Bad deals, tales from the dancefloor and a few more on the watchlist...

Who knew M&A could be so much fun? A week in deals across the North.

A few of the deals we’ve featured this week still aren’t 100% nailed on.

If anything, many could do with that period between agreement and completion to just pause and say, is there time to pull back from the brink?

The Coventry Building Society acquisition of the Co-operative Bank is a reminder of the latter’s terrible deal to acquire the Britannia Building Society in 2009.

Many veterans of the financial services world are still haunted by that experience, which has contributed to the Co-operative Bank’s lost decade, and took what should have been a challenger bank to basket case.

Telecoms group Daisy hasn’t confirmed that it’s bought could services business 4com, they’ve just made sure it’s all been leaked out to the most favoured journalists.

My last look at Daisy’s accounts made my eyes water at the amount of debt they’re servicing. So, when the time comes I’d like to have a look in more detail about what they’re buying, how they’re doing it, and what shape the business will take.

4com has been a hungry acquirer itself, so there’s probably yet more integration to do. 

This week I also had some correspondence with someone who claimed to my amazement:

“Some of our notable multimillion pound exits after a successful turnaround reflects our commitment to economic stability and growth in the regions we operate.”

I disappeared down a research rabbit hole trying to find these “notable exits” and only found winding up petitions, administrations, liquidations and legal action.

If anyone can help me sharpen my research tools, please get in touch.

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Subscribers to Rainmakers will have seen the results of a trip to Lancashire this week to meet the chief executive of a security business that completed its first acquisition.

This thought was never more apparent than when spending time talking to Brian Curran (pictured, above) the founder and chief executive of Lancashire-based security business KeyPlus this week. 

We spoke just a few days after KeyPlus Security acquired another small local business, SteelSec, in order to expand its portfolio of security services with a Fire & Security systems division.

From his base and control centre on the Shuttleworth Mead business park between Padiham and Burnley, Brian breathed a sigh of relief once he’d got the deal over the line.

Then we did a look at the B Corp movement and took a look at two investment businesses that have achieved that exalted and hard won status. 

Could there be a B Corp premium? 

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At a lunch event yesterday I interviewed Sacha Lord, founder of Parklife festival and the Warehouse Project. A man who has been shot at, attacked with a machete, been in business with some real maniacs, dealt with cops and criminals, and faced down the government over lockdown restrictions.

He described selling a 50% stake in his business to Live Nation as “the most stressful 28 days of my life.”

His new book, Tales From the Dancefloor, is full of raw honesty and a few hair raising moments in the life of the nightclub and festival entrepreneur.

Co-written by acclaimed author Luke Bainbridge, the book tracks the last three decades and the rise of the acid house scene in Manchester, from the Hacienda to Sacha’s takeover of Sankeys, and how The Warehouse Project and Parklife came together.

At our terrific TheBusinessDesk.com lunchtime event yesterday at Ducie Street Warehouse in Manchester city centre, Manchester’s Night Time Economy adviser and founder of music entertainment sensation The Warehouse Project and Parklife, opened up about his upbringing, being shot at, his achievements and the amazing stories behind his success.

Some of the stories he told are in the book, but a few weren’t.

We dug a bit deeper into the story of how he came to sell a 50 per cent stake in Parklife and The Warehouse Project (TWP), just a few days after he was reeling from the death of David Bowie in February 2016.

Along with Simon Moran of SJM, a shareholder in TWP and Parklife, he met with Denis Desmond from Live Nation who had made the approach, Lord suggested a number, and they accepted. However, it was on one condition, and they had to complete the deal in the next twenty eight days.

“That was twenty eight of the most stressful days of my life,” Lord says.

They had to do deals with neighbouring hotels, Network Rail and all the shareholders. In the end they got the deal over the line and could then get stuck into the champagne that the lawyers rolled out.

We got on very well, and I enjoyed Sacha’s company. But he still wouldn’t tell me how much he sold for.

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Our next Rainmakers lunch will feature special guest Ruth Percival, above, CEO of Contollo Group, a buy and build consultancy group backed by private equity investor NorthEdge.

We’re giving subscribers to Rainmakers the first shot at tickets for this event, which you can register for here.

As she embarks on this new venture, this seasoned leader with extensive expertise in the corporate finance, power/energy, and healthcare sectors, will share her strategic ambitions for Contollo and the lessons learned from her impressive track record of leading multi-disciplinary teams across diverse professional service disciplines including commercial/sales and operational/service delivery roles.

She describes her leadership as values-driven, emphasizing integrity, kindness, and collaboration.

Her latest venture, Contollo is a progressive new consultancy that works with commercial developers to offer consulting services in Cost Management and MEP, with particular expertise in smart buildings.

As reported on TheBusinessDesk.com at the time, Contollo made its first acquisition in February 2024 to acquire Abacus, a Manchester-based cost management consultancy which has worked for Vita Student Living, Sunderland AFC and Bolton Wanderers FC.

Contollo sees Ruth once again working alongside entrepreneur Oliver Dennis, as she did at medcomms consultancy group Fishawack.

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European B2B software investor Everfield is another of those private equity backed buy and build operations on the hunt for market share and synergistic targets.

Formed by German private equity funder Aquiline, it wants to buy, build and accelerate the growth of great founder-owned vertical software companies in Continental Europe.

To that end it’s bought York-based software company MyKnowledgeMap giving founder and majority shareholder Robert Arntsen an exit plan and a fresh challenge for Adam Doyle, who is going to continue in the role of CEO of the company, which specialises in learning and development software for universities.

