Doing deals differently?

Our managing director, Ruth Shearn, recently attended a Dealmakers event, organised by Insider. Here’s her take on the event and the current state of the corporate finance and private equity market.

The theme, ‘Doing PE Deals Differently’ was interesting for the simple fact that there doesn’t seem to be much that’s different in dealmaking land.

That said, there are two notable changes since I first started out in corporate finance PR and communications many years ago:

• Once, I would have been a lone woman in a room full of suited men. Today, over half the audience (and panellists) were women. Hooray!

• Back in the day, the lift taking us to the ground floor would have buzzed with loud voices suggesting a boozy afternoon. Today, the lift was silent.  Possibly an indication of a flat market but more likely a reflection of a community that has changed radically over the years. Boo!

Anyway, here’s my round-up of comments from today’s sessions:

• Private equity is sitting on a mountain of ‘dry powder’ but it’s difficult to get deals done.

• Key challenges are market volatility, inflation, tariffs, a lingering hangover from Covid and management teams over-stating and embellishing their figures which can derail a transaction

• All too often, management teams don’t know what they want from a transaction or don’t have a shared purpose, which can cause real issues. This is where advisers can bring focus and value before involving investors.

• The days of lazy PE investors are long gone and companies now expect them to be more involved and hands-on

• Investors still back people and oftentimes would like advisers to back off and give more direct access to management

• Companies must accept that their relationship with investors will inevitably end in divorce one day so they should choose their partners wisely to ensure an amicable parting when the day comes

• Management teams should take out references on potential investors by asking investee companies what they were like and whether they were supportive through good and bad times?

• Due diligence has become more complex but should not be viewed as a blocker. Instead, it should be viewed positively as something that can inform future strategy by identifying weaknesses and, therefore, opportunities

• Management should start meeting investors years before a planned transaction so they can nurture relationships and start to build trust

• It isn’t necessary for everyone in a management team to know the numbers inside out and upside down, provided someone has a handle on them and there’s a general understanding of the direction of travel and where growth is coming from.

• Buy and build will continue to be a theme but the sum of the parts is not always greater than the whole which is why well-considered operational integration is essential for success.

• Having a regional presence is more important than having a sector specialism

• Despite the use of AI, the art of dealmaking will always be reliant on people skills and relationships

Between the two panels Simon Keegan conducted a ‘special interview’ with Leah McGimpsey, CEO of APEM Group, and Peter Barkley, partner at private equity firm, WestBridge.

The pair talked about the exceptional growth at the environmental consultancy since WestBridge invested six years ago and how it’s recent agreement to sell it will deliver a 11.5 multiple.

Pete explained that APEM first appealed due to the exceptional technical expertise among its team; strong customer base; and opportunity to scale. WestBridge supported key hires and encouraged a more professional approach to sales and marketing.

Leah joined to oversee an ambitious buy and build strategy and put a succession plan in place. She explained that the year she spent working in concert with the original founders was critical to success.

She also added that integration for her is more about teams working together for the greater good than the integration of process and systems.

Leah and Pete provided a truly interesting insight into how private equity investment and support can genuinely benefit a company.

I have to disclose an interest here, having handled WestBridge’s PR and marketing for many years!