Multi-tasking

Intelligent investing in Europe from
MAY 2004
ISSUE 5
www.bridgepoint-capital.com
THE POINT
Multi-tasking
The changing role of
company chairmen
Heaven
Scent
Daniel Vercamer mixes
business with perfume
Bottom Line
William Lewis on changing
prices in a changing world
Supporting
Cast
Support services move
onwards and upwards
Finance Director Recruitment
for Private Equity Backed Businesses
For more information contact
Sarah Hunt, Guy Moran, Joanna Adolph, Rachael Oldfield or Louise Hunter
at 10 Market Mews London W1J 7BZ.
telephone: 020 7493 2703 email: [email protected]
www.equityfd.com
THE POINT
CONTENTS
News
EDITORIAL
www.bridgepoint-capital.com
4
Maximising
Potential
Bridgepoint investments and
exits across Europe
Spotlight
5
What vendors want and how
to make sure they get it
Multi-tasking
8
Joanne Hart investigates the changing role
of company chairmen
Face to Face
12
Nocibé founder Daniel Vercamer talks
to François Vidal about perfume,
passion and paradox
Supporting Cast
14
The support services sector has been on a
roller-coaster ride in recent years. Andrea
Felsted finds out why
French Connections
19
Private equity is booming in France and the
middle market is the main beneficiary.
François Vidal reports
The Guide to
Smarter Living
20
Charitable giving made fun; where to stay and
eat in Stockholm; must-have gadgets
Bottom Line
22
William Lewis on Buzz Lightyear,
plumbers and the price of stuff
MAY 2004
ISSUE 5
Published by: Bladonmore Media Ltd
At the heart of private equity
is the task of maximising a
business’ potential. One of the
many ways we go about
achieving this is making sure
that we have the right chairman
in each of the companies our
funds own.
Choosing a chairman for a private equity-backed company
requires care because you are looking for someone to sit
alongside you on the same side of the table but with
complementary skills to your own. A chairman must also be able
to represent the interests of many groups: shareholders,
management, employees, suppliers and customers. As the
analysis piece on page 8 shows, these skills are rare to find and
explains why candidates to chair these companies remain
relatively scarce. It’s also why Bridgepoint spends so much time
and effort identifying the right people with the right experience.
Gerald Corbett, recently appointed chairman of Holmes Place,
the European health club operator, has a wealth of experience in
this role, having tackled the thankless challenges of the UK rail
industry and more recently led the turnaround at Woolworths.
He very helpfully shines a light on the difference between
chairing a public company and one backed by private equity.
Not that CEOs reading this should feel left out: I would draw
your attention to our profile of Frenchman Daniel Vercamer,
head of perfumery group Nocibé, who is the subject of our faceto face profile on page 12. His story is a colourful one but
nevertheless exemplifies the complementary qualities
Bridgepoint looks for in the CEOs it backs: vision, ambition
and absolute determination to grow a business.
Since the last issue of The Point, Bridgepoint has been active
not only in finding new investments (nursing home group
Médica in France) but also bolt-on acquisitions for Alliance
Medical and new club openings for Virgin Active, both in Italy.
And, continuing a long held view that realising investments is
where we really make our mark, exiting investments (IMO Car
Wash Group, Gower Group, Blagden Packaging and Dennis
Eagle) has been a strong feature of our activities in the past six
months. More details on pages 4 to 6.
Encouragingly, activity levels in our middle market space
appear set to continue, if the latest figures in the Europe Buyout
Review (see page 7), a Bridgepoint-sponsored annual study
published in association with Initiative Europe, are to be
believed. Is this a sign that market confidence is on the up in
2004? If the first quarter of this year is any guide, we may yet see
some interesting developments. Long may it continue.
www.bladonmore.com
Publisher: Richard Rivlin
Editor: Joanne Hart
News Editor: Grant Murgatroyd
William Jackson is managing partner of Bridgepoint
Business Development: Yago Otero
Design: Create Services
Photography: Tom Stockill, Powerstock, Vis Media
Reproduction, copying or extracting by any means of the whole or part
of this publication must not be undertaken without the written permission
of the publishers.
The views expressed in The Point are not necessarily those of Bridgepoint.
Companies in this issue
ALcontrol Laboratories 16, Alliance Medical 6, Blagden 4, Dennis Eagle 4,
Gower 5, Holmes Place 10 &11, IMO Carwash 6, Jessops 9, Kaffee Partner 8,
Médica 4 & 19, Nocibé 11 & 12, Safestore 10, Virgin Active 6.
THE POINT
3
NEWS
NEWSEXPRESS
NEWSEXPRESS
NEWSEXPRESS
Healthy deal for Médica
In a further sign of its commitment to the healthcare sector,
Bridgepoint has acquired Médica, one of the top-three nursing
home operators in France. Médica was sold by the French state
through the Caisse des Dépôts et Consignations in a deal totalling
€330 million. Royal Bank of Scotland and ICG provided debt
finance to support the acquisition.
Médica operates 87 homes and more than 7,000 beds, providing
nursing home facilities to individuals requiring dependencerelated or post-operative care. It has almost 3,200 employees and
turned over €210 million in 2003.
“Médica operates against a background of an ageing population
and rising life expectancy rates in a fragmented and regulated
nursing home sector,” says Benoît Bassi, the Bridgepoint partner
responsible for its operations in France.
The acquisition of Médica will also allow Bridgepoint to play a
continued role in the consolidation of the growing French nursing
home sector. “We believe that the Médica management team,
which already has a proven track record of acquiring and
integrating new acquisitions, can work with us to build market
share and coverage to become a leader in its field. This will not
only mean making new acquisitions for the business but also
modernising its existing properties to reflect market and
regulatory changes,” says Bassi.
In September 2003, Bridgepoint acquired Robinia Care Group,
one of the UK’s leading providers of specialist care for people with
learning difficulties, in a £50 million transaction. Bridgepoint
believes the industry fundamentals across the European
healthcare market will continue to deliver growth in the sector.
Key drivers include ageing populations, rising consumer
expectations of the healthcare system and pressure from providers
to deliver more efficient services.
Eagle-eyed deal nets £51m
Refuse collection vehicle manufacturer Dennis Eagle has been sold by
Bridgepoint for £51 million. ABN Amro
Capital, the private equity arm of Dutch
bank ABN Amro, put together a £61.5
million financing package, including
working capital and costs, with debt
from the Royal Bank of Scotland.
The deal represents a full exit for
Bridgepoint, which has made a healthy
return on its original investment of
July 1999.
Dennis Eagle is an industry innovator,
pioneering low entry cabs, which
improve
operator
safety
and
productivity. The company has 580
employees based in Warwick and
Blackpool. It also runs a parts and
service after-market business from a
number of service centres across the
UK, and has a distribution subsidiary
4
THE POINT
in France. Dennis Eagle currently
generates 12 per cent of its £90 million
turnover from overseas markets.
Bridgepoint director Andrew Burgess
says: “Dennis Eagle has consolidated its
market position by remaining at the
forefront of product development and
by selective acquisition.”
The future of the business will be
based around continued growth in the
UK and building on current expansion
in export markets such as Ireland,
Germany and France. Dennis Eagle will
be jointly owned by management,
including chief executive Mike
Molesworth (right) and finance director
Robert Jackson, and funds managed by
ABN Amro Capital. Molesworth says:
“We have a clear plan to develop the
business into a leading international
business over the next three years.”
NEWS
NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS
Spotlight on...
Buying from Vendors
Blagden package
Bridgepoint and CVC Capital
Partners have sold their interests
in Blagden Packaging Group to
management and the private equity
firm Alchemy. The sale represents a
full exit for Bridgepoint and CVC
who report a healthy return on their
initial investment.
Blagden was first acquired five
years ago in a €149m deal. Since
then the company has completed a
number of acquisitions and
consolidated its position as the
leading
European
new
and
reconditioned drum manufacturer.
