With a strong showing at the end of 2010, the past year has seen a resurgence in M&A activity as dealmakers completed a series of exciting and innovative transactions.
With a strong showing at the end of 2010, the past year has seen a resurgence in M&A activity as dealmakers completed a series of exciting and innovative transactions.
After four years of hard work weathering the storm of the recession, DFJ Esprit is now seeing some reward for its labours.
Following its foundation in 2006, the European fund has been busily acquiring in the technology, media, telecoms, medtech and cleantech sectors to build a strong portfolio to take to the exit market.
Simon Cook, chief executive officer of the venture capital fund, explains, ‘We have been able to demonstrate our ability to add value and get companies sold. We’ve generated significant capital returns to our investors, who have continued to back us.’
In a standout year for Cook, DFJ accounted for 54 per cent of total European venture capital M&A exits (excluding IPOs and biotech), with headline deals such as the sale of LoveFilm to entertainment retail giant Amazon seeing Cook scoop the M&A Dealmaker of the Year award at the annual M&A Awards.
Cook featured prominently in the development of LoveFilm, a movie subscription business, sitting on the company’s board and labelling the sale, which achieved an enterprise value of $367 million, his standout achievement of the year.
‘I was on the board of LoveFilm for many years and saw it grow from 10,000 to 1.5 million subscriptions,’ Cook explains.
Putting a successful 12 months behind him, Cook says that with a recently raised $150 million fund primed for action, DFJ Esprit can once again return to the acquisition trail with what he describes as a ‘number of exciting technology opportunities in the market’.
12 MONTHS OF ACHIEVEMENT
With the very best of the UK M&A world assembled at the Millennium Mayfair hotel in London’s Grosvenor Square, the awards afforded the opportunity to take stock of what was another difficult but prosperous year for many.
Before the takeover of accountancy software business Access, chief executive officer Chris Bayne had never been involved in an MBO or private equity transaction.
However, Access walked away with the Buy-out of the Year trophy after the judging panel commended the strength and speed of the deal.
Bayne describes the buy-out as a ‘win, win’ deal from the outset, with the initial idea for the £50 million purchase coming from the existing majority shareholder, to ensure the business was passed onto people he trusted.
In an unusual set of events, both the MBO team and the sellers used the same lead advisers, a move that Bayne believes was pivotal to ensuring the smooth running of the deal.
‘It was probably the highest-risk decision that we made, and the best one in fact, as it cut out all of the toing and froing. If we’d had a situation where our advisers had to talk to their advisers, it would have become very long and protracted,’ he explains.
Bayne says that the MBO team hasn’t really had time to come up for air since the deal in March but is excited about the performance of the business so far, with performance numbers more than living up to the predictions set out in the pre-deal proceedings.
The lack of confrontation and ‘point scoring’ is what Bayne believes resulted in such a smooth and successful deal – ‘there was no shoot-out’, he explains.
Following on from the Buy-out of the Year award being awarded to software business Access, elsewhere the technology sector continued in its relentless growth. It was then no surprise when TweetDeck picked up Small Company Deal of the Year for its sale to global social media giant Twitter.
The deal brought to the fore the importance of British start-ups, with TweetDeck having initially set up in Old Street, London, on the “Silicon Roundabout”.
Surrounded by other British ventures such as business card company Moo, online music database Last.fm and social online gaming business Mind Candy, the London tech hub looks set to build after a successful year.
BUILDING THE BRAND
This year’s Accountancy Firm of the Year category saw a highly competitive shortlist, with strong cases for firms such as Grant Thornton, Baker Tilly and Deloitte. However, it was BDO who picked up the prize with what Peter Hemington, partner at BDO, says was a testament to its ability to build on its global presence.
He comments, ‘Historically, like many competitors, we have been very strongly private equity-orientated, but what we have tried to do is lay on top of that a very strong corporate offering.’
One such deal that Hemington believes displays this approach was the partnership with building products supplier Wolseley, where he says BDO managed to achieve prices far in excess of what was expected in what has been a very competitive environment.
The Due Diligence Specialist of the Year prize was awarded to Pragma, which saw an increase in the volume of its commercial work.
