There will be winners and losers in the acquisition race of 2011
The next 12 months will confirm the fate of the consolidators. For the handful of brokers that have kept the market buzzing since Towergate hit the scene in 1997, it’s make your mind up time. They will have to examine their financing options as deals expire. Many have spent the past two years claiming to be on course for a 2012 flotation. This year, we’ll see which were on the money, and which were on a wing and a prayer.
There’s a lot of bluster in this business. The model depends on bringing together a group of brokers and, by talking big in public and tightening the screws in private, making the whole worth more than the sum of its parts. Has it worked? Depends who you ask. Critics point to black and white results such as Giles’s – whose EBITDA plunged 13% last year.
Defenders of the model say Giles remains a good business, operating at high margins typical of a solid private equity investment. With acquisitions including Westinsure last year and more in the pipeline, Giles still has the support of Charterhouse’s deep pockets.
There will be winners and losers. Experts put Towergate and Oval at the front of the pack: Towergate’s planned private equity deal is a step in the right direction and Amanda Blanc’s defection to AXA will not necessarily deter investors. The pressure is on Peter Cullum and Andy Homer to hold their nerve and sort out the group structure while retaining key staff.
Jelf is back on track, slashing its debt to £8m last year. And as Blanc takes the reins at parent AXA, all eyes will be on Bluefin. Once again, the consolidators will dominate the headlines. And this year, they’ll have to put their money where their mouth is. IT