Date: 22 April 07
Publisher: The Sunday Times
AMBITIOUS executives no longer have to move south to make a success of their careers. The Midlands and the north are booming.
“It’s very buoyant, particularly along the M62 corridor,” said John Wakeford, a managing director at Hitchenor Wakeford, an executive recruitment company that has offices in Leeds and Manchester.
Wakeford reckons more headhunting deals are being done and more top-flight executives hired than for many years. “There are a lot more six-figure opportunities than there have been for some time,” he said.
The demand for good executives is being matched by the influx of serious money looking for business opportunities. Classic venture-capital deals are flourishing, and on top of this the explosive growth of private equity has made an impact.
Retailing in particular, said Wakeford, is seeing something of an upheaval. He reckons the acquisition of Littlewoods by the Barclay brothers, and its transformation from a catalogue company into an online retailer, is among the deals that have produced a cultural change, and this sort of activity has stirred up the jobs market.
The venture capitalists have come and want to stamp their own image on the companies they take over. A lot of people in these businesses are happy
to embrace new opportunities. Changes on the boards of regional companies are also having an impact. Younger executives see this as a chance to move on and accumulate some capital.
“Once you get some private wealth into these companies, people want to make money on a three to five-year timescale,” said Wakeford.
Leisure and travel are thriving business areas. Entrepreneur John Caudwell has also broken up his telecoms group, which included Phones 4U, and sold it to Providence Equity and Doughty Hanson, the private-equity firms. The impact of this and the sale of Littlewoods has brought different skills and people into the market. “This has had a significant impact in a regional economy. It’s an infinite opportunity,” said Wakeford.
When private-equity groups decide to move in they will either back the existing management or will replace them and bring in their own people. “It’s either one thing or the other. Once people start leaving, others move into the gaps behind them. But it is essential to tie them in or they will move elsewhere.”
Whether the number of deals will continue to rise is another matter. “If the truth be told,” said Wakeford, “there’s more money around than deals.”
Nevertheless, salaries in the £150,000 to £250,000 bracket (plus a generous benefits package) are now common and the bigger offers are heading towards £600,000. “You don’t have to relocate to London to make serious money,” he said.
Leeds-based Garry Wilson, who specialises in innovative financing deals, said there was a shortage of good executives. “They’re thin on the ground. Some very well-trained people have been brought up in a blue-chip environment and it’s difficult to tempt them into private equity — many of them don’t appreciate the rewards that can be had from working on a private-equity deal.”
Wilson is a former partner at Arthur Andersen and Ernst & Young, where he worked as an adviser to private-equity firms, but now he runs his own business, Endless, which has offices in Birmingham, Manchester and Leeds.
He said: “At any point we will be assessing a number of deals and we hope we can take advantage of any skills that are available. It’s an exciting time in the north now. There is a very busy private-equity market.
“The question is whether there is a bubble and will it burst,” said Wilson. “I’m not convinced there is a bubble. It’s a shift from public markets to private equity. But even if it does burst it will create a lot of private-equity deals in the turnround area. Over the next decade executives with turnround skills are going to be highly prized.
“Often a private-equity deal is too big for one person to handle. Clear vision in terms of setting a strategy for companies is often too much for one man alone. The ability to motivate and run a big team is crucial. Executives and investors in private-equity deals must have their interests aligned.”
His biggest deal so far has been £300m but the average size is about £50m. “We’re averaging just over one deal a month and we completed 17 in 2006 and four so far in 2007. We should see more business than last year and the deals should be bigger.”
David Tunna, managing director of the headhunter Hitchenor Wakeford in Manchester, said: “We are experiencing growth across all sectors that is being funded by the deep pockets of the private-equity people. It is having a significant knock-on effect.
“Business has been very strong for the last 12 to 18 months and the outlook is for more of the same. Last year was very good and there are a lot of opportunities. Chief executives, finance directors, supply-chain executives are just some of the people in demand.”
What stands out is that all this activity is being generated in what was a stronghold of manufacturing. It suggests that before the pessimists write off the north they should appreciate that this part of the country is not so much in decline but undergoing intense change.