more involved in business company by some distance. The ‘In’ of InBev is if you have a services and consumer rather than manufacturing, from Interbrew, itself a merger laced with good story, and that leads to more positive sentiment. symbolism between the Flemish Stella Artois and they’re willing “Also, everyone speaks English, and if you have the Walloon Piedboeuf. to listen a good story, they’re willing to listen to you. That’s According to Refinitiv, in the nine and a half to you” led to the market being more open to investors months to the middle of October, M&A deal value Boris Kawohl, from abroad.” announced in the Benelux region was $71.1bn – partner, 3i When 3i set up its Amsterdam office in 1998 it the highest amount at that stage of the year for six was one of the first to establish a local footprint years. It bucked the trend for the rest of Europe, with a local team. “Developments over the past which had returned to levels closer to 2016. 15 years have led the PE market to become more Can the cultural divisions that see parts of the internationalised – people setting up shop here but region look to France and parts to Germany allow also fly-ins,” adds Kawohl. “The market has become Benelux to be treated as one region? Or is it just a more transparent and that’s allowed people to get geographic construct – a neat though fairly arbitrary division made by corporate planners keen to section the world into manageable packages? The Netherlands, with its mercantile history, has huge corporates like Royal Dutch Shell, Unilever and Phillips. Belgium, linguistically and culturally divided, has increasingly specialised in biotech

24 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER ROADSHOW: BENELUX

deals done from the outside.”

PE firms such as HPE Growth, Life Sciences Benelux target European target Partners and Goodwell Investments lead Year Value ($m) No. of deals Value ($m) No. of deals European investments out of Amsterdam. And global players such as Carlyle Group and 2014 73,181.9 804 846,655.8 14,454 AlpInvest have bases in the Dutch city. 2015 63,562.2 974 865, 632.8 15,904 3i’s investments in the region include optical 2016 40,348.6 1,085 714,841.0 16,550

retailer Hand Anders, fitness clubs Basic-Fit, and 2017 48,483.7 1,080 753,264.6 15,967 personal care products company Royal Sanders, 2018 81,346.7 1,076 989,939.6 16,084 which completed a cross-border deal into the UK 2019 (9 months) 71,059.4 798 539,656.1 11,397 for the personal care division of McBride, whose main operations are in Preston. “The number one TABLE OF DEALS (FIRST 10 MONTHS OF THE YEAR) SOURCE: REFINITIV value-driver for almost all of our investments is international growth,” explains Kawohl. “That can M&A with the UK fluctuates take two shapes – either organic roll-out as with Basic-Fit, or buy and build, as with Royal Sanders widely in terms of value of deals, personal care. You have to pay high prices for but has consistently seen over attractive consumer businesses, but cross-border synergies can make it worth it.” 100 announced deals a year Kawohl feels the winners for PE in the region “In the are traditional businesses, and that could be Netherlands good news for Belgium as long as PE has boots on they have TWO TIERS the ground. some large Lieve Creten is a partner at Deloitte in Belgium, M&A with the UK fluctuates widely in terms multinationals, heading up the M&A transaction services team. She of value of deals, but has consistently seen but we have says that a big difference between the Dutch and more than 100 announced deals a year, fewer and that Belgian markets is that Belgium is a country of according to Refinitiv. In the 10 months to changes the mid-sized companies. “In the Netherlands they October there has been $8.6bn of Benelux dynamic of have some large multinationals, but we have fewer acquisitions of UK businesses (up from $0.6bn in the market” and that changes the dynamic of the market. The 2018), and $1.7bn in the other direction (down Lieve Creten, Dutch market is more Anglo-Saxon – we partly align from $27.6bn in 2018). partner, Deloitte with the Netherlands and partly with France. This In July, Netherlands-based business takeaway. makes the Belgian market less transparent than the com announced a £4.3bn takeover of UK-based Dutch market. I hear a lot from PE players that the Just Eat, which is the biggest deal of the year so far Belgian market is more difficult to explore, which is between Benelux and the UK, although at the time partly because we have a lot of ‘hidden jewels’ – of publication Prosus of South Africa had made a family businesses that are not so visible.” rival $4.9bn unsolicited bid for Just Eat. The biggest Creten says that larger PE houses from the US, UK acquisition of a Benelux business was Mesh UK and Scandinavia have been more active in the Holdings’ acquisition of Sentiance for $329m. Belgian market, and perceptions of that capital

