Private Equity Backed Business

Boots: A Prescription for Survival The once-dominant British retailer, Boots, finds itself at a crossroads. Profits have increased year over year, but according to a source in the UK leadership team, it has been tough. The decline of the high street and the rise of e-commerce have significantly impacted its business model. To ensure its long-term survival, Boots must pivot and return to its core strengths: optician services and pharmacy. The high street has been in decline for years, with retail parks following suit. According to a recent report by the Centre for Retail Research, the number of store closures on UK high streets reached a record high in 2023. This trend has been exacerbated by the shift towards online shopping, with e-commerce sales accounting for a growing share of retail spending. Boots has already taken steps to adapt to this changing landscape, such as pulling out of food and sandwiches in many locations. However, further action is needed. The retailer should also consider exiting other non-core categories, such as shampoos, deodorants, and perfumes. These products are readily available online for home grocery delivery and do not attract customers to Boots specifically. While Boots has a significant market share in makeup, this category is increasingly dominated by online retailers and beauty specialists. To remain competitive, Boots must focus on offering a unique and personalised experience that cannot be replicated online. This could involve investing in advanced technology, such as virtual try-on tools and personalised beauty consultations. Consideration to medicated make-up and allergy testing should be further explored. To retain this British brand into the future, Boots must focus on profitable niches rather than pursuing high-cost ventures. The retailer's large store format, with its associated real estate and lease costs, is a significant burden. By downsizing and focusing on smaller, more efficient stores, Boots can reduce its overhead costs and improve its profitability even more than recently achieved. In conclusion, Boots must pivot and return to its core strengths of optician services and pharmacy. By focusing on these profitable niches and adapting to the changing retail landscape, Boots can ensure its long-term survival and continue to serve as a valuable asset to British consumers. We might be early writing this article but if action is not taken in the next 12-24mths we will writing an all too common story of how "they didn't keep up with changing customer trends and update their operating model". #BootsUK #RetailTransformation #HighStreetDecline #Ecommerce #Pharmacy #OpticianServices #BusinessStrategy #RetailFuture #BritishBrands #MarketAdaptation

Advent International Eyes Sweet Deal with potential Tate & Lyle Takeover Advent International, a prominent private equity firm, is reportedly exploring a potential acquisition of Tate & Lyle, the UK-based food and beverage ingredients manufacturer. According to the Financial Times, sources familiar with the discussions have revealed that Advent is in the preliminary stages of preparing a takeover offer. News of this potential deal sent shares in Tate & Lyle soaring by 11.5% on Wednesday (16 October), reaching a near eight-year high. While there's no guarantee that a formal offer will materialise, Advent's interest has undoubtedly generated significant buzz within the industry. The Financial Times suggests that the offer could value Tate & Lyle above its current market capitalization of £2.8 billion ($3.65 billion). Both Tate & Lyle and Advent have declined to comment on the speculation. Tate & Lyle, a global leader in food ingredients, has been making strategic moves to expand its business. In June, the company acquired US-based CP Kelco for $1.8 billion, aiming to bolster its specialty ingredients portfolio and capitalise on the growing demand for plant-based products. This acquisition aligns with Tate & Lyle's broader strategy of providing innovative and sustainable solutions to its customers. Tate & Lyle has also been actively addressing the challenges posed by geopolitical tensions and supply chain disruptions. The company has implemented measures to ensure business continuity, maintain supply chain resilience, and support its employees and communities during these difficult times. Despite these challenges, Tate & Lyle has demonstrated its ability to adapt and navigate the changing market landscape. Dan Coatsworth, an investment analyst at AJ Bell, offered his perspective on the potential deal. He suggested that Advent might have identified an opportunity to assess Tate & Lyle's value while the company is focused on integrating CP Kelco. This tactic is a common strategy employed by private equity firms, aiming to acquire businesses at a favorable price point. Earlier this year, Tate & Lyle forecasted that its annual revenue would be "slightly" below the previous year's levels due to softer demand and ongoing de-stocking by customers. However, the company's strong market position and ongoing investments in research and development suggest that it is well-positioned for future growth. #PrivateEquity #M&A #TateAndLyle #AdventInternational #FoodIngredients #Takeover #Acquisition #CPKelco #BusinessStrategy #Investment #MarketAnalysis #SupplyChain #Sustainability

