Endless has been shortlisted for Turnaround House of the Year at this weeks ceremony in London. This ceremony is traditionally one of the highlights of the PE year, but the outlook for the 2010 event seems to be mixed and opinion clouded, with comments from some quarters threatening to rain on the parade.
The Awards, presented by the British Private Equity and Venture Capital Association (“BVCA”) and Real Deals Magazine, traditionally recognise the achievements of individuals and firms working in the Venture Capital (“VC”) and Private Equity (“PE”) industry. But whilst Real Deals notes attendance will be up on 2009, an increasing number of firms have allegedly declined, on either ethical or reputational grounds, given the current climate.
Our Managing Partner, Garry Wilson, notes why Endless is proud to continue to support the Private Equity Awards in 2010,
“The Private Equity industry, as with the wider financial services sector, has come under both increased scrutiny and pressure in the last 18-24 months, as commentators, policy makers and decision takers look for someone to blame for the global economic recession.
As an industry, I firmly believe we should be proud to celebrate all that private equity has achieved in what is unquestionably a more testing economic environment, but one in which Private Equity backed businesses are arguably better placed to survive, even in the event of a ‘double-dip’.”
Indeed the recently published “Private Equity and Insolvency” Report, compiled by a team of academics including the Credit Management Research Centre at Leeds University Business School, just a stone’s throw from Endless HQ, notes that Private Equity-backed buyouts are less likely to fail than non Private Equity-backed deals.
Wilson notes, “As a house we are characterised by our hands-on approach to turnaround, which helps drive strategic, operational and financial improvements across our portfolio, rather than merely looking to realise value via financial re-engineering and multiple arbitrage on exit. Those days of leveraging up the balance sheet have gone and may never return.”
Wilson continues, “It is our restructuring and turnaround skill-set which will position the Endless portfolio to successfully navigate what is likely to be a very slow and protracted recovery from recession.” Businesses emerging from turnaround are typically leaner and fitter than competitors, having already gone through much of the pain which has since spread to the wider economy.
At a time when the return of liquidity to the market from our financial institutions has remained stilted at best, Private Equity has a key role to play in funding future buyout activity, which is also now slowly beginning to creep back to market. Wilson notes “Endless has in excess of £120 million of committed capital still to invest from Fund II and we have the ability to complete transactions in a matter of days and weeks, a timeframe against which more traditional PE houses struggle to compete.”
Endless recently acquired specialist schoolwear business, Trutex, in February 2010, a month which also saw the successful divestment of three portfolio investments, including Sheffield based heavy engineering specialist, DavyMarkham, which prior to acquisition had delivered only 20 years of losses for the vendor. The business was divested in February to IVRCL, an Indian trade buyer, realising a 10.5x return. “DavyMarkam demonstrates that with hard work, commitment and vision, the Private Equity backed turnaround model succeeds where others have previously failed.”
With other notable turnarounds well underway, including Endless’ investment in leading UK discount book and arts & crafts retailer ‘The Works’, for which Endless scooped the prestigious ‘Turnaround Financier of the Year’ award at the Dec 2009 Institute for Turnaround Awards, is there more to celebrate for Endless and the Private Equity industry in general?
Wilson confirms, “We are delighted to be short-listed by the BVCA and Real Deals for ‘Turnaround House of the Year’. We look forward to a fantastic event and the opportunity to share contacts, comment and best practice with our peers. The Private Equity industry will play a key role in coming months to drive our recovery from recession and we need a collaborative approach to face the inherent challenges this will undoubtedly bring.”