The business now has 19 facilities
throughout the EU and recently
began working in Russia.
Bridgepoint and CVC say: “The
management team have done an
excellent job in a highly competitive
industry and we regard the group as
an excellent platform to continue the
next phase of consolidation now
underway within the sector.”
The deal will provide management
with an increased and ratcheted
equity interest. The management
group is rolling over most of its
investment.
Nobia cooks up with Gower
Private equity firms employ all their
psychological and strategic skills when dealing
with vendors. Richard Rivlin investigates
The source of every deal is a vendor deciding it is time
to sell. Acquisitions might capture the headlines but
private equity firms need to work with vendors from
early on in the process to ensure their transactions are
ultimately successful.
Bridgepoint partner Graham Oldroyd says: “The key
to working successfully with vendors is to ascertain what
motivates them and understand what drives them to
examine a deal.”
According to Oldroyd, there are different types of
vendors, so private equity investors need to react to the
nuances of individual situations to make sure a deal is
struck in which everyone feels they have succeeded.
These are his key rules:
First, understand that price is not always the sole
motive. Speed and confidentiality may be key factors
too. Equally, the dynamic between owners and
managers is crucial. Most owners want to know their
The key to working successfully
with vendors is to ascertain what
motivates them
Gower Group, the UK’s leading
supplier of self-assembly kitchens to
DIY multiple chains, has been sold to
Swedish kitchen giant Nobia for
SEK890 million (€96.02 million).
Bridgepoint backed a £3.7 million buyout of Gower in 1988, syndicating a
portion of the investment to Electra.
Nobia CEO Fredrik Cappelen
says: “The acquisition strengthens
Nobia’s position in the UK and
opens up new possibilities. We gain
a strong position in the UK multiple
retailer market, which is particularly
interesting as it represents a large
and growing part of the market.”
The acquisition of Gower, with 475
employees in West Yorkshire, will
more than double Nobia Group’s
share of sales to the European
multiple retailer market to 10 per
cent. The sector accounts for a
quarter of all kitchens sold in Europe.
In the UK, Nobia’s best known brand
is Magnet, which primarily offers
fitted kitchens, bedroom and
bathroom furniture.
The sale represents a full exit for
Bridgepoint and Electra and has provided
a significant return on their investment.
managers will be looked after following a purchase.
Others do not want to distract management from
running the business during the sales process, since a fall
in performance during a deal can be hugely detrimental
to ultimate value.
It is important to recognise that there are, broadlyspeaking, four different types of vendor – large quoted
companies, unquoted corporates, businesses owned by a
number of private shareholders and owner-manager
businesses run by single individuals. In every instance, it
is important to find out what is driving them and to earn
their trust.
Each group also has different price expectations.
Quoted corporates are often happy to let the investment
bank determine the price through an auction process;
others, such as private owners, have a strong intrinsic
sense of the value of their company.
It is vital to let the vendor decide on the sales process,
which can range from an auction to a privately
negotiated deal to a delisting. Bridgepoint operates
under each of these environments and adjusts its
approach accordingly. High-quality advisers on every
side can make a big difference.
Oldroyd concludes: “Fundamentally the art of
working successfully with vendors is to be consistent,
stick to what you say and understand that these are
stressful times.”
Oldroyd is also constantly looking out for the next
deal. When one sale completes, he says, the first
question to ask the vendor is: “What’s your next deal?”
THE POINT
5
NEWS
NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS
Investors clean up with
£350 million car wash
After five years of rapid growth,
IMO Car Wash has been bought by
JPMorgan Partners, for £350 million.
IMO was sold by a group of financial
investors led by Bridgepoint.
“We are very proud of what we have
accomplished at IMO over the last five
years, which have seen a large increase in
the scale and reach of the business,” says
Bret Holden, CEO of IMO, who will
continue to lead the company after the
acquisition.
“Our aim now is to focus on growing our
market share and developing for our
customers the highest quality and most
efficient experience in the market.”
Based in London and founded in 1965,
IMO is the world’s largest conveyor car
wash business and is marketed under the
IMO and ARC brand names.
Bridgepoint led an investment in 1998
and then provided further funding for the
business to acquire its former sister
company Toman Group in Germany in
2002. This acquisition helped IMO regain
a strong position in the highly fragmented
German market.
Under Bridgepoint’s ownership, IMO
also completed a number of other
acquisitions. As a result of these
Rise and shine: CEO Bret Holden – focused on developing market share and customer satisfaction
purchases and continued organic growth,
IMO doubled the number of sites from
which it operates.
In addition, the group tripled
underlying earnings to over €40 million
this year.
Today, the company operates more than
800 car washes across 12 countries in
Europe, including France, Germany, Spain,
and the United Kingdom. It washes an
average of at least 30 million cars a year.
Holden, 42, was recruited from BP
shortly after Bridgepoint acquired IMO
for £114 million.
NEWS IN BRIEF
Healthy Alliance
Alliance Medical, the private operator of
diagnostic imaging equipment, has
bought United Medical Systems’ Italian
division. The €9.1 million deal includes
further funding from Bridgepoint, which
backed a €178 million secondary buy-out of
the company in January 2001.
EMPTY
DESK
“A couch potato? Er...I don’t know son,
but I’ll have one if you’re getting some.”
6
THE POINT
Alliance was founded in 1989 and has
grown at a phenomenal rate under the
leadership of Robert Waley-Cohen. The
business already had operations in Italy,
and this deal will make it a market leader in
several sectors.
Italy getting more Active
Healthclub and lifestyle group Virgin Active
has continued its international expansion,
opening clubs in the Italian cities of Genoa
and Bologna.
The clubs will conform to Virgin Active’s
‘Life Centre’ model, focusing on health and
fitness for the entire family. Bridgepoint
invested in Virgin Active in a £110 million
transaction in February 2002. Italy is Virgin
Active’s third territory, after the UK and South
Africa, and was chosen because of the high
level of Virgin brand recognition, lack of
comparable facilities, excellent demographics
and enthusiasm for exercise.
European MidMarket Buyout
Firm of the Year
For the second year running
Bridgepoint has been named
European Mid-Market Buyout
Firm of the Year in Financial
News’ annual awards for
excellence in private equity.
Bridgepoint was praised not
only for its new investment
activity but also its ability to
return cash to its investors and
was described as ‘one of the
few mid-market firms that can
genuinely lay claim to a buy and
build approach’.
Runners-up for the award
included EQT, Barclays Private
Equity and Electra.
NEWS
NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS
Buoyant mid-market
drives buy-out growth
Buy-out investment in Europe has
risen 4 per cent to €60.7 billion, thanks to
strong activity in the mid-market sector.
The increase follows three years of
declining growth, according to the Europe
Buyout Review published by Initiative
Europe in association with Bridgepoint.
The number of deals in the €50 million to
€500 million range rose 28 per cent and
value was up 8 per cent.
“The year 2003 marked a return of
confidence in the European private equity
market with the amount of investment
almost up to that witnessed in
1999/2000,” says Bridgepoint partner
Kevin Reynolds. “There were a number of
factors fuelling this increase, in particular,
the volatility and uncertainty of the public
markets and the need for many larger
corporates to divest non-core assets. The
outlook for 2004 is encouraging.”
Sales of non-core businesses by local
parent companies provided the largest
source
of
buy-out
transactions,
accounting for €25.4 billion, or 42 per
cent of all deals. Buy-outs of family and
private businesses accounted for more
than a quarter of all buy-outs, with the
amount invested up 12 per cent to €5.6
billion. However, the proportion of deals
arising from these sources has fallen from
40 per cent in 1999 to 28 per cent in 2003.
France saw the strongest increase in the
number of deals with a 52 per cent rise,
though the value fell 29 per cent to €9.5
billion as there were fewer big-ticket
deals. Investment in German buy-outs
increased by more than 50 per cent to
€9.4 billion in 2003 as private equity
investors spotted value in the slowlyrecovering German economy. Italy had its
strongest ever year, with investment more
than doubling to €8.6 billion, largely as a
result of the €1 billion-plus buy-outs of
SEAT Pagine Gialle, Fiat Avio and Safilo.
