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Private equity: driving the Midlands economy forward, by Andy Lyndon

By LDC Midlands Director, Andy Lyndon

The perceptions and benefits of private equity funding have clearly become better understood by a broader audience over recent years, notably in terms of its ability to generate growth, employment and support innovation across many different sectors.

This was re-inforced in the first half of 2015 when our Midlands team completed the management buyout (MBO) of the NEC Group, after almost 40 years under the ownership of Birmingham City Council.

The NEC is the UK market leader in its industry, with a high profile group of venues at the heart of the Midlands community – the National Exhibition Centre, Genting Arena, the Barclaycard Arena and the International Convention Centre. With other commercial activites including The Ticket Factory, specialist catering business Amadeus and its third party venue management operations, the NEC delivers over £2billion per annum to the regional economy and supports some 29,000 jobs.

With a high quality incumbent management team at its helm that has a clear plan to invest in and grow the business, the NEC is an investment of a nature which is at the heart of LDC’s investment strategy, and we are looking forward to unlocking further opportunities across the business in the months and years to come.

What was central to the delivery of this deal, and is to the successful completion of all private equity transactions, was a collegiate approach between advisors and funders. The NEC deal saw a significant portion of the Midlands market working together in a variety of roles to deliver a much talked about and highly complex deal.

In the past year our team in the region has been particularly busy, providing support beyond the initial equity investment. This continuous support and drive to create value is what makes private equity attractive to many ambitious businesses when exploring investment opportunities. We use our expertise in supporting management teams to identify and execute strategic opportunities to drive organic and acquisitive growth.

For example, in the past year we have supported leading healthcare equipment manufacturer Prism Medical with two strategic acquisitions. The business purchased The Mobility Equipment Company, which installs and services a wide range of mobility equipment, and Smirthwaite Limited, a leading manufacturer and supplier of a wide range of specialist equipment for children and young people with special needs.

The deal with Smirthwaite marked the fourth acquisition completed by Prism Medical since we supported its £30million MBO in April 2014. The acquisitions form part of our long-term plan to support the business’ ‘buy and build’ strategy, and provide important milestones in the company’s objective to diversify and deliver superior solutions.

When the management team of Eley Group, the world’s leading manufacturer of .22LR rounds for the target shooting market, wanted to secure new investment to strengthen its market leading position and accelerate expansion into new geographic territories, we completed a significant investment to support the business’ £42million MBO. With new capital secured, the business is well-placed to continue its growth, primarily through the introduction of product ranges.

Eley is based in Sutton Coldfield, and is another example of local advisors and funders securing the mandate to support local businesses. We find, that where possible, there is a strong desire to work this way, engaging with teams that understand the local landscape and market conditions and have the growth of the region at the heart of their strategy.

Looking forward, there is considerable appetite for MBOs in the Midlands market, and this looks set to continue into 2016 and for the foreseeable future. Pursuing a buyout can be an attractive way for a business owner to realise value, whilst also providing the management team with the opportunity to take a stake in the company and develop it moving forward.

The economic diversity and prosperity of the Midlands region will continue to provide good investment opportunities across a range of sectors, and we at LDC understand the importance of continuing to utilise our extensive networks to successfully originate, asses and execute deals – there is a genuine sense of comradery and drive to help and support fellow Midlanders.

At the recent Insider Midlands Dealmakers Awards 2015 it was great to see such a supportive and vibrant business community come together to celebrate the region’s success over the past year. Indeed, we were proud to receive the coveted ‘Deal of the Year’ award for our purchase of NEC, the largest transaction completed in LDC’s 30 year history. The deal was noted for its complexity and potential impact on the business and wider regional economy.

The event, which was the 21st annual awards staged by Insider, also recognised LDC’s contribution and longstanding presence in the Midlands market over the past two decades. We were delighted to be presented with the Dealmaking Private Equity Excellence Award. The accolade is testament to the hard work of our team in building strong relationships with local advisers over the years and our unwavering support for local management teams and businesses.

This echoes the real buzz currently apparent in the regional market, and significant inward investment with the opening of Grand Central, the redevelopment of New Street Station and the launch of the £200million integrated leisure and entertainment complex Resorts World at the NEC. These landmark developments are helping to further build the region’s profile and attract more interest and investment into the Midlands in 2016 and beyond.

Private equity remains fundamental to providing the funding and expert support to businesses that want to drive long-term, sustainable success, and by engaging with our extensive network and backing strong management teams, we can continue to ensure the region’s economy has a prosperous outlook.

For further information on how Andy and our team in Birmingham or any other UK region can help your business grow please contact us.

Article appeared in Issue 2-Winter 2015 ‘Abacus’ – The magazine for Chartered Accountants Birmingham & West Midlands.

by Sophie Reed