The Big Debate - Given better support, many more people

04/04/2014
Title
Subtitle
1
04/04/2014
The Big Debate: “Given better support, many
more people will be able to buy an existing
company”.
• Pr. Mike WRIGHT, Director, Centre for Management BuyOut Research, Imperial College of London, United
Kingdom
• Thomas SPITAELS, Chairman of the Executive Committee
and Board Director of TPF Group, Belgium
• Pr. Lex VAN TEEFFELEN, Professor of Business Transfers and
Innovation, University of Applied Science Utrecht &
Academic Chairman of the Transeo Academic working
group, The Netherlands
• Madi SHARMA, Expert in entrepreneurship, Member of
Employers' Group of the European Economic and Social
Committee and Member of Mr Tajani’s Advisory Board
for Industry and Enterprise, United Kingdom
2
04/04/2014
The Big Debate: “Given better support, many
more people will be able to buy an existing
company”.
• Pr. Mike WRIGHT, Director, Centre for
Management Buy-Out Research,
Imperial College of London, United
Kingdom
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04/04/2014
Why buyers of businesses need
support
Mike Wright, Imperial College Business School
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04/04/2014
Centre for Management Buy-out Research
• Identified emergence of UK buy-out market early 1980s
• Organised first European buy-out conference in 1981
• Centre for Management Buy-out Research (CMBOR)
• Established in 1986, based at Imperial College Business School
since 2011
• To examine developments in UK & European buy-out markets
in comprehensive and independent manner
• 25 years of research into MBO/MBIs
• Established world leading database of buy-outs
• Currently c.30,000 buy-outs in UK and Europe
• Number of publications generated from database including:
• UK Quarterly Review and European MBO Review
• Database also used as basis for more detailed research
• Both for academic and commercial uses
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04/04/2014
Who are the Buyers?
MBO
Management Buy- Existing Management Main Nonout
private equity Owners
MBI
Management Buy- Outside Individuals Main Nonin
private equity Owners
MEBO
Management
Existing Management and
Employee Buy-out Employees Significant Owners
IBO
Investor-led Buyout
BIMBO
Hybrid Buy-in/Buy-out
Buy-in
Management Buyout
Private Equity Firm Initiates
Transaction; Management Some
Equity
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04/04/2014
Can managers buyout? They already are!!
PE Backed Family Firm Buyouts
Smaller PE Backed Buyouts
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04/04/2014
What qualities are needed?
• Entrepreneurial Vision
• Managerial
Capability
• Tenacity
• Commitment
• Make money
• Team
• Complete and
capable team?
• From line-managers to
owner-managers
• Firing existing colleagues
and finding new ones
• “Tacit”
knowledge of
the departing founder
• How critical?
• How to fill the gaps?
• Effect on price?
• Employee relations
• Negotiating with unions
and HRM
• Business prospects
• Ability to
• Grow
• Improve efficiency
• Turnaround
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04/04/2014
How can awareness be raised?
• Role models of successful deals
• Accessible and informative guides
• Private Equity Demystified
• Experience of buyout managers
• Informed commentators
• Need positive image of buyouts and private equity
• Debate about private equity has been damaging and
misleading
• Courses/seminars
• Advisor, Chambers of Commerce, Industry associations,
family business associations: breakfast and evening
seminars
• Business school courses/seminars
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04/04/2014
Where advisors can provide support
• Corporate seller
• Negotiating with
Boss
• Is the business for
sale?
• Why does the
owner want to
sell?
• What if the bid
fails?
• Risk of being fired?
• What does seller
want?
• Family seller
• Does family want to sell and you to buy?
• Does family think you’re up to it?
• Are there other family bidders?
• What are implications for
family?
• Does family want to maximize sale price
or keep name?
• ¼ of cases vendor proposed fixed
price maximizing valuation
• Access to information on the company?
• 2/5 vendors control information
• Role of seller post buyout? [NED?]