The UK remains Europe’s largest
market. The value of deals was more than
double that of any other European
country at €22.9 billion or 37 per cent of
the total, though this proportion has
declined significantly in recent years.
Julian Longhurst, head of data and
research at Initiative Europe, says:
“Increasing levels of activity in the
mid-market sector are the best sign yet
that investor confidence is once again
on the up.”
Buy-outs by country
€m
2002
2003
25,000
20.000
15,000
10,000
5,000
0
Benelux
France
Germany
Italy
Nordics
Spain &
Portugal
Switzerland
& Austria
UK
BAPS boost
Bridgepoint has launched The Bottom Line, a
magazine promoting the innovative Bridgepoint
Affinity Purchase Scheme. The publication provides
real-life examples of how the scheme has helped
companies in the Bridgepoint family to cut costs by
securing big discounts from suppliers on products
including mobile phones, software, vehicle contract
hire and leasing, insurance, forklift trucks and even
vending machines. Patrick Fox, who runs the scheme,
says: “It is a classic business win-win for both our
portfolio companies and our preferred suppliers.”
Sound advice for Bridgepoint
Bridgepoint has appointed Alan
Milburn MP, Sir George Mathewson and
Penny Hughes to its newly-created
European Advisory Committee. The
group, chaired by Bridgepoint chairman
David Shaw, brings a wealth of
experience to the table and will work
with Bridgepoint and its investee
companies on questions of strategy and
market issues.
Sir George is chairman of the Royal
Bank of Scotland and a non-executive
director of Santander Central Hispano and
Scottish Investment Trust.
He
has
wide-ranging
business
experience, having been on the board of
the Royal Bank for many years, during
which time he helped orchestrate the
acquisition of Nat West. He was also
chief executive of the Scottish
Development Agency.
Hughes was president of Coca-Cola UK
and Ireland until 1995 and is a nonexecutive director of Vodafone, Gap,
Skandinaviska Enskilda Banken and
Trinity Mirror. Alan Milburn was
Secretary of State for Health in the UK
until June 2003 and was previously chief
secretary to the Treasury.
These three industry-leading figures
have extensive experience of the retail,
health and financial services sectors, which
are key investment areas for Bridgepoint.
They will bring a broader external
perspective both to the firm and the
businesses it backs.
THE POINT
7
ANALYSIS: CHAIRMEN
Multi-tas
As private equity becomes increasingly competitive, chairmen of portfolio businesses
have an ever more important role to play. Joanne Hart looks into the changing
landscape of portfolio company boards
Once, private equity firms did deals
with management. Now they do deals
with businesses.
The difference may seem superficial to
those living outside this world, but it
represents a profound shift in approach by
the industry and it has serious
consequences for those at the receiving
end of bids and offers.
In essence, the industry has become more
complex. Fewer deals are done and they
tend to cost more. Therefore firms have to
do more with them to make sure their
investments reap the necessary rewards.
What this means is that far greater
emphasis is placed on transforming
businesses. Private equity firms do not
want to be seen to be interfering in their
portfolio companies but they do want to
make sure there is a clear strategy in place
and that it is being followed. Rather than
simply backing management teams,
private equity firms need to manage their
investments more actively. To that end,
there is much more focus on what
management is doing and a growing
emphasis on the role of the chairman and
non-executive directors.
Approval is not
hard to find,
particularly as many
businesses do not
have an existing
chairman
The process has to be handled with
sensitivity to ensure that all sides benefit,
from the private equity firm to the
portfolio business to the incoming
chairman. Normally this is managed by
introducing the concept of an external
chairman early on in negotiations.
“Of course, we will appoint an
independent chairman,” is the phrase most
commonly used and, by slotting it in early,
there
is
less
potential
for
misunderstanding at a later stage.
Nor is the suggestion made in isolation.
Instead, it is an integral part of the
conversations held with management
about how to make their business work
better under its new owners. Private equity
firms leading the way in this area define as
clearly as possible what they expect from
the business before signing the final
contracts. They then work with
management on the new strategy and
discuss jointly what sort of chairman is
required. At Bridgepoint, for example, an
appointment is never made without the
Germany
Quoted companies and large private
businesses in Germany have a dual board
structure. The Vorstand, or management
board, consists of around five senior
managers, each with executive responsibilities. Standing
shoulder to shoulder with the management board is the
Aufsichtsrat or supervisory board, which is expressly
forbidden from engaging in day-to-day business activities. Its
only job is to control the activities of the Vorstand and deal
with hiring and firing its members.
The supervisory board always includes at least one
employee representative, generally a union member, whose
role is to safeguard the interests of the workers.
For Anglo-Saxon businesses, operating in this environment
can be challenging. Bridgepoint portfolio companies have tried
to work round this by moving towards the same procedure in
Germany as they do in the UK.
“We have begun to simulate the UK model with a board
that meets regularly and includes one representative of
management, one or two external representatives appointed
by Bridgepoint, including the chairman, and an observer from
8
THE POINT
German shareholders are
growing frustrated with the
two-tier structure
Bridgepoint itself – either myself or a colleague,” says
Wolfgang Lenoir, who runs the firm's German office.
“The chairman makes sure the company develops
according to its strategy and all the outsiders oversee and
review the business,” he adds.
The German coffee and water dispenser firm Kaffee
Partner, owned by Bridgepoint, is an example of this policy
in action. Chairman Andrew Simon meets the management
twice a month and is closely involved with the company.
Some in the corporate world are against this type of
development. Intriguingly however, German shareholders are
themselves growing frustrated with the two-tier structure of most
domestic boards and are calling for change.
Any steps that take them towards the Anglo-Saxon system
will be welcomed by UK institutions in both the quoted and
private arena.
ANALYSIS: CHAIRMEN
king
The chairman is the bridge
between managers and
investors and a catalyst for
ideas rather than a power base
in his own right
structures. Private equity firms are keen to
use the Anglo-Saxon board model but a
degree of diplomacy is required to
persuade some companies to adopt the
single board structure.
Additionally, finding the right people
can be a challenge across Europe.
Bridgepoint uses its new club for existing
and former portfolio company directors,
MEET, and a roster of search firms.
Frequently, headhunters are used during a
deal to appraise and reference
management. Once the deal is done, the
same firm can be used to find new
directors and chairmen.
Private equity chairmen have a variety
of responsibilities but they are fundamentally responsible for the business
plan and its effective delivery. They are
Gerald Corbett: “Being a private equity chairman is rejuvenating.”
The Perfect Chairman
+
1)
Sharp elbows
Good communication skills
2)
A secret desire to be the chief executive
3)
An understanding of private equity
3)
Poor delegation skills
4)
An ability to inspire trust and respect
4)
Detachment
5)
Charisma
5)
A tendency to indecisiveness
6)
Maturity – unlikely to be under 45
6)
Youth
1)
A wide range of experiences
2)
express and explicit approval of the
portfolio company’s directors.
Approval is not hard to find, particularly
as many businesses do not have an existing
chairman, having originally been part of
larger listed companies. Ten of the 13
businesses bought with Bridgepoint’s
latest investment fund have independent
chairmen. The practice brings rewards to
all sides.
“In private equity, there is complete
clarity about what is required. Investors
have put £100 million into a business and
they want to see a significant return three
to five years down the line. The
chairman’s role in this exercise is often
pivotal,” says Luke Meynell of
headhunting firm Russell Reynolds.
In the UK, the role of the chairman may
be broader in private equity firms than in
the quoted sector but it is not too difficult
to explain the difference to potential
candidates or investee companies. In other
parts of Europe, the process can be more
challenging. Countries such as Germany or
Italy have radically different corporate
expected to act as a mentor to the
management team and can also act as an
effective bridge between management
and its private equity owners.
