PRIVATE EQUITY IN EAST ANGLIA A closer look at the types of businesses backed by across the region February 2018

Forward Corporate Finance - www.forwardcf.co.uk INTRODUCTION

When clients talk to us about a management or selling their business, we often raise private equity as an option they might consider instead of a trade sale. We take time to explain what private equity is, how it works, but sometimes clients just want to know “am I the right fit?”. To try and answer that we have carried out some research on private equity backed companies across East Anglia1. We excluded businesses that have just raised small amounts of seed finance, and also those fast-growing technology and life sciences businesses, which we have categorised as backed. In total we identified 89 different companies representing investments by over 50 different private equity funds, across a diversity of scale and sectors. For businesses out there looking for an exit, to fund a , or to raise , this should be encouraging.

To view this report as a .pdf please click here. If you would like to see the full list of businesses, please get in touch or click here.

THE INVESTORS

# With Average Over 50 different private equity firms appear on our list. The table opposite # # Companies BY INVESTOR # Co-invest accounts EBITDA per lists all those companies with more than one investment in the region; Companies by Investor filed investment Mobeus leading the way with 6, including one co-investment with Connection Mobeus Equity Partners 6 1 7 5 790 Capital. The list varies enormously in the size of investee companies. At the LDC 5 5 5 3,385 lower end of the scale we have Business Growth Fund, Mobeus, YFM, Spring, Beringea 4 1 5 2 (31) Calculus and Beringea. Moving up the scale we also see investments from Business Growth Fund 4 4 3 221 some of the market mid market firms, Rutland, Bridgepoint and Inflexion. At Calculus Capital 4 4 0 n/a YFM Equity Partners 4 4 3 537 the very top end, KKR even appear on our list! Rutland Partners 4 4 4 8,171

Bridgepoint 2 2 2 23,943 Downing VCT 2 2 1 462 Equistone 2 2 1 (82) ETF Partners 2 2 2 1,181 Inflexion 2 2 1 12,016 Spring Ventures 2 2 2 468 Synova Capital 2 2 2 1,105 TDR Capital 2 2 0 n/a Azini Capital Partners 1 1 2 0 n/a Connection Capital 1 1 2 1 569 HgCapital 2 2 2 1,693 TOTAL WITH > 1 INVESTMENT 51 4 55 36 3,486 Other 38 3 38 28 TOTAL 89 7 93 64

1 Hertfordshire, Essex, Cambridgeshire, Bedfordshire, Suffolk and Norfolk. Forward Corporate Finance - www.forwardcf.co.uk

IN WHAT SECTORS ARE THEY INVESTING?

So what type of businesses are private equity firms investing in? Across our 89 companies we identified 11 sectors from media to business services, vets to care homes, companies to e-commerce businesses.

The key thing to understand about private equity, is that most of the funds are sector agnostic. Unlike venture capital which is searching for the next unicorn in technology or life sciences, private equity funds are looking for good, solid businesses with a track record, a good management team and a defensible growth plan. They like to invest in supporting a business sale through a management buyout, or perhaps a partial exit of a founder shareholder, or they can help to support growth plans such as overseas expansion or provide funds for acquisitions. So no matter what sector you are in, if your business fundamentals are good, then there is no reason why private equity might not be a solution for you.

HOW ARE THE COMPANIES SPREAD ACROSS THE REGION?

Maybe it’s no surprise how the companies are spread across the region, but it is great to see all the counties represented. But as we have travelled around East Anglia talking to businesses and advisors, there is not widespread understanding of what private equity is, or what it has to offer. And that means companies in the region might be missing out on opportunities that are available to other businesses in Birmingham, Manchester or Bristol. Private equity is not the silver bullet, but it is a valuable option for business owners and managers to be aware of. We hope that over the next few years, the number of private equity transactions across the region grows, and we hope that businesses in Norfolk are as aware of the opportunity it offers, as those sitting in the centre of Cambridge.

Forward Corporate Finance - www.forwardcf.co.uk

AND FINALLY… AM I THE RIGHT SIZE FOR PRIVATE EQUITY?

For those companies with filed accounts we split them into different size categories. And while accounts do not often portray the whole picture, again there is a large spread of companies. Typically private equity will look for businesses with a track record of profitability, and an EBITDA of over £1 million. Interestingly in the list we have 25 companies that filed account showing EBITDA of less than £1 million. Obviously this could reflect investment for growth, or other exceptional issues which we can’t identify from the accounts alone.

As we saw from the first section, different firms focus on different areas of the market, so if you are looking to raise private equity it’s important to do your research and know which type of private firm is the best fit for your scale of business.

SUMMARY

Having spent many years working with SMEs and owner managed businesses, we are encouraged by the amount of capital now available to our clients. Unlike 20 years ago when the options didn’t go much beyond the local bank manager, the variety of funding options are now plentiful. It’s great to be able to meet companies, listen to their needs and be able to provide options, private equity being one of them. If we can help… please get in touch.

Sarah Moores Director, Forward Corporate Finance T: +44 (0)1279 215558 M: +44 (0)7809 610401 E: [email protected]

Rob Dukelow-Smith Director, Forward Corporate Finance T: +44 (0)1279 215559 M: +44 (0)7931 349271 E: [email protected]

Forward Corporate Finance - www.forwardcf.co.uk