• Family firm buyouts don’t plan transfer
• Only 1/3 plan >1 year ahead; 1/5 don’t
plan
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04/04/2014
Where advisors can provide support
• PE Firm
• Different buyers
• Potential conflicts of interest
• Equity stakes
• Ownership illusion and
covenants
• Is a PE firm necessary?
• Which PE firm is most
appropriate?
• Can the PE firm add
value?
• Conflict of time horizon
of PE and management
• Why is the deal attractive to
a PE firm?
• What’s the strategy?
• Growth, profits from
cost-reduction….?
• MBOs
• Emotion of wanting to own
‘their’ business
• Over-valuation and unrealistic
price
• Give away equity and overleverage
• Risk of failure of the deal
• Second mortgages and overcommitment
• Reflecting managerial unique skills
in price?
• MBIs
• Asymmetric information
• Due diligence challenges
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04/04/2014
What can government do to support?
• Supportive Capital Transfer Tax regimes
• Schemes to support growth and regional
economies should include ownership
transfers not just start-ups
• MBO performance has held up better during recession
• Promote asset and private equity markets
for SMEs
• Government ownership transmission training
vouchers
12
04/04/2014
The Big Debate: “Given better support, many
more people will be able to buy an existing
company”.
• Pr. Mike WRIGHT, Director, Centre for Management BuyOut Research, Imperial College of London, United
Kingdom
• Thomas SPITAELS, Chairman of the Executive Committee
and Board Director of TPF Group, Belgium
• Pr. Lex VAN TEEFFELEN, Professor of Business Transfers and
Innovation, University of Applied Science Utrecht &
Academic Chairman of the Transeo Academic working
group, The Netherlands
• Madi SHARMA, Expert in entrepreneurship, Member of
Employers' Group of the European Economic and Social
Committee and Member of Mr Tajani’s Advisory Board
for Industry and Enterprise, United Kingdom
13
04/04/2014
The Big Debate: “Given better support, many
more people will be able to buy an existing
company”.
• Thomas SPITAELS, Chairman of the
Executive Committee and Board
Director of TPF Group, Belgium
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04/04/2014
TPF
Our philosophy of acquisition
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04/04/2014
TPF in a few words
1. Engineering and consultancy company
2. Foundation in 1991
3. Average growth of 25 % - 30 % each year
(doubling the size each 3 year)
4. 31 acquisitions and 15 creations
5. 3350 employees
6. 2013 Consolidated Turnover with acquisitions :
195 MEUR
7. Subsidiaries in 32 countries
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04/04/2014
1. Can anyone buy an existing company ?
Almost everybody, every company can buy another
company.
Almost every company can be sold.
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04/04/2014
2. To be a success, an acquisition should answer to some
major points and it’s not only a question of price.
a) Who are we?
• Shareholding structure (listed company,
partnership, subsidiary, limited number of
shareholders)
• The management of the group (from the mother
company >< from all the companies of the group)
• The H.R. policy (expats, …)
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04/04/2014
b) Why are we buying that company ?
• What is our strategy on a long term basis for this
company ?
• Does that company share the same value as us ?
• Will it be easy to work with the management ?
• What do we bring to that company ?
• The question of the price and synergies ?
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04/04/2014
c) Why is this company on sale ?
• The nature of the shareholders ?
• Are we an interesting shareholder for the
management ?
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04/04/2014
d) The role of government or professional / private
experts
• Increase the level of knowledge of the stories of
successful and unsuccessful companies
• Private bankers = deal focused on the price.
21
04/04/2014
The Big Debate: “Given better support, many
more people will be able to buy an existing
company”.
