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