Panoramic view of Zuidas – the business and financial district of Amsterdam, Netherlands credit/here

ICAEW.COM/CFF 25 ROADSHOW: BENELUX

have improved: “There’s been a concern that “Private equity firms are they’re only interested in short-term returns and a lot of family-owned companies looked on them as typically setting up sharks. That perception changed with some very auctions and there is a lot positive deals that have led to second and third buy-outs and company growth. Some of these “Sellers still of appetite for banks to get mid-sized companies have maybe not had the have the involved in financing” greatest ambitions, and PE has been seen to help old price with that and make companies more sustainable expectations, and profitable.” so there’s a Bank financing is readily available, often through bit of a price any downside to come. They issued a lot of the incumbent banks KBC and Belfius. “I don’t get gap between leveraged deals in the past few years and have a the impression that it’s difficult to get finance for the buyers and lot in the portfolios, so are starting to de-risk,” he deals,” says Creten. sellers” explains. “Meanwhile, debt funds are emerging, Tobias Broeders, which can take the higher leverage and are BOATS AND BANKS partner, EY more flexible, but of course more pricey.” In Rotterdam, Tobias Broeders is a partner for EY involved in port-related assets. EY is organised so SELLER’S MARKET that Belgium, the Netherlands and France are one Casper Haket and Kuif Klein Wassink, partners technical ‘region’ for the firm, and city offices work at the law firm Dentons, have been involved in more sectorally. Broeders is seeing “a lot of capital dozens of deals in what they categorise as a around and PE becoming a crowded market with seller’s market in the region, often with new entrants as well as existing players increasing international PE firms expanding their interests. the sizes of their deals”. “More money is available,” says Haket. “We’re Broeders has observed banks in the Netherlands getting closer to the levels we saw pre-crisis. It’s becoming less eager to provide deals with high mostly Dutch focused, but Belgian deals are debt multiples. “However, sellers still have the old “More money adopting some of that style too.” price expectations, so there’s a bit of a price gap is available. Wassink says that PE firms are typically setting between buyers and sellers. There have been We’re getting up auctions and there is a lot of appetite for historic issues with some Dutch banks – and they’ll closer to the banks to get involved in financing. also be thinking about how protected they are for levels we saw There is also a changing perception of PE pre-crisis” and pushback from traditional works councils, Casper Haket, adds Haket: “We assisted KKR in buying the BREXIT EFFECT partner, Deloitte spreads business from Unilever last year for While Brexit has not happened (yet), some $8bn. The head of the works council at Unilever companies are moving their European said they were actually very happy that PE was headquarters from the UK to the Netherlands. picking this up,” says Haket. Others have suggested they would switch from London-Amsterdam dual headquarters, but backtracked. Has Brexit been a deal-driver? Deloitte’s Lieve Creten says: “I’ve not seen a lot of impact from Brexit. Some Belgian companies have looked outbound to keep a hold in the UK market, but I haven’t noticed anything inbound that looks inspired by Brexit. That’s happened more in the Netherlands.” 3i’s Boris Kawohl adds: “Amsterdam is an international city. On the business side, some finance teams have shifted here – but there’s been no big inflow of structural set-ups yet.” EY’s Tobias Broeders has seen moderate Brexit effects: “There’s some movement from companies opening in Amsterdam or Rotterdam. Anyone investing in firms that rely on trade flows to and from the UK are cautious, but that doesn’t mean it’s not happening. People realise the trade flows are still going to be needed. There are still people in England who need to eat and we have a lot of food here.”

