Insights & News

Steel yourselves! TATA’s ‘190 buyers’ isn’t news for SMEs

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From Management Buyouts to ‘corporate restructuring’ via ‘expressions of interest’, business sale terminology has made its way from the financial section to the front pages in recent weeks.

The big M&A story, of course, is TATA Steel UK. Stymied by falling steel prices globally, the company is reportedly losing an estimated £1m a day - despite having invested over £3bn in its UK operations.

This week’s story is the potential sale of the massive Port Talbot steelworks. Site chief Stuart Wilkie has already announced his intention to pursue a Management Buyout (MBO), and TATA has announced it is now ‘reaching out’ to 190 potential buyers.

That number was eye-catching enough for the BBC to make it the headline on their news story. The implication? When it comes to megadeals, 190 is a very big number of buyers indeed.

Here at BCMS, approaching that number of acquirers is not headline news – it’s an everyday occurrence for our SME clients. As an M&A advisor, we would typically ‘reach out’ to between 120 and 250 buyers for every SME company we represent. Last year, we researched an average of 189 for each company we sold – and remember, we specialise in businesses with market values of £1-£100m, not multi-billion corporations.

For our clients, we examine all possible avenues of interest: sales to complementary trading companies, organisations overseas, private investors, and private equity if appropriate. We advise an increasing number of clients on sales to financial buyers including management teams – both existing management for MBOs and external commercial teams via Management Buy-Ins (MBIs).

In today’s market, the exit options are many.

Back to the story at hand. "We are trying to find a responsible buyer,” said a TATA spokesman. “We don't want the process to last forever - our main aim is to find the right buyer.”

I totally agree. Regardless of sector and regardless of size, the key to deal-making is just that: finding the right buyer, not just any buyer.

And as for TATA’s steelworks across Britain, I sincerely hope the best solution is found for the UK steel industry, and the thousands of men and women who work in it.

Dave Rebbettes's picture
Posted Apr 2016
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