Tim Brookes has worked with several
venture capitalists and chaired the former
Bridgepoint company Jessops, where he
helped the business do a string of deals
before it was sold to ABN Amro in 2002.
“Sometimes, there can be conflict
between what management want and what
the private equity owners want. I get
round this by saying, ‘I look after the
THE POINT
9
ANALYSIS: CHAIRMEN
company’, which means I should be acting
in everyone’s best interests. One of the
biggest roles, I feel, is to build the venture
capitalists’ confidence in the management
team,” he says.
A chairman will also provide
complementary skills to management,
offering expertise that may be lacking on
the board. Many businesses may be
excellent operationally but have scant
knowledge of the financial world. A
chairman can provide this and thereby
facilitate the process of expansion through
mergers and acquisitions.
Within the Bridgepoint portfolio, for
example, Gerald Corbett was appointed as
chairman of Holmes Place. The company
The base
salary of a
chairman is not
particularly
large but there
is always the
opportunity to
subscribe for
equity
spotlight on the quoted sector becomes
increasingly bright; too bright in the
estimation of many listed company
directors.
Situations in the UK, such as the very
public refusal of investment institutions to
accept Michael Green as chairman of the
new ITV or the intense criticism of Sir Ian
Prosser as potential deputy chairman of
Sainsbury’s, make many experienced
business people look longingly at the
private sector. Directors from quoted
concerns are in frequent dialogue with
private equity firms and recruitment
consultants to see if the grass is greener on
the other side.
In many respects, it may be. There is
Italy
In the wake of the Parmalat scandal,
Italian regulators decided to change the
way companies were allowed to structure
their boards. Anxious not to place too
many restrictions on leading businessmen however, the
authorities have given industry three choices.
Companies may either adopt a single board, a two-tier
board or a modification of the current Italian model. Under
this last option, there is a single board but also a so-called
Collegio Sindacale, comprising between three and five
individuals whose job is to check on management and
audit the business.
is going through a period of radical change
and Corbett has extensive experience in
the quoted sector. He is chairman of
Woolworths and previously held executive
positions
at
Railtrack,
Grand
Metropolitan, Redland and Dixons.
“Lots of chairman have plc and private
equity roles. A broad portfolio is quite
attractive for them and the companies
they work with,” explains Meynell.
Nonetheless, the jobs are very different.
“In a public company, the chairman
has the power and he delegates to the
chief executive. Shareholders only really
get involved when something goes
wrong. In private equity, the power lies
with the private equity firms. The
chairman is the bridge between
They are officers of the
company but they are giving
opinions on the audit as if they
were outsiders
The system has attracted international criticism
because the members of the Collegio Sindacale are
considered insufficiently independent. “They are officers
of the company but they are giving opinions on the audit
as if they were outsiders,” said one corporate
governance source.
managers and investors and a catalyst
for ideas rather than a power base in his
own right,” says Corbett.
“But being a private equity chairman is
rejuvenating because you are working
with people who are young, intense and
intelligent. It is very refreshing. Also,
the economic alignment between
managers, owners and the chairman is so
powerful. Everyone is on the same side,”
he adds.
Like every other profession, private
equity firms enjoy working with people
they know and people who understand
their business. There are not many serial
private equity chairmen around but the few
that do exist are in great demand. Over
time, this circle is likely to grow as the
greater clarity of purpose, less scrutiny
from numerous shareholders and the
prospect of making considerably more
money, without being lambasted for it by
investors and the media. The base salary
of a chairman is not particularly large but
there is always the opportunity to
subscribe for equity.
Nonetheless, the role of chairman is, in
many ways, far harder than it once was.
The private equity sector is intensely
competitive so firms look far more closely
at the performance of the businesses they
have bought.
“The demands on the chairman are far
greater in private equity. Communication
is not just at board meetings, it is
perpetual,” says Corbett.
There are not many serial private equity chairmen
around but the few that do exist are in great demand
10
THE POINT
ANALYSIS: CHAIRMEN
Non-executives
on the board
The phrase “non-executive director”
used to be one of the least contentious
in the corporate lexicon. Everyone knew
that NEDs were chums of the chairman.
They would show up for the odd board
meeting and happily agree to everything
that was being proposed by the
executive team.
In some companies, this is still the
case. Increasingly however, corporate
governance codes demand that quoted
businesses appoint independent nonexecutives who will make an effort to
understand the company for which they
are working, participate regularly in
Frequently, nonexecutives come from
the private equity firms
themselves.
Occasionally they come
from outside
board meetings and carefully consider
any of the schemes and strategies being
proposed by the executive directors.
While this mini-revolution occurs on
the quoted scene, private equity is also
placing increased importance on the role
of the non-executive. The glare of the
media and the constant criticism of
institutional investors may not be
apparent in the private equity sector but
the rationale behind firms’ desire for
France
strong non-executives is broadly the same:
they want the companies in which they
have invested to fulfil their potential.
NEDs in private equity-backed
businesses tend to come either from the
outside world or from the firms
themselves.
During any set of negotiations with a
potential private equity business, there is
one private equity director who will be
charged with spending time with the
management, making sure everyone is
happy with the deal and all the necessary
information is available on both sides of
the fence. If the transaction goes
through, that person will generally
become one of the non-executives on the
new board.
During the deal process, another private
equity director will take on the role of
devil’s advocate, asking difficult questions
and probing everyone concerned to make
sure those questions are answered. That
person is also likely to be appointed to the
new board and given responsibility for
managing change when the company is
first acquired by its new owners.
Who is chosen depends on individual
circumstances. Non-executives are not
selected on a random basis: they are handpicked for their particular expertise.
Frequently they are internal –
occasionally they are appointed from
outside.
At Holmes Place, for instance, Archie
Norman, who was responsible for the rags-
Under French law, companies are allowed to
choose between two types of board
structure. They may either go for a unified
board, run along similar lines to the AngloSaxon model, or they may select a two-tier
system, similar to the German model, with a management
board and a supervisory board.
In each case, they can also choose whether to unite the
jobs of chairman and chief executive or separate them. An
employee representative is invited onto the board, if staff
own more than 3 per cent of the business.
to-riches transformation of Asda, is a nonexecutive. He also chairs the telecoms
group Energis and is ideally suited to
encourage the change programme at the
fitness clubs group.
Frequently however, the necessary
talents can be found in-house.
Occasionally, there are as many as three
internal non-executives. At the perfume
company Nocibé, for instance, one
Bridgepoint director is on the board for
his retail and forensic expertise; another is
helping on the company’s expansion
programme and the third is looking at
banking relationships.
The pressure to
perform is more intense
now than it has ever
been. Productive nonexecutive directors can
make a real difference
The Nocibé situation is rare now but it
may become more prevalent as deals
develop an increasing complexity. For
private equity firms, like their quoted
brethren, the pressure to perform is more
intense now than it has ever been. Firms
continually search for points of
differentiation and ways in which they can
improve returns. Efficient and productive
non-executive directors are an integral part
of that process.
Regulators are trying to improve
the situation but progress is slow
The law states that vested interests should not be
allowed to interfere with the principle that quoted
companies are run for the benefit of their shareholders
but many overseas investors believe their interests are
often superseded by other factors.
Regulators are trying to improve the situation but
progress is slow.
THE POINT
11
PROFILE
FACE
FACE
Heaven scent
Daniel Vercamer inherited the family
business when he was 35. But he is, above
all, an entrepreneur. François Vidal meets
the contradictory man behind Nocibé, the
French perfume chain
Daniel Vercamer is not a lover of perfume. It is all the more
intriguing then that, over the past 20 years, he has created the
third-largest chain of scent and cosmetics shops in France, with
300 outlets and sales of €280 million.
Built up through a series of acquisitions since the early 1980s,
Nocibé is a well-known brand throughout France. Growing the
business undoubtedly required plenty of energy and enthusiasm.
Yet Vercamer, a 55-year-old native of northern France, is perfectly
open about the fact that he has only a limited interest in luxury
goods and fragrances.