26 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER ANNUAL RECEPTION THE BIG NIGHT

Members packed Painters’ Hall in the City of London for the Corporate Finance Faculty’s annual reception, reports Marc Mullen

Deb Oxley OBE addresses the audience

ICAEW.COM/CFF 27 From left: David Petrie, Deb Oxley OBE, Mo Merali, Sybella Stanley, Alec Stokes, Charlotte Mancuso, Andrew Rutherford and Rosanna Woods

She added that it was increasingly important that A YEAR IN corporate financiers understood the opportunity so that it could be put on the table for vendors. CORPORATE “Are EBOs capitalism? Are they socialism? They are about developing a way of running FINANCE businesses that act in the long-term interests of all their stakeholders, recognising that sharing wealth and influence among all employees can Deb Oxley OBE, chief executive of the Employee deliver significant value add,” she said. “They are Ownership Association, was guest speaker at the about socialising capital.” Corporate Finance Faculty’s annual reception, Faculty chair and head of private equity at held last month at Painters’ Hall in London. Grant Thornton, Mo Merali, gave a speech outlining Addressing an audience of more than 200 the invaluable work carried out on behalf of guests, Oxley began by suggesting that a wider members this year by the faculty. This included definition of corporate finance could include David Petrie, ICAEW’s head of corporate finance, advice to encourage “long-term, productive representing the Institute on the government’s sustainability of more inclusive businesses”. She newly created Business Finance Council from explained why: “Because there is a global debate September, and the AI in Corporate Advisory across all developed economies around what guideline – co-written by Shaun Beaney (ICAEW) business is for. And corporate finance sits at the and Rosanna Woods (Drooms) and published in heart of business.” June – as well as the work of the technical Having outlined the characteristics of likely committee and the forums held throughout the employee ownership transitions, Oxley went on to year for the benefit of members. speak about three recent employee buy-outs (EBO): Having welcomed guests at the start of the Aardman Animations, the Bristol-based film evening, Petrie then also thanked the faculty’s production company behind Wallace & Gromit; members, board and staff. Union Industries, a family-owned manufacturer of This year’s annual reception was co-sponsored by high-speed roller doors based in Leeds; and Drooms and Arbuthnot Commercial Asset Based electronics retailer Richer Sounds, whose EBO saw Finance, Beauhurst, Cantab Asset Management, 500 employees share £3.5m. Mark to Market and ThinCats.

28 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER ANNUAL RECEPTION

MOST SUCCESSFUL AT M&A

Annual reception guests saw FTSE 100 “A network of corporate financiers may often information and analytics company RELX have better access to that deal flow than us, presented with ICAEW’s Corporate Development because they are working actively with those Award for its successful acquisition strategy. businesses.” RELX is a £36bn market cap global provider of information-based analytics and decision tools for professional and business customers. It was featured in the February 2019 issue of Corporate Financier as one of the UK’s most acquisitive companies. Last year it acquired California-based venture capital-backed ThreatMetrix for £580m. It is one of the largest repositories of online digital identities in the world and the deal was RELX’s largest acquisition of the past decade. RELX director of corporate finance and head of M&A, Sybella Stanley, said: “ThreatMetrix is widely recognised as a leader in the digital identity space. The acquisition was in line with our organic growth-driven strategy, supported by acquisitions of targeted data sets and analytics that are natural additions to our existing business. “We have always been very selective with our acquisitions, wanting them to really fit and be tightly integrated with our strategy,” added Stanley. “We look for acquisition opportunities to augment organic growth rather than transform business.” As well as Stanley, the M&A team includes five other staff, four of whom are ACAs. Deals come from the operations, which are “deeply enmeshed in their markets” and RELX then uses advisers for financial and legal due diligence on most deals. Where appropriate, it takes commercial and reputational risk advice. The Corporate Development award is based on a ‘best-in-class’ methodology devised by the Corporate Finance Faculty, led by David Petrie, with the M&A Research Centre at Cass Business School, led by professor Scott Moeller. It involved an empirical analysis of the contribution of substantial acquisitions made between January 2017 and July 2019. Petrie said: “Every year we identify the London- listed company that has made the most effective use of M&A to increase shareholder value and grow. I’d like to congratulate RELX, a global company with 30,000 employees, which was the best performer according to the unique methodology we’ve developed.” Previous winners of this award represent a wide range of industries and have included Weir Group, Intertek, Aberdeen Asset Management, Victoria Plc, Rentokil Initial and Coats Group. When it comes to tapping into the corporate finance network, Stanley added: “There is a lot of innovation going on in smaller and mid-size businesses, particularly out of universities in recent years.

