News & Views

John Hughes, the head of transaction services at the firm says the occasion will “take a humorous look at the deals that have shaped the Northern region over the past decade: compare the past with the present, laugh at a few photos and perhaps even regale some tales of the good old days”.

There seems to be a lot of this kind of nostalgic navel gazing at the moment. With a new government and a new age of austerity to cope with, people are counting their blessings.

I should declare an interest, I’m chairing the proceedings and fielding questions for the star guests. Anthony Preston – a true private equity veteran, who has seen his business, Pets at Home, go through three private equity buyouts and is well qualified to be able to say “been there, done that”!

Also appearing, and hopefully at giving us a glimpse of the future, as well as a misty-eyed backward glance, will be Simon Walker, the chief executive of the British Venture Capital Association. His job is to bring understanding and transparency to the industry, and is a key figure in the industry’s ongoing relationship with British business.

I approach the event in two minds. I do genuinely feel that a golden age for private equity and corporate finance has come to an end. There has been a benign tax regime and a helpful banking market where cheap debt has encouraged higher gearing. Over the years the number of businesses that have sweated their assets and produced stunning capital returns for private equity investors has led to a will be more apparent when the talking is over.

But this doesn’t mean people engaged in buying and selling businesses will have a grim future.

Even the latest management buy out data from KPMG has shown that there has been a surge of consumer-facing deals this year; making up 42 per cent of deal volume in the second quarter of 2010.

Most teams around town have a glut of mandates to sell businesses. There has also been a leveling off of expectation on price by vendors. Those who started a sale process pre-credit crunch have been brought back to earth, while those who need to sell, need to sell. Corporates who stashed a few quid through the tough times now have capacity to expand by expansion. And now the penny has dropped, private equity buyers have to do deals, or they’ll have to return funds to investors, pack up and go home.

But also take the reasons for private equity backing businesses with aggressive growth and ambition. And for which businesses they’re backing.

The 2009 Dealmaker of the Year – Jonathan Boyers, head of corporate finance for KPMG in the north, says for him the biggest surprise in recent deal activity has been the level of private equity interest in consumer-facing businesses. Antler was bought by LDC and Card Factory was snapped up by Charterhouse Capital Partners. This is interesting because they shied away from retail and consumer goods in the past as they had high working capital requirements and low margins.

Now, if private equity has any kind of future it has to be on driving a business hard for maximum gain and many consumer-facing businesses have a predictable growth trajectory. “If a business can be expanded by 20 stores, the growth potential is readily understandable; even if like-for-like sales are tough to drive forward,” says Boyers.

And here’s another theme that Boyers’ colleague John Hughes, the head of KPMG’s Private Equity Group in the north, has noted: turning around a business in trouble and in so doing private equity houses are feeling braver.