The deal is Everfield’s 15th acquisition in Europe and its third in the UK.

Nicki Berrange, above, the acquisitions manager at Everfield, said: “MyKnowledgeMap’s niche expertise in healthcare e-assessment and e-portfolio platforms, combined with its seasoned team and deep expertise, aligns seamlessly with our strategic objectives, promising an exciting path ahead.”

I’ll be keeping an eye on them.

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When is a partnership not a partnership?

Probably when your hand is forced by an administration process.

The spin on the rescue of Altrincham-based Armstrong Craven was that they’d randomly entered into a new exciting partnership with Indian RPO business WhiteCrow Research. 

My interest in it was piqued when I got a tip off from someone that administrators had been appointed from FRP Advisory and the registered address had changed from their well-appointed new office in Altrincham to FRP’s base in Manchester.

Sure enough, Martyn Rickels and Anthony Collier of specialist advisory firm FRP Advisory were appointed as Joint Administrators to Armstrong Craven Limited on 22 March 2024, and immediately secured a sale of the business and its assets to recruitment research firm Colvill Banks Limited, part of the Mumbai-headquartered WhiteCrow Research Group.

The sale saves the jobs of all 67 members of staff which will transfer to the purchaser, though not the 35 who’ve left since the business reported a loss of £287k on £9.4m turnover, with interest payments of £179, 828 in the last set of accounts to the year end December 2022. 

I just hope everyone’s OK and it works out.

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One of the consistent themes on Rainmakers is looking at the underlying trends in professional services.

We’ve written about the growth spurt in the regions of Interpath. We’ve seen private equity backed Sumer Group take a stake in Cowgills. Then there’s the ever acquisitive accountancy group Azets.

I was lucky enough to carve some time out of the diary with Oliver Vaughan, below, a managing director in Houlihan Lokey’s Business Services Group.

What is driving the momentum behind private equity interest in professional services?

“Private equity's burgeoning interest in the professional services sector is driven by several factors, shaped by both industry dynamics and, more recently, by the broader economic landscape. Private equity firms are continuously searching for nascent markets and emerging opportunities with which to deploy capital, and up until the past five years or so, large sways of the people-based businesses were underserved by investment. In recent years, however, we've started to see that change, with firms recognising the ability for high-value-add consulting to drive outsized returns.

“Additionally, parts of the consulting industry are perceived as a safe haven during market volatility, owing to the metronomic nature of certain revenue streams and services, and enduring client relationships. These relationships provide the bedrock of an equity creation plan, underpinning retention and allowing companies to upsell supplementary services, even within more challenging economic environments.”

How do you perceive the dynamics of transitioning from a traditional partnership setup to a corporate structure backed by PE?

“The transition from a partnership structure to a corporate one needs a complete mindset change-moving from a partner-centric outlook to a plan that is predicated on delivering sustainable, long-term growth across the entire organisation. The economics behind this change match the objective, with partners accepting that a percentage of the profits will be allocated to an investor (resulting in lower drawings per partner), but in return, the PE investor will help create equity value that more than compensates for any drawings shortfall. As private equity continues to deliver success stories, partnerships are becoming increasingly comfortable seeking investment (and it is also an obvious mechanism to deal with the big issue of succession in people businesses).”

Do you think emerging technology is having a meaningful impact on the sector?

“It's spoken about a lot, and for good reason. Emerging technology, or Al more specifically, will indeed reshape the consulting and accountancy sector, transforming the way consultants operate and provide value to their clients, as well as opening new avenues for growth and efficiency. Digital transformation is starting to disrupt the traditional "pyramid" consulting model, enabling firms to streamline processes, automate simpler tasks, and increase productivity.

High-value-add, client-facing work is always going to require human interaction, but technology will play more of a supporting role in providing insights and analytics to enhance this advice.

“However, when it comes to repetitive tasks (the more BPO end of consulting) and streamlining workflows, Al technology will enable businesses to handle a larger volume of work and service more clients, ushering in a new era of scalability in the sector.”

Do you see any other prominent themes materialising in 2024?

“Each area of professional services will have its own nuances. Take accountancy as an example. As the market continues to mature, and especially given the number of firms that are now PE-backed, we're likely to see a growing emphasis on specialisation as companies face mounting pressure to differentiate their offering in a competitive landscape. Accounting firms have a range of options at their disposal to achieve this, which may involve adopting and embracing tech-led solutions, targeting specific geographic markets, or honing in on certain areas of the market, whether that be certain customer cohorts or increasing the capabilities on offer. These strategies can help companies present a differentiated value proposition and capture the attention of potential investors.”

So, can the recent flurry of activity continue?

 “I think so, fuelled by ongoing interest in pockets of growth and fragmented markets. Again, as seen in the accountancy sector, for example, there has been a flurry of activity but still ample opportunity for investment, and we can see that the broader legal services space is beginning to attract similar attention. Overall, the professional services sector remains dynamic, with continued potential for growth and innovation driving further investment activity.”

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Here’s now this is going to work going forward.

There will be a longish read piece on Tuesday and Thursday, for subscribers only. 

Typically, one will focus on happenings going on in the advisory and funding market - what it means and where things are going.

The other will look at deals from a market perspective. How much was paid? what the vendor wants, who the management team are, an interview with a CEO on the buy or sell side.

On Friday, free to everyone, we’ll pull out a few of the completed deals from that week and look under the hood a bit more. I might even have an educated guess at some of the prices paid on all of the undisclosed deals we get to hear about.

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