ICAEW.COM/CFF 29 ANNUAL RECEPTION

CORPORATE FINANCE DIPLOMA PRIZEWINNERS

Prizes for ICAEW’s Diploma in Corporate Finance exams were also presented to Alec Stokes of RSM and Charlotte Mancuso of Lexington Corporate Finance

Having completed a work Charlotte Mancuso joined placement with RSM in Lexington Corporate London, Alec Stokes joined Finance in Cardiff in April the firm as a corporate 2018 as assistant manager finance executive in from MHA Broomfield September 2017. Last year, Alexander. She started with he started the Corporate MHA in October 2011 and Finance Qualification (CFQ) moved into corporate and was promoted to private equity (PE) associate finance in October 2016. on completion of his studies. HOW DID YOU GET INTO WHAT IS YOUR CURRENT ROLE? CORPORATE FINANCE? I work in business development, which is perhaps I joined MHA Broomfield Alexander straight from an unusual role. I don’t do the nuts and bolts of college and worked in audit and accounts. Once I transactions. I’m responsible for our relationships qualified as an ACCA, I moved into the corporate with the PE community and growing the firm’s finance team and worked on a number of delivery of audit, tax and advisory services to both transactions over an 18-month period. I developed PE clients and their portfolio companies. I also financial modeling and analysis skills, and worked work with RSM’s corporate finance teams nationally on fundraisings and strategic reviews. on PE transactions. WHAT IS YOUR CURRENT ROLE? HOW DID YOU FIND STUDYING FOR We are a boutique advising businesses across the UK THE DIPLOMA? in the £5m-£25m enterprise value range. We offer a I learned a lot, and I really developed my broad range of services on acquisitions, disposals technical skills over the course. It doesn’t impact my and growth funding, as well as providing due day-to-day work, but when I meet a PE firm now, I diligence and independent reviews on proposed have the technical understanding of what the transactions. Gary Partridge is managing director, challenges are on certain transactions. This gives me Thomas Edwards director, and there is an executive, much more credibility, because I can talk about an associate and myself. I lead smaller transactions valuations, deal structures and M&A strategy. It is and work with Gary and Thomas on larger ones. also a great help if I am meeting vendors or Recent deals have been in a variety of sectors but management teams who are considering doing a include retail and further education. PE deal. I can talk about the intricacies of leveraged buy-outs, as well as exit routes. It has broadened WHAT WAS THE KEY LEARNING IN THE CFQ? my skills, which will be useful if I want to move The course has definitely improved my valuation and into more of a technical transactions role later in analysis skills, and how I practically apply that in the my career. work we do. It’s crucial to understand how value is created and be able to analyse how that’s affected by WOULD YOU RECOMMEND IT? performance, and debt and equity structures. I’d recommend it as a very practical course. It gives you the theory and the technical foundation to WOULD YOU RECOMMEND IT? become a good corporate finance practitioner. The I would definitely recommend the CFQ – it gives you real-life case studies were particularly useful – they a good solid technical grounding, develops your core brought the technical knowledge to life. The course corporate finance skills, but perhaps most focuses on large deals and large companies, but importantly you learn how to apply theory in you can definitely apply the learning to lower practical situations. And it certainly improves your mid-market deals that RSM typically advise on. career prospects too.

“This gives me much more “It’s crucial to understand how credibility, because I can talk value is created and analyse how about deal structures and M&A” that’s affected by performance”

30 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER BETTER CONNECTED: DANIEL JONAS PEOPLE HAS WORKED ON MORE THAN 30 POWER TRANSACTIONS IN THE PAST YEAR

DESIRE PATHS

WK Corporate Finance associate director Daniel Jonas talks to Jo Russell about the importance of developing personal contacts within private equity firms