“It’s very simple,” he says. “When I put on a scent, it usually
comes from a bottle that has been rejected.”
This is not the whole story however. Vercamer admits: “I’m not
product-focused. I could have sold something else. That's an
advantage when dealing with suppliers. I’m more concerned
about delivery times and margins than the shape of the bottles.”
Indeed, Vercamer is someone who does not worry about
contradictions. He practices the art of paradox with as much skill
as he handles the vintage sports cars that he collects and drives in
rallies two or three times a year. “For the pleasure – not to win,”
he is quick to point out.
This talent has been evident from early on. Born into a
bourgeois family in northern France, Vercamer inherited the
Vercamer is someone who does
not worry about contradictions.
He practices the art of paradox
with as much skill as he
handles the vintage sports
cars he collects
family business, a wholesale supplier of hygiene
and beauty products, when his father died in
1984. He is still its top executive and the
headquarters are still in the same northern
French town of Villeneuve-d’Ascq. It
would be wrong, though, to conclude
that Vercamer has been happy just to get
a return on his inheritance.
The Nocibé of today is nothing like the
Vercamer SA of 1984. “I created Nocibé in
the mid-1980s because I sensed that our
12
THE POINT
T O
PROFILE
In some ways, his approach to
Nocibé is more that of an investor
than the head of the company
business, distributing goods to independent
pharmacists, was being squeezed out by the
large retail chains,” he explains. “We had to
find some way to keep going.”
Things were initially very hard. Funds
were short, of course, but there was
also hostility from suppliers, who
found the concept too innovative. It
took five years to buy the first five
perfume and cosmetics shops.
“There were times when I opened
shops without having anything to
put in them,” Vercamer recalls.
During this period, the family
business was collapsing. By the early
1990s it was on the verge of
bankruptcy and had to be restructured.
That is when Vercamer gave the first
proof of his independent spirit and
distanced himself from his origins.
He laid off about 50 employees and got
his uncles out of both the company and
its capital. In so doing, he won more
freedom…and a huge amount of
ill will from the family.
This difficult experience
prompts him to say today
that he did not start at
zero, but at “less than
zero.” It also explains no
doubt why he continues to
fight so hard to see that his
business expands. “In some
ways, his approach to
Nocibé is more that of an
investor than the head of
the company,” says
Valérie Téxier, who
works in the Paris
office of Bridgepoint,
the
majority
shareholder
in
Nocibé since late
2002.
Evidence of this
can be seen in
the fact that
Vercamer has
c h a n g e d
partners
four
times since 1994.
First there was
Avenir Entreprise, a
subsidiary of the French
financial giant Caisse des
Dépôts et Consignation. He then took
the company public in 1997 and, just a year later,
sold his shares, following a takeover bid from the Dutch
group Kruidvat. Finally he joined Bridgepoint through a leveraged
buy-out of the Nocibé business.
Four transactions – no soul-searching. Indeed, Vercamer appears
totally devoid of the sentimentality that the founders of small
CAREER PROFILE
Name: Daniel Vercamer, Chairman and CEO of Nocibé.
Origins and family: Born in France in 1948. Married, 4 children
(two girls, two boys) between the ages of 22 and 29.
Educated: Business studies at the EDHEC (Ecole des Hautes
Etudes Commerciales) in Lille (Nord).
Early career: Worked in the United States for a drugstore products
wholesaler. On returning to France, he joined the family business
(Vercamer SA), where he has worked ever since.
Biggest success: Saving the family company by creating Nocibé
when the market of Vercamer SA was shrinking.
Biggest mistake: Not having believed soon enough in international
expansion.
Cars: Drives an Audi A6 and, less frequently, the seven vintage sports
cars that he owns (they include a 1934 Bentley and a Ferrari Modena).
Ambition in life: It is possible to have more than one. My
ambition right now is to make the MBO with Bridgepoint a success
businesses classically exhibit. Soft emotion may be lacking but
determination to press on is clearly in evidence. When Vercamer
sold Nocibé to Kruidvat, it was understood that he would stay on
no more than two years. That was in 1998 and he is still there.
Admittedly, he has stepped back a bit in recent years. He has
brought in two of his four children to work at the company and he
is no longer head of operations. He has also stopped holding
grand, American-style conventions on the Normandy coast,
attended by as many as 1200 employees. These used to be a regular
feature of the business in 1990s but they are no longer.
Nonetheless, Vercamer remains chairman and chief executive of
Nocibé. The chief operating officer, Xavier Dura, handles day-today management of the business but Vercamer is the driving force
and strategy-setter. This has been a full-time role since
Bridgepoint became a shareholder.
He laid off about 50 employees
and got his uncles out of the
company. He won more
freedom…and a huge amount of ill
will from the family
“After four years of very rapid growth, during which Nocibé
went from 57 to 235 stores thanks to the support of our Dutch
shareholder and its investment of €180 million, we had to focus
again on the issues of profitability and cash flow management,”
says Vercamer.
As for the future, he views it with infinite calm. He has already
made a fortune, even if he has reinvested a good part of it in the
management buy-out. “It’s mainly the pleasure that drives me,” he
says, though he hopes to be able to expand Nocibé internationally
and to continue growing in France, until the company has at least
450 shops in the country.
In any case, one thing is certain: if he decides to stop working
at the end of this MBO, it will not be to retire to Nosy Be, the
island for which the company was named. Located northwest of
Madagascar, this spot of land is famous for Ylang-Ylang, a tropical
flower whose essential oil is especially prized by the creators of
perfumes. Vercamer went to Nosy Be a few years ago on holiday.
He had planned to stay for a week but he packed up and left after
two days. He did not like the place. He is, as we said,
a man who does not worry about contradictions.
FACE
FACE
T O
François Vidal writes for the French business daily Les Echos
THE POINT
13
Sector watch
Supporti
The support services sector has had a rollercoaster ride in recent years, moving from
favoured child to black sheep among
investing institutions. Now there are signs
that the industry is picking up again.
Andrea Felsted investigates
It is hard to believe that companies carrying out such
mundane tasks as council tax processing could once have had
star billing on the stock market.
Yet, in the late 1990s, these firms commanded valuations
rivalling the headiest of those achieved in the dot com boom.
And just as the dot com bubble eventually burst, the City’s love
affair with support services companies came to a sudden end
two years ago and valuations plummeted.
The change of heart began in March 2002, when Amey
produced an underlying pre-tax loss of £18.3 million. Analysts
had been expecting a £55 million profit but the loss was
attributed to the implementation of new accounting
standards, relating to the treatment of costs involved in
bidding for new contracts.
Amey’s difficulties intensified the debate over how services
companies should be valued. Investors had several concerns.
Just as the dot com bubble
eventually burst, the City’s love
affair with support services
companies came to a sudden
end two years ago and
valuations plummeted
First, there were worries about the expense associated with
bidding for contracts, and the start-up costs in preparing for
them once they were actually awarded.
Market sentiment was also affected by the way support
services companies approach projects under the government’s
private finance initiative. Under this scheme, private sector
contractors provide a package of services for 25 to 30 years and
often build the asset itself, perhaps a school, hospital or prison.
The way most companies approach PFI is to create separate
entities known as special purpose vehicles. This can make it
difficult for those outside the business to obtain a clear picture
of the performance of individual PFI contracts.
In addition, many companies from lower rated sectors such
as construction and packaging had moved into support services
in the hope of obtaining higher share prices. Facilities
14
THE POINT
management, which had been seen as a
very attractive market, became more of a
commodity service, eroding margins,
while some of the more cyclical companies
within the sector, such as staffing
specialists, were hit by the global
economic downturn
The impact of this fall from grace was
not only in the equity markets but also in
the private equity industry.
