Could the consolidators turn back the clock?
Could this be the first of many buybacks to come in the consolidator space? Oval insists that these are “isolated incidents”, but no doubt other broker vendors across the market will be watching closely. If any have been quietly regretting their decision to sell, this could be the moment they have been waiting for.
The consolidators are only too aware that many of the restrictive covenants they placed on vendors at the time of acquisition are now due to expire. That means, having pocketed their cash, the entrepreneurs are now free to leave and start up again should they so wish. But they can not steal their business back from the consolidators they sold it to – at least, not without risking ending up in court. Oval, Towergate – indeed, all the major consolidators have had their days in court.
So, in those cases where principals are regretting having sold their businesses, this demonstrates a new route. But with one big catch: they have to pay up. All that lovely money sat in the bank (and no doubt battered by the financial markets) will have to go back to the consolidator it came from.
You can’t have your cake and eat it, and vendors thinking about an exit have to make a choice. Oval’s pragmatic approach has given them one option. Retirement is another. Fighting it out in the courts is a third. It will be interesting to see, in the months ahead, who takes which path.