WHY WILKINS KENNEDY? past year, I’ve been involved in South East Awards. Alongside my I didn’t take the conventional route about 25 transactions, predominantly expertise, the judges pointed to to chartered accountancy. I opted in the TMT sector. Exposure to this my reputation with the PE and for work experience rather than a level of deal volumes is a positive debt community. degree, joining the firm in 2008 on a quirk of the dual advisory/TS role I fast track AAT-ACA training scheme. I currently enjoy. HOW HAS STUDYING HELPED moved into corporate finance shortly YOUR CAREER? after qualifying. The culture at Wilkins WHAT WAS YOUR MOST I took the ACA as it is well recognised Kennedy seemed a good fit and it was RECENT DEAL? and opens a lot of doors. At the time, I SME-focused. I felt working with a It was a £4.5m investment into wasn’t sure where my career would go, mid-tier firm would give me a broad SharpCloud, a B2B enterprise whether into an industry finance role, understanding of businesses and direct software-as-a-service (SaaS) business, staying in audit, or moving into a exposure to senior management. by YFM Equity Partners. It was an specialist sector like corporate finance. early-stage growth-capital deal. I led Doing the ACA helped broaden my WHEN DID YOU MOVE INTO the deal from the initial pitch through understanding of those sectors and CORPORATE FINANCE? to completion, building an investor helped my decision-making process. The key driver was wanting to move deck and forecast model, leading In 2018, I completed the ICAEW to an area where I could add more negotiations and guiding the Diploma in Corporate Finance. It value to clients. I knew the WK management team through the broadened my knowledge of areas Corporate Finance team was process. It took four to five months. that we don’t deal with on a day-to- expanding and that there were The deal was referred to me by one of day basis. We have an SME client base ambitious plans for the division. When my PE contacts. Networking and and focus on transactions typically up I joined in 2012, there were only five building relationships is part and to £50m. We don’t, for example, tend people, so I had a lot of responsibility parcel of what we do. Despite being to get involved in listings. Having the from day one. We are now 20-strong part of a big accountancy group, we diploma allows me to talk about and part of the Cogital Group. It has still rely on referrals from previous those other options at a high level been great to play a part in the growth clients and our contact base. I was and provides a more well-rounded story to date and it has accelerated my recently named Emerging Dealmaker knowledge base wherever your development at a personal level. of the Year at the 2019 Insider Media career takes you.

WHAT DOES YOUR WHAT DOES THE FUTURE HOLD? WORK INVOLVE? I see myself staying in the corporate When I first started, it was a very varied finance world, continuing to progress role, but in the past 24 months I have and building my reputation. Not consciously shifted towards external everyone has a job they genuinely fundraising and PE-led transactions, enjoy, but for me corporate finance particularly early-stage growth capital has a bit of everything. We are and lower mid-market M&A, between I felt working with a constantly meeting new, interesting £2m-£25m. I advise management mid-tier firm would give people and businesses, and are part teams looking to raise growth capital, of our clients’ journeys at key stages. typically early stage, and on the flip me a broad understanding Whether that’s a Series A funding side I also provide financial due of businesses and direct round or an exit, we get to be diligence services to a broad range immersed in the crazy art of of PE firms and debt funds. In the exposure to management negotitation. What’s not to like?