Some observers suggested the
downturn in valuations meant there was
potential for private equity firms to
make investments at less demanding
prices. Trade buyers were more cautious
about embarking on corporate activity
so there was less competition and the
challenges faced by some companies
forced them to restructure their
portfolios, generating interesting targets
for private equity buyers. In reality
however,
when
valuations
were
tumbling, making acquisitions was
extremely tricky.
“It was like catching a falling knife.
SECTOR WATCH: SUPPORT SERVICES
ing cast
We were not sure where it was going to
end up. When prices are falling very
quickly, you never see very much activity
because there is no solid ground, and it is
quite hard to buy things in that sort of
situation,” says Kevin Reynolds,
Bridgepoint partner responsible for UK
investments.
“It was like catching
a falling knife. We
were not sure where
it was going to end up”
Furthermore, lower valuations did not
automatically make investments cheap. “I
always think of what happened in the
quoted support services sector as a mini
tech bubble. It was pretty similar, and the
sector was frankly overheated to start
with,” he adds.
Consequently, Reynolds explains that,
while there have been some deals in the
support services sector over the past
year, merger and acquisition activity has
been limited.
The sector rout also made it harder for
private equity groups to exit support
services investments. Trade buyers were
reluctant to acquire businesses and there
was almost no appetite for companies
floating on the stock market.
Fortunately, there are signs that support
services companies are now enjoying a
modest recovery.
Back in 2002, share prices in the sector
fell 20 per cent relative to the FTSE All
Share Index. In the first three months of
2004, they rose by 3.55 per cent, relative to
the All Share.
Prices are still well below the racy
multiples seen a few years ago but at least
they are moving in the right direction.
The sector embraces a wide range of
companies covering a spectrum of service
activities, from building and maintaining
hospitals, schools and prisons, to
collecting rubbish, looking after street
Most companies’ work
is backed by long-term
contracts, which
private equity buyers
like, since they
provide a good
indication of what
turnover and profit will
look like in the future
lighting,
carrying
out
routine
administration for insurance companies
and providing temporary staff. Many
businesses have traditionally been
regarded as attractive growth stories and
the increase in outsourcing – whereby an
organisation employs a third party to carry
out functions regarded as non-core to its
business – has meant plenty of demand for
their services.
Some groups have also begun to benefit
from the early stages of an economic
upturn and accounting worries have
abated, although both equity investors and
private equity executives remain mindful
of the sector’s accounting complexities.
These apart, there have been a few
spectacular recoveries. Shares in WS
Atkins, which fell 72 per cent to 52p
following a profit warning in October
2002, are now trading at over 500p. Shares
in recruitment companies, which are
highly sensitive to the economy, have also
benefited from expectations of an upturn
in the jobs market.
In the UK, the Government continues
to involve the private sector in the
delivery of public services. PFI is set to
remain a key plank of UK procurement
policy, while overseas governments are
adopting it too. Outsourcing by the
private sector is gathering pace and most
companies’ work is backed by long-term
contracts, which private equity buyers
like, since they provide a good indication
of what turnover and profit will look like
in the future.
Corporate restructuring remains a
feature of this sector. Securities giant
Group 4 Falck is currently spinning off its
safety and custodial businesses as part of a
£1.7 billion merger with Securicor.
Although it intends to float these
businesses on the Copenhagen Stock
Exchange, the custodial business, which
THE POINT
15
SECTOR WATCH: SUPPORT SERVICES
runs prisons and detention centres, is already
attracting the interest of both private equity and
trade buyers.
There is scope too for merger and acquisition
activity within niche markets. “A lot of the subsectors are pretty immature so you can create quite
interesting businesses by acquiring a number of small
businesses on a roll-up basis,” Reynolds explains.
With valuations rising however, the opportunity to
acquire attractive support services business for
reasonable prices may be limited and the chance to
make opportunistic acquisitions, while equity
investors shunned the sector, has now passed.
“We are seeing more opportunities but the
landscape is more competitive and we are probably
having to pay more for them if we wish to buy them,”
says Reynolds.
Nonetheless, he expects stable valuations to herald
more, rather than less, interest in the sector.
“It is all about growth,
and if you get a business
that can really deliver on
its growth prospects, I am
sure there is still some real
value to be had”
“The worst nightmare for us is to buy a business on
the basis that the sector price earnings multiple is 15,
and find out that the multiple is 10. We feel very
comfortable that is not going to happen,” he says.
Consequently, he expects merger and acquisition
activity in the sector to pick up this year.
“The technology bubble analogy is a good one,” he
says. “Technology was incredibly frothy. Then the
bubble burst, and there was no IT merger and
acquisition activity, apart from complete extremes,
for a long time. It has now settled down. People feel
more confident that the bottom of the market has
been reached and the level of IT activity is
increasing.”
Nor do rising prices mean an end to finding value
within the sector. “It is all about growth, and if you
get a business that can really deliver on its growth
prospects, I am sure there is still some real value to
be had,” he says.
Some equity analysts believe too that support
services companies remain keenly valued.
More interest in the sector could make it easier for
private equity groups to exit investments. Trade
buyers are once more looking to snap up useful
additions to their portfolios, and there are hopes that
the market for initial public offerings may also be
reopening. This will be a key test of whether support
services companies are on their way to winning back
their star status.
Andrea Felsted covers UK companies for the Financial Times
16
THE POINT
ALcontrol Laboratories is a classic support
services business. Andrea Felsted discovers
what it does and where it is heading
ALcontrol Laboratories exhibits many of the characteristics that
distinguish support services companies from those in other industries.
The business was acquired by Bridgepoint in December 2000 and carries
out environmental and food testing in the UK and Europe.
Traditionally, companies such as food manufacturers and environmental
consultancies carried out their own testing. But, as the work becomes harder
and more costly, they are choosing to outsource this process. And since testing
is a business critical operation, ALcontrol can escape the pressure on prices
faced by suppliers of longer-established and more commoditised services.
In addition, many of ALcontrol’s customers use its services on a long-term
basis so it has preferred-supplier
arrangements lasting 20 to 30 years.
These elements clearly attracted
Bridgepoint to the business but there were
other factors too, in particular the fact that
environmental and food-testing legislation
is being harmonised across Europe. Over
the past three years, Bridgepoint has
supported ALcontrol in nine acquisitions
worth around €30 million. The company
now operates in France and Scandinavia
and is keen to expand into Germany and
Southern Europe.
The testing market is developing too, from a science-based into a serviceoriented industry. Carrying out correct procedures is no longer sufficient.
Results must be returned to customers quickly and efficiently.
“Testing is moving from being a cottage industry to being more of a
corporate industry, and moving from being a scientific industry to being a
service-oriented activity,” says Stirling.
Testing is a business critical operation, so
ALcontrol can escape the pressure on
prices faced by suppliers of more
established and commoditised services
With this in mind, Bridgepoint has invested about €30 million in
ALcontrol’s infrastructure, including laboratories and information
technology systems. All laboratories now operate on a uniform system.
Samples are bar-coded, and test results are provided electronically to
customers. They can log in, through a website with secure passwords, to
track samples and access test results.
By this summer, ALcontrol will have six so-called ‘super-labs’; facilities
designed make the testing process more efficient, without compromising its
scientific basis.
Eventually, Bridgepoint’s attention will turn to exiting its investment in
ALcontrol. Over the past three years, ALcontrol’s turnover has grown by
about 2.5 times to more than €120 million. Efficiency gains have helped
profits to grow by a similar amount. A trade sale is the most likely exit route,
but as ALcontrol expands its operations, a stock market flotation could come
onto the agenda.
MARKET VIEW
French
connections
Management buy-outs have become commonplace
in France and activity has been dominated by the
mid-market. François Vidal analyses the French
private equity sector
While the battles
are fierce on the
mega-buyout
front, the
possibilities in
small and
medium-sized
deals far exceed
the number of
suitors
On the big deal front meanwhile, the
The statistics leave no room for
invested, particularly those whose
crop was much less impressive. Last year
doubt: management buy-outs have never
operations are segment-based. Fonds
saw only one deal worth more than €1
been as popular in France as they are now.