TGI Fridays UK Saved from Collapse in #PrivateEquity Buyout. TGI Fridays, the beloved casual dining chain known for its iconic two-for-one deals and loaded potato skins, has received a lifeline. In a strategic move, private equity firms Breal Capital Group and Calveton UK have acquired the UK operations of the American-themed restaurant brand. This rescue deal is set to preserve over 2,000 jobs and safeguard at least 51 of the brand's 87 British outlets. While the acquisition is a positive development, it's not without its challenges. Unfortunately, more than 1,000 staff will be made redundant as 35 restaurants face immediate closure. However, there's still hope for some of these locations, as discussions with landlords may result in their retention. Breal and Calveton bring a wealth of experience to the table, having successfully managed other renowned restaurants such as Le Pont de la Tour, Quaglino's, the Coq d'Argent, Byron, and Vinoteca. Their plan involves modernising TGI Fridays UK and capitalising on its strong heritage. The deal marks a significant victory for the chain, which has been operating in the UK since 1986. Like many casual dining brands, TGI Fridays faced significant challenges during the pandemic, but it remains a popular fixture on British high streets. Julie McEwan, chief executive of TGI Fridays UK, expressed optimism about the future, stating, "TGI Fridays is a much-loved brand with a rich heritage. Today's news marks the start of a positive future for our business following a very challenging period for the casual dining sector as a whole." The rescue deal comes after Hostmore plc, the previous UK franchisee, filed for administration. Hostmore had initially planned a £177 million reverse takeover of the troubled US parent company, TGI Fridays Inc. However, due to ongoing disputes with bondholders, the US operation lost control of #franchisee payments, leading Hostmore to abandon the takeover plan. #PrivateEquity #RestaurantAcquisition #JobPreservation #TGIFridays #BrealCapital #CalvetonUK #CasualDining #BusinessRescue #UKBusiness #HospitalityIndustry

Boka Group Seeks $300 Million for Debut Fund Focused on #Defence and #Aerospace Tech having hired former UK defence minister Sir Ben Wallace. Boka Group, a leading private equity firm specialising in defence and aerospace technologies, is on the hunt for capital. Yesterday, they announced their intention to raise over $300 million for their inaugural fund, the Boka Group #Technology #Fund. While details regarding the current fundraising stage remain undisclosed, Boka Group boasts a global presence with offices in the US, London, and Australia. The firm strategically partners with individuals like former UK Defence Secretary Sir Ben Wallace, leveraging their expertise to identify and invest in growth-stage companies. Their focus is clear: to fuel technological innovation that strengthens national security, particularly within allied nations like those participating in the AUKUS and NATO partnerships. Boka Group isn't new to the game. Their website indicates a history of utilising holding company structures for investments in critical assets. Past investments include i-space's chemical propulsion business, Agile Space Industries, Adarga (specialising in artificial intelligence), and ALL.SPACE, a leader in satellite communications. The group has confirmed they have hired former UK defence minister Sir Ben Wallace. Wallace served as UK defence secretary from 2019 to 2023, a period that coincided with Russia’s invasion of Ukraine and the UK’s withdrawal from Afghanistan. According to a statement about his appointment, he will be part of Boka’s expanding leadership team and will help guide the firm’s direction in defence development, policy, military strategy and national security. “Threats are aimed not just at our militaries, but also our private sectors and infrastructure,” Wallace said. “If we are to stay one step ahead of our adversaries, then we need to invest in next-generation technology and learn from the current conflicts.” Wallace’s appointment is at least the second PE-politics hire this year, following that of former UK deputy prime minister Dominic Raab, who joined Appian Capital as a senior strategic adviser in February. #DefenceTech #AerospaceInvestment #NationalSecurity #AUKUS #NATO #GrowthEquity #PrivateEquity #SovereignResilience #TechnologyInnovation #DualUseInvestment