ICAEW.COM/CFF 31 on smaller businesses across the stepped down as CEO in August after six country. The financial capability he years in charge. has created in the bank is supporting start-ups and growing companies in Simon Dingemans, previously every region and nation of the UK and CFO of GlaxoSmithKline, has CONNECTIONS is helping the most innovative UK taken over as chairman of the companies to become the world Financial Reporting Council (FRC). Sir class companies of tomorrow.” Jon Thompson, formerly chief executive of HMRC, joins as chief executive. They Avanish Katkoria has joined the replace Sir Win Bischoff and Stephen WK Corporate Finance team Haddrill respectively. from BDO, where he worked in The FRC has recently come under fire the financial services sector group and over the way it has regulated the qualified as an ACA earlier this year. He accountancy and audit profession. Keith Morgan is to stand down has a BSc in economics and statistics Following the collapse of Carillion and as chief executive of the from University College London. BHS, the Kingman review made 83 government-owned British recommendations, one of which was that Business Bank at the end of 2020. Ben Goldring has been a new regulator should replace the FRC. Morgan, who is a member of the promoted to director from Dingemans said: “The UK is rightly Corporate Finance Faculty’s board, has associate director at considered one of the world’s pre- been in the role since December 2013, Cavendish Corporate Finance (part eminent financial centres and the FRC when the bank was established. of finnCap). He joined Cavendish as – and its successor, the Audit, Reporting The bank currently supports more an M&A executive from Deloitte, and Governance Authority – has a big than 90,000 smaller businesses, with where he trained as an ACA, and had role to play in setting and upholding more than £7bn of loans or investments become manager in the corporate high standards for audit, reporting, through its various programmes. The finance team. governance and stewardship in order to bank has also introduced regional protect the interests of investors and finance programmes to the Northern Eric de Montgolfier has been other end-users of financial information.” Powerhouse, the Midlands Engine and appointed CEO of Invest other areas of the country, as well as Europe. He will take up the Solihull-based adviser Jerroms developing the Business Finance Guide role at the end of December. Invest has merged with Blue Sky 1 with ICAEW. Europe represents Europe’s private Corporate Finance. The British Business Bank’s chair, equity, venture capital and infrastructure Its corporate finance division Lord Smith of Kelvin, said: “Keith sectors. de Montgolfier is joining from will be rebranded and run has been an outstanding leader, Brussels-listed investment manager 2 from its headquarters in Blythe building the business from scratch to Gimv, where he was partner and head Valley Park. Alongside Jerroms directors create an organisation with of Gimv France. Lucas Markou (1), Mark Eden and Paul considerable scale, reach and impact He succeeds Michael Collins who Heaven (2), former managing director

PE SHORTS

Jessica Livingbridge at Next Wave, having Beechbrook investment manager Bartos has recruited previously worked in Capital has to help manage funds has been 1 three EY’s private equity recruited Paul across the £27m North appointed investment team. Robyn Smith was Whitehouse as an East Development

investment manager 2 managers: investment associate in investment director Capital Fund. Prior to at AlbionVC. She Andy KPMG’s M&A team. who will lead its deal Maven, he worked at joins from Rothschild Harrington (1) Tom Smith was an origination and RG Corporate Finance

& Co where she 3 from Next executive in the lead execution activity advising on regional advised TMT firms Wave advisory M&A team at across the Midlands. and national mid- on M&A. She Partners; Deloitte. The firm also He joins from Lloyds market deals. previously worked 4 Robyn Smith hired Cate Pfirman (4) Banking Group. for the US (2) from as fund raising Buy-out government, where KPMG; and manager from Ardian Maven group she financed 5 Tom Smith (3) in New York, and Yun Capital 1 KKR has infrastructure from Deloitte. Ma (5) as strategic Partners announced a projects in emerging Harrington was fund analyst from has recruited David number of markets. investment associate Ekimetrics. Nixon as an 2 promotions in

32 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER JERROMS-BLUE SKY CORNELIA ANDERSSON IS NOW PEOPLE CORPORATE FINANCE GLOBAL HEAD OF M&A AND POWER MERGER IN THE MIDLANDS CAPITAL RAISING AT REFINITIV