Partenaires (Lazard) invested more than
billion: the secondary buy-out of Materis
More than 150 deals were completed last
€70 million last year, nearly double the
(€1.15 billion). Several buy-outs that
year, an increase of 50 per cent from 2002
€41 million it invested in 2002. Over 12
everyone in the market expected, such as
and an all-time record.
months, there was a 61 per cent increase
UGC and Editis (from Vivendi Universal)
“The trend is clearly toward structural
in deals worth less than €75 million.
or But (from Kingfisher) did not happen.
growth in our market, even if there are
The upper end of the mid-market was
They were either cancelled (UGC, But) or
dips due to the economy,” says Benoît
not far behind. The second half of 2003
sold to corporate buyers (Editis).
Bassi, head of Bridgepoint in Paris.
saw MBOs of Actaris (€420 million),
It is not surprising therefore that the
A host of positive factors have boosted
Frans Bonhomme (€520 million), Terreal
figures for the French MBO market in
developments in the past two years. These
(€500 million), Ceva (€200 million) and
2003 show a sharp, 46 per cent decline.
include the virtual disappearance of
Médica (€330 million), among others. All
But do not be fooled. While this drop
corporate buyers between mid-2001 and
told, the number of MBOs valued at more
accurately reflects the sluggishness of the
mid-2003, pressure on vendors and a sharp
than €200 million grew by 445 per cent
market for very large deals, it totally
drop in valuations as equity markets
last year and most established firms did at
obscures the excellent health of the
plunged. In addition, institutional
least one transaction. The only cause for
French mid-market.
investors have been very attracted to
concern was that secondary buy-outs
France because the persistent weakness of
became the most common type of deal. As
François Vidal writes for the French business daily Les Echos
the German economy has made it the
the stock market recovers and corporates
pivotal country in the Euro Zone.
return as buyers however, this trend
In the middle of last year, no fewer than
should weaken.
six private equity firms were trying to raise
funds for French middle-market activity.
New entities emerged too, such as MBO
Partenaires, Activa Capital, Eurazeo and
Wendel Investissement. Within 15
months, Eurazeo had taken part in the
buy-outs of Eutelsat, Fraikin and Terreal,
while Wendel had participated in the
buy-out of Legrand. Meanwhile the Paris
offices of established players such as
Doughty Hanson and KKR are taking on
mega-deals when they emerge.
The environment has therefore become
much more competitive. Nonetheless,
while fierce battles rage on the megabuy-out front, as an increasing number
of contenders fight over fewer
opportunities, the possibilities in small
and medium-sized deals far exceed
A host of positive factors
the number of suitors.
The statistics reflect this
have boosted developments
phenomenon. Several mid-market
players for instance had a recordin the past two years
breaking year in terms of funds
THE POINT
19
MAKING THE MOST
THE POINT guide
Charitable giving
As competition becomes more intense, charities are looking for innovative ways to persuade companies to
part with their cash. Andrew Morris reveals some of the more successful schemes on offer
You have worked hard for your money and you deserve
to enjoy the fruits of your labour. What better way to do so
than by giving away large amounts to charity? As a sensible
investment scheme it might turn a head or two, but ask
anyone who has seen their generosity put to good use and
they will tell you it is one of the most rewarding ways of
spending money.
Unfortunately however, there are not enough donations
to go round so the UK’s
186,582
charities
are
constantly searching for
lucrative
cash-raising
schemes. Bring and buy
sales may make for good
l o c a l n e w s c o p y, b u t
t h e y cannot bring in the
sort of substantial capital
injections charities need to
ensure they are not left
behind in an extremely
competitive marketplace.
What this means is that
charities tend to devote a
substantial amount of time
working on how to appeal to
those with the most to give.
One successful approach
has been hit upon by the
Funding Network (www.the
fundingnetwork.org.uk). It
brings together charities
and potential donors on socalled ‘funding days’, where
each charity gives a
presentation and participants then have the opportunity to
donate in an informal ‘pledging session’. Co-ordinator,
Lizzie Gillett, explains: “Giving is often a very lonely
endeavour, and giving with a group of other people in a
Richer people are often
personally targeted by charities
in a way that the less wealthy
are not, and people can become
overwhelmed by the number of
requests for help, which may
make them more cautious
20
THE POINT
situation where it is easier to get a sense of what gift would be
appropriate, means it can feel safer.”
The charity’s philosophy is that donating should be a positive
act and not one done grudgingly. “We work on making each
funding event a day people would like to attend rather than one
they feel obliged to, and where people will feel inspired by the
charities,” says Gillett.
“Richer people are often personally targeted by charities in a
way that the less wealthy are not,
and
people
can
become
overwhelmed by the number of
requests for help, which may
make them more cautious,” she
suggests.
Other charities believe that
successful business people can be
encouraged to make major
donations if they are given the
opportunity to see the fruits of
their investment. Working
equine welfare charity, the
Brooke Hospital (www.brookehospital.org.uk) encourages highlevel givers to travel to the
countries where their cash has
made a difference.
“Major donors who are able to
fund an entire project are more
likely to want to visit it, have
their name on it and monitor
its progress,” explains Brooke’s
Di r e c t o r o f Fu n d r a i s i n g
a n d C o m m u n i c a t i o n , Jo h n
Trampleasure. This is what
charity professionals call the fund-raising pyramid: simply put,
the greater the donation, the greater the appreciation.
Another productive strategy is the one-off, high-calibre event,
in which donors are given the red-carpet treatment. Larger
charities with the capital and connections to put on such
evenings were quick to realise that everybody likes mixing with
A-list celebrities. After all if you are going to give, you want to do
it in style. Those who attended the premiere of Cold Mountain
and donated £275 a ticket to the Prince’s Trust (www.princestrust.org.uk) for the privilege may not have been motivated
principally by philanthropy. They were almost certainly more
excited by the prospect of hobnobbing with HRH, Nicole
Kidman or Renee Zellweger. But whatever the reason that the
well-heeled attend such events, it is still a great money spinner
for a good cause. Who said altruism can’t be fun?
Andrew Morris, former charity worker, writes on social affairs and community relations
to smarter living
Stockholm
Business travel can be frustratingly dull. Joanne Hart discovers
how to avoid the mundane when staying in Stockholm
Sweden used to be considered one of the least attractive
destinations in Europe, dismissed as dark, dull and northern.
Low-cost airlines and a more adventurous travelling public
have put paid to that and flights to the country’s capital are
routinely packed, particularly on the weekend.
Business travellers may not have as much time for revelry
as regular tourists but there is no reason why they should not
take advantage of the myriad hotel and dining opportunities
on offer in Stockholm, popularly known as ‘The Venice of
the North’.
The most established luxury hotel is The Grand, built on the
waterfront almost 150 years ago. Steeped in history, The Grand
is for travellers who enjoy pomp and splendour. The Strand,
too, is a large, lavish establishment, which treats its guests well
and caters for most business needs.
Those looking for something a little different might prefer
one of the new, boutique-style hotels, such as The Rival, in
which former Abba member Benny Andersson, has an interest. The Rival is
situated to the south of central Stockholm and is extremely chic. Anyone
wanting to be right at the centre of the action however should consider The
Lydmar, so trendy that even its website resembles a work of contemporary art,
warning potential guests: “If you are looking for a standard hotel, you are
looking in the wrong place.”
All these establishments provide restaurants and bars but travellers keen to
explore beyond the hotel have a multitude of choices.
Boys’ toys
These days, gadget-lovers
are spoilt for choice. But
buying the wrong gizmo
can be a fashion disaster.
Grant Murgatroyd
gets upwardly mobile
It is a well-known fact that boys like their toys. But with the digital
and mobile revolution spreading like wildfire across all our lives, it is
harder than ever to keep up with the latest gizmos. Take Apple’s
iPod. The ultra-hip MP3 player (compressed digital audio files for
the technologically challenged) burst onto the scene last year and
was touted as last Christmas’s hottest present. So great was the
demand that many of the present-buying public were disappointed.