US Private Equity group plans one of Europe’s biggest deals between buyout firms. TPG is nearing a deal to buy German metering company Techem for up to €7bn. In a significant move within the European private equity landscape, TPG, a leading US-based private equity firm, is reportedly close to acquiring Techem, a German metering company, in a deal valued at around €7 billion. This acquisition would rank among the largest transactions between buyout groups in Europe this year. Techem, founded in 1952, is a global leader in metering solutions, providing valuable data on energy and water usage to homeowners and tenants. With a vast network of over 60 million devices worldwide and a strong presence in Germany, Techem has established itself as a key player in the metering industry. The company's operations align well with the growing investor interest in the sector, driven by the energy transition and increasing consumer demand for sustainable power usage. The acquisition of Techem by TPG comes amidst a backdrop of heightened activity in the metering industry. Last year, KKR, another prominent private equity firm, acquired Smart Metering Systems in the UK for £1.4 billion. This deal showcased the significant potential and value of the metering sector, attracting the attention of investors seeking to capitalise on the industry's growth prospects. TPG's proposed acquisition of Techem is also motivated by the need to deploy capital and generate returns for its investors. With a slowdown in initial public offerings and takeovers, private equity firms are under increasing pressure to distribute cash to their backers. By investing in Techem, TPG aims to secure a substantial return on its investment and provide value to its shareholders. To support this significant acquisition, TPG has secured the participation of GIC, the Singaporean sovereign wealth fund. GIC will invest alongside TPG in the deal, contributing to the overall financing required to complete the transaction. TPG will make this investment through its TPG Rise Climate fund, which focuses on sustainability-focused investments, aligning with Techem's role in the energy transition. Additionally, CDPQ, a major shareholder in Techem, is selling its 24.5% stake as part of the deal. CDPQ's decision to divest its interest in Techem reflects the changing dynamics of the market and the opportunity to realise a return on its investment. If finalised, the sale of Techem to TPG by Partners Group would be one of the largest deals between private equity firms in Europe this year. Partners Group, which acquired Techem in 2018 for €4.6 billion, has been actively involved in the company's growth and development. #PrivateEquity #MergersAndAcquisitions #EnergyTransition #Metering #Techem #TPG #PartnersGroup #GIC #CDPQ #Investment #Business #Finance #DealMaking #Europe

NorthEdge sells Helios Global Group to Telemos Capital #UK #PE firm NorthEdge has sold Helios Global Group, a full-service healthcare communications group, to Telemos Capital, a European mid-market private equity firm backed by family capital. Founded in 2015 and now with almost 300 employees across five office locations spanning the UK and USA, Helios provides high-quality and impactful healthcare communications, as well as – following its acquisition of Cogentia Healthcare Consulting in February this year – health economic and market access solutions. Since the NorthEdge investment in 2021, the business has tripled its revenues, more than tripled its headcount, expanded its global operations, all while maintaining EBITDA margins. Telemos’ investment will support the group in its future ambitions expanding into new service lines, harnessing innovative technologies and continuing to scale its internal infrastructure to support its client base. Helios’ existing leadership team will continue to manage the business, expanding the client base and global operations while maintaining its core focus on sustainable organic growth. “We chose Telemos as our next investment partner because of their flexible approach and agile decision-making capabilities, alongside their wish to assist strong management teams in building great companies for the long term,” said Andrew Minnock, CEO of Helios. Helios Global Group was advised by Baird. #PrivateEquity #HealthcareCommunications #MergersAndAcquisitions #ExitStrategy #GlobalExpansion #BusinessGrowth #Leadership #Investment #Healthcare #NorthEdge

