Calculated corporate growth

Calculated corporate growth

In March, IT maintenance and repair provider Triage Services was bought by a new management team – the second buy-out at the company in ten years.

Such was the interest in the £13 million-turnover business that the management team, which included Computer Centre’s chief executive Mike Norris as non-executive chairman, had no problem raising the funding needed to back the deal.

The deal was financed by private equity firms Kaye Enterprises, Bridges Ventures and Calculus Capital, with debt provided by Royal Bank of Scotland. Triage, which specialises in repairing computer equipment, was sold for an undisclosed sum by private equity group and venture capitalist 3i, which backed the original buy-out in 1997.

The funding was arranged by Saffery Champness Corporate Finance. Its team was led from its London and Bristol offices by head of corporate finance Charles Simpson, who project managed the deal on behalf of the new owners.

“The company has grown significantly in recent years, developing into specialist areas, such as the repair and maintenance of ATMs, and it is now led by a powerful management team with a strong chairman,” Simpson said.

“The secondary buy-out solved the challenges of a long-term growth strategy and several succession issues by providing an exit for the original investors.”

Golden year

This is one of several deals the firm’s corporate finance team has led or advised on in 2007. According to Simpson, working on deals such as Triage has helped to make this year his busiest since he joined the corporate finance practice five years ago.

“It has been an excellent year for Saffery Champness Corporate Finance,” he added. “We have closed a number of good deals and worked on a range of transactions. From a fee income perspective, it has also been a landmark year.”

The firm’s other deals this year have included the sale of diagnostic test specialist Euromed to Concateno plc, and the acquisition of motorsport venue Donington Park Leisure. It has also worked on the reverse takeover of Kiwara Resources by Wadharma Investments plc and the AIM admission of Ludgate Environmental Fund.

For Simpson, developing the business is not just about working on as many deals as possible. “It is about market presence and position. It’s being seen to be out there doing deals that close successfully. We have won several interesting mandates this year and of course once you are seen to be doing those deals it has a snowball effect.”

Master plan

S Saffery Champness has been trading since 1855 and provides a range of financial and advisory services, including auditing, accounting and tax. Five years ago, it decided to expand its corporate finance capabilities to meet the needs of its clients.

Simpson said corporate finance was an area that needed to be developed by the firm and he was more than happy to accept the challenge. “We wanted to build up the ability to do deals for our clients. There was also a growing recognition that corporate finance was an area that the firm had to be stronger in to win new clients.”

He added that building the corporate finance division has taken a lot of hard work to get to the levels of success that it has experienced this year. “It has taken years. It’s not something that has happened overnight. We have worked to build Saffery Champness Corporate Finance over and above the strong profile that the firm already has.”

With the firm now established in the corporate finance market, it has started to develop its business from its London base into the regions. The first step in this strategy was to appoint a senior director in Edinburgh. Robert Fraser, formerly of corporate finance house British Linen Associates, joined the firm in March to win new business north of the border.

“Until this year we had been based in London, but as part of our growth strategy we began to move out into the regions,” Simpson said. “Edinburgh is certainly an area where we feel there is room for us. We are looking at other UK centres where we can roll out in the same way.”

A strong sign of the firm’s progress in the corporate finance market was a nomination as Specialist Due Diligence Provider of the Year at February’s M&A Awards.

“Just being nominated was positive for the business,” Simpson said. “It helps to increase our profile and adds to the credentials that we have as being a genuine player in the market.”

Another positive for the business was the recent merger of its global network, SC International, with independent auditing and consultancy group Nexia International.

SC International has associations in more than 50 countries, giving Saffery Champness’ clients access to advice around the world. The merger creates one of the top ten networks in its market, with an anticipated turnover of some £1 billion.

“Any effect of this merger is likely to be beneficial for us,” Simpson said. “We have a good network of relationships that we have built up through SC International. One of the more interesting deals we did this year came from the network when we acted for Pampa Holdings of Argentina on its acquisition of IPC Operations in the UK.”

It’s deals such as Pampa that gave Saffery Champness Corporate Finance a busy start to the year and despite the summer’s credit crunch this has continued. “We are still busy, but there is uncertainty in the market in terms of the implications of what is happening at the higher level,” he said. “At the moment, however, we haven’t seen any slowdown in business. In fact, leading up to Christmas we are going to be extremely busy.”

But he is not sure if the credit crunch will have an affect on deal-making next year. “The deals that we have just completed or are on the go at the moment were contemplated in the spring or early summer. If there is a negative impact next year, it will be because fewer deals are being contemplated at present.”