Or were they? The next issue of Stuff magazine – which gets
65,000 readers a month in the UK alone and is a huge fan of
Apple’s icon – could nudge the iPod out of the way in favour of
Rio’s Karma, which does much the same thing. A clear case of here
today, gone tomorrow.
MAKING THE MOST
Earlier this year Edsbacker Krog, a short drive beyond the city, was
awarded two Michelin stars. The surrounding area is not the most
salubrious but the restaurant is considered the best in Stockholm.
Almost as exclusive but situated in the centre of the city is Paul &
Norbert, an excellent and elegant choice. Eriks, too, is highly popular,
frequented by Swedish celebrities, and even royalty.
More homely options include the popular Ulla Winblad, serving
typical Swedish food and Sturehof, a 100 year-old fish restaurant,
recently refurbished to resemble some of New
York’s seafood eateries.
Bars abound and a good place to find them is
in Gamla Stan, Stockholm’s old town, where
cars are restricted and the atmosphere is oldworld charm.
The Lydmar Hotel’s
trendy website
resembles a work of
contemporary art
It is worth noting that the Swedes eat lunch
and dinner earlier than in more Southern parts
of Europe. Lunch is served from 11.30am and
people frequently meet for for dinner at 6pm.
Graham Oldroyd, Bridgepoint partner in Sweden, says: “My
preferred place to stay is The Lady Hamilton Hotel in Gamla Stan. A
favourite restaurant is the Kryp In, a small, intimate restaurant not far
from The Lady Hamilton. The menu has a good mix of traditional
Swedish meat and fish dishes complemented by some more unusual
‘signature’ items. There is a counter bar overlooking the small kitchen
area where guests can see the food being prepared.”
So what are the must-have gadgets for 2004? According to the experts at
Stuff, no toy-lover should feel complete without:
Nokia 6600 Bluetooth enabled mobile phone
Apple iPod MP3 jukebox
Pioneer PDP-434HDE plasma screen TV
Pioneer NS-DV990 home cinema system
Sky+ personal video recorder
Pentax Optio S4 digital camera
Microsoft Xbox games console
Sony Vaio wi-fi laptop
Netgear wireless network
Seiko Arctura Kinetic watch
This is no longer just about electronics and audio visual products. The
world of gadgetry has evolved into a mind-boggling array of products.
What outdoor enthusiast would not want to keep warm with the North
Face Met 5 jacket, complete with an in-built electric heating system? Or
perhaps a Rally Office chair, which uses genuine Cobra rally seats for
ergonomic comfort.
My personal favourite offers the chance to replicate that seventies icon
Steve Austin, the Six Million Dollar Man. On offer for a mere €500, a set
of Powerisers allows you to run at 30 kph and jump almost two metres in
the air, as well as do somersaults and backflips. Time to start shopping.
Grant Murgatroyd is editor-in-chief of Bladonmore Media
THE POINT
21
The bottom line
OPINION
International labour markets have revolutionised our world. Toys,
televisions and Tesco jeans are incredibly cheap. Plumbers and
handymen are hugely expensive. William Lewis, Sunday Times
Business Editor, ruminates on the costs of goods and services
When I was growing up, life was pretty simple. If your TV
or video broke down, you called a man (yes, a man) to fix
them. The idea of flying to Barcelona for the weekend was
simply absurd but if your boiler broke down you could afford
to call out a plumber. Clothes were something that you saved
up to buy, and a new pair of Levis was the ultimate in cool.
But at least it was cheap to get around. Some bloke
called Ken Livingstone made sure that it only cost
5p to use the bus.
Things are different now. The world has
turned upside-down. I know because I’ve been
buying lots of Buzz Lightyear stuff for my sons in
recent months. Big Buzzes, medium Buzzes and
small Buzzes line up on the floor each morning for
us to salute. The big one cost £19.99 and in the old
days we would have called it a computer. It
talks to us, saying: “To infinity and beyond!”
or: “This is an inter-galactic emergency!”
It is a seriously excellent toy, almost
exactly like the not real-life Buzz in Toy
Stories 1 and 2. We have written Andy on
the sole of one of his feet (just like in
the film) but on the other it says
“Made in China”.
And there it is: China. Thanks to
the extraordinary boom out there, stuff is seriously cheap.
Getting things fixed, by contrast, is seriously expensive.
Our plumber clearly knew this when he came round to
mend our toilet two weeks ago. Cup of tea in hand as he
struggled manfully to find the fault, he picked up the big
Buzz from the kitchen floor and grunted: “It’s incredible how
cheap these things are nowadays.”
That thought resonated with me 45 minutes later as I
handed him a cheque for £248. He’s just charged me more
than twelve Buzzes to fix our toilet, I thought. That can’t be
£5,000 now. Not bad, particularly when compared with the
price of a two-week holiday in the Mediterranean. Hiring a
gite in the South of France costs at least £2,000 and if you
are on some sort of Mark Warner holiday, then it really will
cost more than a new car. For sure, I recall foreign holidays
being special but boy, was it a big moment when my Dad
brought home a new car. We would ride around the suburb
in it, testing all the brilliant new gadgets – like electric
windows. Not any more. I recently took a new car home
to show the children, and my daughter told me to
“grow up”.
As for clothes – you can buy decent jeans for £5 in
Tesco as well as dirt-cheap TVs and videos. But,
when your fridge breaks down, you are forced to
consider whether to get it mended or buy a new
one. Yes, in case you didn’t know, fridges aren’t
expensive anymore, at least compared to the
price of calling out the fridge doctor. You
can buy a new Hotpoint from John Lewis
for £212. How much is some menderchap going to charge? First, you don’t
know. Second, loads.
Or how about the DVD player. Can’t
watch Toy Story 2 because your DVD
keeps jumping? What’s the answer – buy
a new one of course, for just £99.50 from all good
electrical retailers.
On the other hand, my mile and a half bus trip home
from the tube costs one whole pound. If I walk it, I could
buy a load of Buzzes in no time. Madness, as my three-year
old son says.
The point is clear, and I haven’t even mentioned the
weird world of house prices. Stuff is cheap, but getting stuff
done, getting stuff fixed, and getting around London is
anything but.
He’s just charged me more than twelve Buzzes
to fix our toilet, I thought. That can’t be right
right. It was even more disconcerting the following weekend
when his mate came to fix our boiler, our own little intergalactic emergency. The charge?
Nineteen Buzzes, of course.
It doesn’t take a great brain to realise that there is a state
of disequilibrium between the cost of things and domestic
services. It can’t go on; at least I don’t think it can.
Take the price of a new car. You can buy one for about
22
THE POINT
There is an opportunity here, but where is the pukka easyplumbing company?
Or the easy-fix outfit that guarantees to fix your fridge,
boiler and Buzz toys for £50? You can’t really blame the
Government: ultimately it comes down to entrepreneurs and
those with capital. So unite would-be plumbers of the world
and heed my rallying cry: “To infinity, and beyond!”
William Lewis is Business Editor of the Sunday Times
“
News
Bridgepoint investments and exits
across Europe. Page 4
Spotlight
What vendors want and how to make
sure they get it. Page 5
Multi-tasking
The changing role of
company chairmen. Page 8
Face to Face
THE POINT
IN SIXTY
SECONDS
Nocibé founder Daniel Vercamer on perfume,
passion and paradox. Page 12
Supporting Cast
Support services companies have been on a rollercoaster ride in recent years. Now they are regaining
their appeal. Page 14
French Connections
French private equity has had a bumper year
and the middle market is the main beneficiary.
Page 19
Guide to Smarter Living
Charitable giving made fun; an inside guide to
visiting Stockholm; gadgets galore; must have
gizmos for 2004. Page 20
Bottom Line
For Sunday Times Business Editor
William Lewis, the price is not right.
Page 22
”
THE POINT
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