Private equity house IW Capital eyes growth following #MBO. Dealmaker Tariq Attia becomes #CEO, with experienced entrepreneur and #privateequity investor Alan Armstrong named chairman. Growth investor IW Capital is to launch a £30 million fund backing UK SMEs following the successful completion of a management buyout. Existing director and established dealmaker Tariq Attia becomes CEO, with experienced entrepreneur and private equity investor Alan Armstrong named chairman. IW Capital invests patient capital in growing businesses, backing experienced management teams across a range of sectors, with drivers including technology, environmental impact, healthy living, demographic change and education. The launch of the new Growth fund will enable IW Capital to invest larger cheques in businesses that have proven their model and are ready to scale at pace. Core to IW Capital’s success is the significant commercial support provided to the portfolio, leveraging both the entrepreneurial experience within the investment team and the significant strength of its investor network. With eight exits to date, IW Capital has over £150m assets under management across a broad range of UK-based companies including Transcend Packaging Ltd., Daily Dose, BorrowMyDoggy, SaveMoneyCutCarbon and Flarin with co-investors including ITV AdVentures, Barclays Sustainable Impact Capital, Starbucks and LG. Most recently, it has invested in Impact Recycling and GPDQ. Its portfolio investments are across England, Scotland and Wales. “Since its foundation in 2011, IW Capital has demonstrated a strong track record of backing brilliant businesses with experienced management teams who are addressing long-term shifts in societal trends,” Attia said. “Our approach means we have continued to see success regardless of the economic environment; in fact, 2023 was our most active year to date. It is hugely exciting to embark on a new chapter for IW Capital, with a talented team bringing the best of youth and experience to support the most exciting growth businesses in the UK today.” Armstrong added: “I know from my own business experience how important it is to find an investment partner who understands how to support growing businesses through engagement and commercial acumen and network introductions. “UK SMEs are a core driver of employment and GDP and we pride ourselves on being an active, supportive partner. We combine the agility and entrepreneurship of venture capital with the long-term commitment of private equity to ensure some of the most promising businesses in the UK today have the financial and commercial support they need to realise their potential.  “For our investors, this means access to opportunities which would otherwise be the domain of larger private equity houses.” #GrowthFund #UKSMEs #Investment #Business #Entrepreneurship #VentureCapital #Funding #GrowthStage #Technology #EnvironmentalImpact #HealthyLiving #DemographicChange #Education #InvestorNetwork

UK #Accounting Regulator Tightens Scrutiny on #PrivateEquity Investments in Audit Firms. As private equity firms circle the UK audit sector, the Financial Reporting Council (FRC) has issued a stern warning. The regulator has mandated that audit bosses disclose any plans to sell stakes in their businesses to private equity investors. While the FRC isn't categorically opposed to such investments, it has expressed deep concerns about the potential risks to audit quality and independence. The regulator fears that private equity ownership could undermine audit firms' ability to provide rigorous and impartial audits. This is paramount for maintaining investor confidence in the accuracy of company accounts. The FRC has emphasised that any firm contemplating a change of ownership must engage with the regulator early on and with complete transparency. The recent overtures from Permira and EQT Group to Grant Thornton UK LLP's business highlight the increasing attractiveness of the UK audit market to private equity investors. While such investments have been more prevalent in the US, the UK is now witnessing a growing trend. The FRC has made it clear that it will scrutinize any private equity investment in the audit sector, ensuring that it aligns with the regulator's expectations for audit quality and public interest. The regulator has also stressed the importance of long-term thinking and exit strategies for private equity investors to maintain audit quality over the long term. The FRC's intervention comes amidst a backdrop of increasing scrutiny on the audit profession following a series of high-profile corporate failures, including Carillion and BHS. The regulator has previously expressed concerns about the potential for private equity investors to prioritise short-term financial returns over long-term audit quality. The FRC's message to audit firms is clear: any firm considering a private equity investment must be prepared to demonstrate how such an arrangement will enhance audit quality and protect the public interest. The regulator has also indicated that it may consider imposing additional requirements on audit firms that are subject to private equity ownership. As the UK audit market continues to evolve, the FRC's stance on private equity investments is likely to play a significant role in shaping the future of the industry. #UKAudit #PrivateEquity #FinancialReportingCouncil #Accounting #AuditQuality #InvestorConfidence #CorporateGovernance #Business #CSuite #FinancialRegulation #MergersAndAcquisitions #BusinessStrategy #FinancialServices #Carillion #BHS #AuditReform