Pragma chairman Roy Palmer says that one of the most gratifying and encouraging developments of the past 12 months has been the operational due diligence project that Pragma has taken on.
‘This is where people are asking us if we can help them to understand the underlying robustness of the business model itself,’ he explains.
‘Our client base now includes banks that don’t necessarily have an equity stake but are lenders in a particular sector and want to understand the robustness of, not so much the revenue model, but the ability of the management team and the business itself to deliver what is being required.’
In tapping into this new market, Palmer says that Pragma has expanded its team to include specialisations in supply chains and buying models, a position that he believes now gives the company a good grip over the retail sector.
It is this process which Palmer believes is important in addressing the increasing demand for a more comprehensive understanding of business performance below the surface.
In what was a telling year for the retail sector, with high-profile casualties such as Habitat, Jane Norman and TJ Hughes, it was perhaps surprising that two of the biggest awards of the night were picked up by high street fashion label SuperGroup and online clothing and apparel retailer Net-A-Porter.
After a highly successful and heavily oversubscribed listing on the London Stock Exchange, David Beckham-endorsed SuperGroup won the IPO of the Year gong, proving that the IPO market is far from shut.
Following the listing Supergroup has gone from strength to strength with shares now trading at double last year’s float price.
The £500 million sale to Swiss luxury goods company Richemont for Net-A-Porter, which netted founder Natalie Massenet £50 million, proved the stand-out transaction in the Large Company Deal of the Year category.
Luxury fashion has dominated the M&A market in recent months with deals for shoe retailer Jimmy Choo and Kurt Geiger providing stimulus to a sector which as seen stagnation on the high street.
2011 Winners
Accountancy Firm of the Year:
Winner: BDO
Shortlist: Baker Tilly, Deloitte, Grant Thornton, Mazars, RSM Tenon
Corporate Finance Boutique of the Year:
Winner: Regent Partners International
Shortlist: Beanstalk Management, Catalyst Corporate Finance, Cle
arwater Corporate, GP Bullhound, Livingstone Partners
Due Diligence Specialist of the Year:
Winner: Pragma Consulting
Shortlist: Armstrong Transaction Services, Calash, Crowe Clark Whitehill, Highwire Consulting, Saffery Champness Corporate Finance
Law Firm of the Year:
Winner: Olswang
Shortlist: DLA Piper, Eversheds, Kerman & Co, Memery Crystal, Nabarro, Pinsent Masons
Finance Provider of the Year:
Winner: Investec
Shortlist: Barclays Private Capital, GE, Inflexion, Kreos Capital, Leumi ABL, Lloyds Development Capital, Lloyds TSB Commercial Finance
Buy-out of the Year:
Winner: Access UK
Shortlist: Allied Glass, Lloyds Development Capital UK2 Group, Spice, Wagamama, Weldex
IPO of the Year:
Winner: SuperGroup advised by Seymour Pierce
Shortlist: Cupid advised by Cenkos Securities, Digital Barriers advised by Investec, EMIS Group advised by Cobbetts, iEnergizer advised by Arden Partners, Instem Life Sciences advised by Brewin Dolphin
Dealmaker of the Year:
Winner: Simon Cook, DFJ Esprit
Shortlist: Alex Chesterman – Zoopla,
Andy Currie – Catalyst Corporate Finance, Matthew Riley – Daisy Group, Sean Cooper – Better Capital
Large Deal of the Year:
Winner: Net-A-Porter’s sale to Richemont
Shortlist: Chrysalis’s sale to Kohlberg, Kravis Roberts & Bertelsmann, Coffee Nation’s sale to Whitbread, Maximuscle’s sale to GlaxoSmithKline, Morrisons acquisition of Kiddicare, Oakley Capital Private Equity’s disposal of Host Europe, TLC’s sale to Serco, Young & Co’s acquisition of Geronimo Inns
Small Deal of the Year:
Winner: TweetDeck’s sale to Twitter
Shortlist: Better Capital’s acquisition of Connaught Assets, Daisy Group’s acquisition of SpiriTel, Ebiquity’s acquisition of Xtreme Information Services, Oakley Capital Private Equity’s acquisition of Time Out, Phyworks’ sale to Maxim Integrated Products
For more details, visit the website www.manda-awards.com