• Pr. Mike WRIGHT, Director, Centre for Management BuyOut Research, Imperial College of London, United
Kingdom
• Thomas SPITAELS, Chairman of the Executive Committee
and Board Director of TPF Group, Belgium
• Pr. Lex VAN TEEFFELEN, Professor of Business Transfers and
Innovation, University of Applied Science Utrecht &
Academic Chairman of the Transeo Academic working
group, The Netherlands
• Madi SHARMA, Expert in entrepreneurship, Member of
Employers' Group of the European Economic and Social
Committee and Member of Mr Tajani’s Advisory Board
for Industry and Enterprise, United Kingdom
22
04/04/2014
The Big Debate: “Given better support, many
more people will be able to buy an existing
company”.
• Pr. Lex VAN TEEFFELEN, Professor of
Business Transfers and Innovation,
University of Applied Science Utrecht &
Academic Chairman of the Transeo
Academic working group, The
Netherlands
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04/04/2014
Pro
“Given better support, many more people will
be able to buy an existing company”
Lex van Teeffelen
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04/04/2014
Start-ups: from 3% - 10% (GEM, 2012)
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04/04/2014
Qualtiy Entrepreneurship?
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04/04/2014
Entrepreneurial Conditions (GEM, 2012)
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04/04/2014
Effects of education (Van Teeffelen, Weesie and Uhlaner, 2013)
Initial entry choice
Final entry choice
Advisor
3
3
Start-up
3
2
Firm acquisition
0
7
Family succession
3
6
Franchise
3
5
Indecisive
Total
19
8
31
31
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04/04/2014
Education/mentoring 1000 buyers
(Eurochambers, 2009)
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04/04/2014
Conclusion
• Entrepreneurship = Start-up entrepreneurship
• No education on firm acquisition, a little in on family
succession
• No government programmes, incubators, financing.
• First reports on education/mentoring show positive
outcomes
30
04/04/2014
The Big Debate: “Given better support, many
more people will be able to buy an existing
company”.
• Pr. Mike WRIGHT, Director, Centre for Management BuyOut Research, Imperial College of London, United
Kingdom
• Thomas SPITAELS, Chairman of the Executive Committee
and Board Director of TPF Group, Belgium
• Pr. Lex VAN TEEFFELEN, Professor of Business Transfers and
Innovation, University of Applied Science Utrecht &
Academic Chairman of the Transeo Academic working
group, The Netherlands
• Madi SHARMA, Expert in entrepreneurship, Member of
Employers' Group of the European Economic and Social
Committee and Member of Mr Tajani’s Advisory Board
for Industry and Enterprise, United Kingdom
31
04/04/2014
The Big Debate: “Given better support, many
more people will be able to buy an existing
company”.
• Madi SHARMA, Expert in
entrepreneurship, Member of
Employers' Group of the European
Economic and Social Committee and
Member of Mr Tajani’s Advisory Board
for Industry and Enterprise, United
Kingdom
32
04/04/2014
The Big Debate: “Given better support, many
more people will be able to buy an existing
company”.
• Pr. Mike WRIGHT, Director, Centre for Management BuyOut Research, Imperial College of London, United
Kingdom
• Thomas SPITAELS, Chairman of the Executive Committee
and Board Director of TPF Group, Belgium
• Pr. Lex VAN TEEFFELEN, Professor of Business Transfers and
Innovation, University of Applied Science Utrecht &
Academic Chairman of the Transeo Academic working
group, The Netherlands
• Madi SHARMA, Expert in entrepreneurship, Member of
Employers' Group of the European Economic and Social
Committee and Member of Mr Tajani’s Advisory Board
for Industry and Enterprise, United Kingdom
33
04/04/2014
“Given better support,
many more people
will be able to buy
an existing company”
Do you agree or not ?
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04/04/2014
Message
from
Walloon Vice-President
Jean-Claude MARCOURT,
Minister for the Economy,
SMEs & Foreign Trade
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04/04/2014
Fabrizia Benini,
Member of Cabinet of
Vice-President Antonio Tajani,
Industry and Entrepreneurship
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04/04/2014
Hans Wilmots,
CEO,
BDO Belgium
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04/04/2014
Next Sessions: 14.00
Workshops
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04/04/2014
Title
Subtitle
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