of Blue Sky, will head up Jerroms manager from Intralinks. Based in transactions. He previously worked at Corporate Finance. Frankfurt, he will work on corporate Oakley Advisory. finance and M&A. Rothschild & Co has agreed to buy Kingston Smith has changed its name Livingstone’s UK business, a Dow Schofield Watts has to Moore Kingston Smith to reflect the 34-strong team that provides deal- expanded into Scotland firm’s membership of the Moore making, debt and special situations through a partnership with Stephens International network, which advice to privately owned companies Hall Morrice Corporate it joined in May. Moore Stephens and entrepreneurs. Finance in Aberdeen. Melanie International has rebranded itself as Clark and Tom Faichnie Moore Global. CBW has recruited Philip Bird founded Hall Morrice Corporate as a partner in its corporate Finance in 2017. Clark was previously at The Financial Conduct finance team from BDO. Prior KPMG and RSM. Faichnie, played a key Authority (FCA) has to BDO he worked at Moore Stephens role in building Deloitte’s deal advisory appointed Sheree Howard and Grant Thornton, and before that in team in Manchester, and developed executive director of risk and private equity at RBS and Hawkpoint Barclays’ global investment strategy for compliance oversight. She replaces Partners. He has a first-class economics the oil and gas sector. More recently he Barbara Frohn. degree and an MBA from Cranfield was a partner at RSM. School of Management. Faichnie said: “This partnership with Blick Rothenberg, a London subsidiary He will be responsible for identifying Dow Schofield Watts will boost our of Cogital Group, has acquired Rees and developing new business global reach in line with the increasingly Pollock, which focuses on advising opportunities for the firm, as well as international nature of the oil services owner-managed businesses, particularly providing additional support and industry, and enable us to leverage the those regulated by the FCA. expertise to existing clients. expertise within the group to support other fast-growing entrepreneurial Smith & Williamson and Tilney have Cornelia Andersson has joined businesses in the region.” agreed to a merger, which will see financial markets data firm Smith & Williamson shareholders Refinitiv as global head of Onecom has recruited receive £625m in cash and shares in the M&A and capital raising. She has joined Christian Craggs, who joins enlarged group. The transaction values from Blackstone, where she was senior the independent business the combined business at £1.8bn. vice-president, global head of research telecommunications provider as its first and market data, leading the firm’s director of M&A and strategy. Duff & Phelps has expanded its market data and business intelligence Onecom recently secured a London presence with a new office at functions globally. £100m funding package from LDC The News Building. and credit funds managed by an Dennis Kasch has joined virtual affiliate of Ares Management. Kreston Reeves has recruited Steve data room provider Drooms as Craggs will define Onecom’s Gauke from legal firm Exigent, where business development M&A strategy and lead all of its M&A he also developed new business leads.

LEGAL BRIEFS

its flagship and Ashish Shastry (6) Courtney partners from that, he was with DLA private will head up PE in Haseley Jones Day’s business where he was made a 3 equity Asia-Pacific. 1 (1) has restructuring and partner in 1999. business. joined reorganisation Pete Stavros Camille Emin Gibson, practice. Derek 4 (1) and Nate has joined 2 Dunn & Swanson Taylor (2) French Crutcher in Weil Gotshal has has joined will co-lead private equity firm Washington recruited David Denton’s corporate 5 its buy-out Activa Capital, 3 from the US Avery-Gee as an practice in Atlanta. In activities associate, from Securities M&A partner from Saudi Arabia, Imtyaz in the BNP Paribas. and Linklaters. Sattar has joined as 6 Americas; 4 Exchange counsel from K&A, in Mattia Caprioli (3) James Lander has Commission. And in Addleshaw Goddard association with Allen and Philipp Freise (4) joined Caledonia New York, Scott has recruited Paul & Overy. In Vancouver, are to co-lead the PE Private Capital in Greenberg (2), Steven Fleming as partner natural resources business in Europe; Birmingham, as an Domanowski (3) and in its London specialist Robin Longe and Hiro Hirano (5) investment executive. Michael Cohen (4) restructuring practice has joined as have joined as from Dechert. Prior to corporate partner.

ICAEW.COM/CFF 33 MOORE KINGSTON SMITH FOUND A PEOPLE BUYER WILLING TO PAY A PREMIUM POWER AND ALSO PRESERVE THE LEGACY

ON MY CV ALL THE WORLD’S A STAGE It might have taken three years, but Nicola Horton of Moore Kingston Smith achieved a record price for a West End theatre