The Imperative of Operational Due Diligence in Private Equity The private equity industry is undergoing a profound shift in its approach to value creation. Historically, financial engineering and multiple expansion were the primary drivers of returns. However, the increasing complexity of business operations and the competitive landscape have necessitated a more granular focus on operational performance. A recent Bain & Company study underscored the importance of operational due diligence. The research revealed that average EBITDA margins declined across many PE investments, indicating a missed opportunity to unlock significant value. This has spurred a renewed emphasis on identifying and capturing operational efficiencies. To effectively execute on this strategy, PE firms are investing in advanced data analytics and operational expertise. By meticulously examining a target company's business processes, cost structures, and talent management, firms can develop comprehensive value creation plans. This involves not only identifying cost-saving opportunities but also exploring avenues for revenue growth and margin expansion. However, the scope of operational due diligence extends beyond financial analysis. A deep understanding of the management team is equally critical. Assessing the capabilities, experience, and cultural fit of key executives is essential for determining the company's potential for success. By conducting thorough reference checks and, when possible, direct assessments, PE firms can mitigate risks and identify opportunities for leadership development. The convergence of these factors—a heightened focus on operational performance, the utilization of advanced analytics, and a comprehensive evaluation of management teams—is reshaping the private equity landscape. Firms that excel in operational due diligence will be better positioned to create long-term value and outperform their peers.

Private Equity in Action: D&D London's Potential Takeover of TGI Fridays - A Strategic Investment or a Plate of Uncertainty? The recent news of D&D London's potential acquisition of TGI Fridays has sent ripples through the private equity landscape. This move by the renowned hospitality group has sparked discussions about the future of the iconic #American casual dining chain in the UK market. While the deal promises to safeguard a significant portion of TGI Fridays' workforce, executives in the PE sector must carefully analyse the strategic rationale and potential challenges before diving in. TGI Fridays has faced significant #financial hurdles in recent years. The casual dining sector itself has undergone a period of #consolidation, with customer preferences shifting towards fast-casual concepts and delivery options. TGI Fridays' recent merger with another restaurant chain did little to stem the bleeding. D&D London, on the other hand, boasts a proven track record in the hospitality industry. The group has successfully navigated a diverse portfolio of restaurants, ranging from #Michelin-starred establishments to upscale casual dining chains. Their expertise in brand management, coupled with their deep understanding of the UK dining scene, positions them as a potential savior for TGI Fridays. Revitalising TGI Fridays UK' Brand: D&D London's experience in brand revitalisation could breathe new life into TGI Fridays. Menu innovation, revamped store experiences, and targeted marketing campaigns could reignite customer interest. Navigating a Competitive Landscape: The casual dining sector remains fiercely competitive. Understanding how D&D London plans to differentiate TGI Fridays from its competitors, particularly in the delivery and takeout segments, will be crucial. Workforce Integration and Potential Job Losses: While the deal is expected to save most TGI Fridays jobs, some workforce reduction might be inevitable. The TGI Fridays saga reflects a broader trend in the PE space. With traditional casual dining chains facing challenges, PE firms are increasingly seeking opportunities in niche sectors or distressed assets with turnaround potential. Here are some additional considerations for PE firms: Focus on Experience-Driven Dining: Consumers are increasingly seeking unique and memorable dining experiences. The Delivery Imperative: The rise of food delivery apps has fundamentally altered the restaurant industry. Technological Innovation: Embracing technological advancements such as online ordering, self-service kiosks, and loyalty programs can streamline operations and enhance customer experience in casual dining establishments. The D&D London-TGI Fridays deal presents a compelling opportunity for Breal Capital Group and Calveton. #PrivateEquity #CasualDining #DDFridays #TurnaroundStrategy #RestaurantInvestment #ConsumerExperience #DeliveryEconomy #FoodTech #HospitalityIndustry