roundtable
National audit, tax, advisory and risk firm Crowe hosted this roundtable at the Thames Lido in Reading looking at the current state of the private equity (PE) market in the Thames Valley. Tim Wickham reports
Positive messages for SMEs seeking backing from private equity
Participants
Bob Alsop: partner, corporate finance transactional services, Crowe, chaired the discussion
Mark Allen: partner, corporate finance lead advisory, Crowe
Chris Baker: investment director, LDC
Miles Otway: partner, Connection Capital
James Austin: investment director, BGF
Mike Freer: associate director, Osborne Clarke
The Roundtable team State of the PE market
Bob Alsop from Crowe chaired the roundtable and began by summarising the health of the private-equity market. “We have seen near record levels of PE deals globally in recent years; however, in respect of the UK market, some commentators have noted a softening in the last quarter of 2018 and in the first quarter of 2019, both in terms of volume and value. But is this the same picture for our local market?” he said.
Enthusiasm for private equity appears to be relatively strong among SMEs. “Smaller and mid-market deals up to £30 million are happening,” said Alsop. “The South East is maintaining its momentum in terms of deal volumes and value, so the situation is perhaps not necessarily as bleak as you might read about.”
Crowe’s Mark Allen added that the PE
industry is taking a more sophisticated approach to the way investments are both made and managed. “The PE market is probably on the cusp of quite a significant change in terms of operational efficiency and taking advantage of greater digitalisation in the deal process,” he said.
Mike Freer from law firm Osborne Clarke echoed the sentiment of a softening market. “However, we see a potential strengthening of the market from Q2 and Q3,” he said. “The view among many businesses thinking about PE who might have been holding off at the end of 2018 is ‘let’s just get on with it’.”
Miles Otway from private equity firm Connection Capital observed: “One of the reasons for resilience in the market, particularly with MBOs, is that they are driven as much by personal life moments, like retirement, as they are by underlying economic factors.”
Edward Hutton: deputy regional director, HSBC
HSBC’s Ed Hutton provided a banker’s view: “We are still seeing deals coming through. The PE market seems fairly resilient and if a business has a good management team, then a PE deal should succeed.”
Chris Baker of private equity investor LDC sounded a note of caution: “There is deal flow out there, although it would be interesting to see the metrics on successful deal conversions. My sense is that successful conversion percentage will have reduced during the past 18 months as we come off a busy, ‘frothy’ market. On the whole, compared to this time last year deals seem to be taking longer to complete.”
PE expertise strengthening
Are PE houses bringing useful expertise and support to company management teams? “A lot of customers are telling us finance houses are very supportive.
Bob Alsop
Chris Baker
Edward Hutton
Mark Allen
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