the end of January 2018 and had bids the operations. Financial terms of by the middle of March. There was the deal were not disclosed, but there WHAT IS THE DEAL? significant interest from abroad, was significant press speculation at The sale of the Theatre Royal Haymarket particularly from the US, but also the time. I am confident the price (TRH) to Access Entertainment (owned from Europe and Asia. We needed a achieved set a new record for the sale by Sir Leonard Blavatnik). TRH turnover second round, and further due of a West End theatre. in the year immediately prior to the sale diligence and legal negotiations took was £4.5m. TRH is the first theatre to be about eight weeks. We completed the WHO WERE THE ADVISERS? owned by Access, which also owns deal in June 2018. We were financial advisers to the Warner Music. The Louis Michaels family TRH shareholders, Saffery Champness held the lease from the Crown Estate WHAT WAS THE STRUCTURE provided accounting and tax and had managed the theatre since the OF THE DEAL? transaction support services and early 1970s. The current chairman was It was a simple 100% sale of a holding CMS provided legal advice. Franklin approaching retirement and there was company whose trading subsidiary Rae advised on the launch PR and no obvious succession plan, so they held the lease for the theatre and ran communications. Access has a large decided to pursue a sale. in-house M&A team that ran the deal THE CV from their side and did much of its own WHAT WERE THE TIMESCALES? due diligence. Taylor Wessing was In 2015, a TRH shareholder Nicola Horton is a corporate finance Access’s legal adviser. approached me, knowing I advise on principal at Moore Kingston Smith. She media and entertainment transactions. started her career in publishing in 1998, WHAT WERE THE CHALLENGES? We spent over a year on essential before joining Smith & Williamson’s Probably the biggest challenge was corporate finance team, where she pre-sale tax and structuring issues gaining the trust of the various became head of media. Treasurer of before planning for the sale began in theatrical charity, The Actors’ Children’s family shareholders, who had mixed earnest in April 2017. We knew this Trust, she holds the ICAEW’s Corporate feelings about the sale. They knew was a trophy asset purchase and Finance qualification. that there was no succession plan, needed to get to as wide an audience but were very emotionally attached as possible. We therefore wanted to be Recent deals to the theatre. We had to find a very public about the fact that it was for buyer who would not only pay a sale, rather than try to manage a sale Sale of technology business premium price, but would also look discretely, which would be a much Grand Visual to media agency after the theatre and preserve the more common route for us. Talon – May 2019 family’s legacy. Sale of B2B marketing agency We spent months researching Another challenge was that a DirectionGroup to Unlimited – potential buyers, pulling together a April 2019 journalist broke our embargo and ran comprehensive data room and an Sale of healthcare comms agency a story that the TRH was up for sale information memorandum, devising a Healthcircle Advertising to a day early. This had a huge PR campaign and staff communications Fishawack – July 2018 impact on our staff and internal

strategy. The sale process launched at stakeholder communications. HARRISON DAVID PHOTOGRAPHY:

34 DECEMBER 2019/JANUARY 2020 CORPORATE FINANCIER ICAEW CORPORATE FINANCE FACULTY

Way ahead

THE CORPORATE FINANCE FACULTY WOULD LIKE TO THANK ITS MANY MEMBER ORGANISATIONS FOR THEIR SUPPORT IN 2019 – AND INTO 2020

3i Development Bank of Wales Panoramic Growth Equity ABN AMRO Commercial Finance Drooms Perscitus Advisers Addleshaw Goddard Duff & Phelps PKF Francis Clark Alantra ECI Partners Price Bailey Albion Capital EY PwC Anthesis )LHOGƓVKHU Quantuma Arbuthnot Commercial Asset Based FRP Advisory Ramboll Lending Gibson Dunn RSM August Equity Grant Thornton Rutland Partners BDB Pitmans Haysmacintyre RVE Corporate Finance BDO Headpoint Advisers Saffery Champness Beauhurst HMT Samena Capital Beechbrook Capital ICON Corporate Finance Simmons & Simmons Beer Mergers Investec Smith & Williamson BGF James Cowper Kreston Spectrum Corporate Finance Brewin Dolphin JCRA Stonehage Fleming British Business Bank KPMG Strand Hanson Burges Salmon LDC Taylor Wessing Buzzacott Lexington Corporate Finance Thinkat Capital Cantor Fitzgerald Linklaters TLT Cass Business School Mazars Travers Smith Cavendish Corporate Finance Media Asset Capital UHY Hacker Young Clydesdale Bank Menzies UK Government & Investment Connection Capital MHA MacIntyre Hudson WestBridge Capital Corbett Keeling Mobeus Equity Partners WK Corporate Finance Crowe UK Moore Kingston Smith WSP Deloitte NorthEdge Capital XPS Group Dentons OMERS Private Equity Yorkshire Bank

If you’d like your organisation to become part of the biggest network of professionals and companies LQYROYHGLQFRUSRUDWHƓQDQFHSOHDVHFRQWDFW[email protected] or phone her on + 44 (0)20 7920 8689

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