The Model

We are currently working on a number of merger strategies and subsequent IPO:

We are looking to bring together around 8-10 well run, profitable businesses in each sector to form a larger group. We anticipate each group to be circa £50m turnover, making profits [EBIT] of around £8-10m.

Each group is now formed and includes what we call a ‘platform business’.

  • Construction & Property Services
  • Engineering & Manufacturing
  • Marketing Services
  • Taxi, Transport

The medium term plan is to build the group through acquisition and list the group on one of the capital markets. Funds raised on the capital markets will then be used to grow the business substantially (principally through acquisition) – the plan would be to get to a £200m market capitalisation within 3 years in each group. This growth will come through acquisition. The funds to make the acquisitions will come from the IPO/listing [shares will be sold to raise the capital].

The benefits to a business joining the group are:

Economies of Scale – being part of an enlarged group there will be the opportunity to consolidate & benefit from ‘shared’ functions;

Best practice – working with like minded business owners there will be opportunities to share best practice, ideas etc. to create greater value within your current business & the wider group;

Buying Power – being part of a larger group will provide us with greater buying power;

Pointing to the PLC – being part of a PLC means when pitching for larger contracts/tenders there will be great credibility created by pointing to the PLC and saying we are part of XYZ Plc with a market capitalisation of £50-100m;

Access to capital – the cost of private equity is expensive, but by listing a business, access to far greater sums of capital at a much reduced cost will be available to grow much quicker than remaining as a private entity;

Liquidity – you would have a shareholding in the group PLC and can sell shares easily through a broker;

Recruit & Retaining the Best Talent – whilst you can offer shares in a private LTD to key people it is difficult to value them & they are not liquid. In a PLC you can grant share options to your key people and they can see (& sell easily) the value of their shares. This can be used to attract & retain the best talent in your industry;

Wealth Creation – because of the vast sums of capital available & liquidity, public companies tend to be valued much more than private entities. In addition a diverse group of businesses is reduced risk from an investment point of view. So, when you decide its time to exit, you sell your shares at hopefully a much greater value than what your business is worth today.

We have three models:

  1. Exit – if you are looking to sell your business and exit, and have a capable management team in place to run the business, we are interested to acquire outright businesses that ultimately we can bring into the group and subsequent IPO.
  2. Majority Sale – sometimes its better to own a smaller percentage of something big than all of something small. We can structure a deal to enable you to ‘cash in’ on the value created thus far, retaining a minority stake in the business. Then using the benefits of the enlarged group & access to the capital significantly grow & scale your business. You would then benefit from owning a % of an enlarged business.
  3. Growth Sale – you swap shares in your current company for shares in the group – you continue to run the business, make the rules but with access to capital to significantly grow and scale.

In options 2 & 3 unlike traditional roll up/merger models we are looking to ensure each business retains control & its own independent identity right down to keeping the existing name over the door. So you (or your existing team) continue to run your business just as is today, with all local decisions continuing to be made by you/your team including managing your bank account.  

This model enables you to run your business just as you do today, but with the benefits of being part of a larger group:

You can point to the PLC when required (such as for pitching for contracts/tenders or to offer shares to key people);

You can use the PLC to your advantage (group buying power, consolidation & economies of scale)

You can use the PLC to grow (sharing best practice with other founders & taking back new ideas to your business, access to vast sums of capital to grow by way of acquisition or other investment opportunities to make yourself bigger, better, stronger & more profitable – doing this significantly quicker than trying to do it on your own as an SME).