Visit London's posh East India Club and you can't help reflecting on how imperial glory fades. Visit on the right day, though, and you'll also be reminded that corporate empires live on - provided, of course, that they're reasonably clever about how they move assets in and out of their portfolios.
The right day would be one of the six or seven per year when the British chapter of the Association for Corporate Growth gathers at the club. The group's aim: to provide in-house dealmakers from the country's largest companies with a forum where they can compare notes on successful deals and generally chew the fat about the dealmaking craft.
There's plenty to talk about. "The nature of corporate development in Britain has changed beyond recognition over the past 10 to 15 years," says Chad Murrin, ACG U.K.'s chairman and founder. The general evolution of M&A as a tool for growth, the stock market boom that ended in 2000, the march of globalization - and, perhaps most importantly, the rise of private equity investors - have all contributed to this transformation, he says. Murrin was, until earlier this year, also corporate development director at British venture capital and private equity firm 3i Group plc.
These new challenges prompted Murrin and a group of colleagues to set up the London chapter in 1999. Based in the U.S., the ACG has 39 chapters in North America and 42 worldwide. "This is a networking organization for people who do the same kind of job," Murrin says. "Of course you might be in different industries, but at the end of the day, you're dealing with the same kinds of issues."
ACG U.K. meetings usually take place over lunch at the club and feature a speaker presentation. Past guests include Telegraph-columnist-turned-Labour-Member-of-Parliament Sion Simon and, at the February 2004 meeting, Chris Outram and Martin Deboo of OC&C Strategy Consultants. Among those lined up for the balance of 2004 are Peter Thurlby, director of strategic alliances at Glaxo SmithKline plc, and Sarah Hogg, the 3i chairman who was an aide to former British Prime Minister John Major.
Besides the corporate dealmakers themselves, ACG U.K. also has members from the private equity industry and other deal intermediaries such as investment bankers, accountants and management consultants.
Murrin says that the aim is to keep the level of corporate membership at about two-thirds. "We don't want to be swamped by the intermediaries, but it is important to have them there because they are, of course, part of doing deals." ACG U.K. now has just over 100 members; about 30 of the FTSE 100 companies are represented. The association welcomes new members; interested parties can contact Murrin or visit ACG's Web site.
So what issues are top-of-mind for British corporate dealmakers?
Keeping up with their PE counterparts is one major concern. "What we've seen over the last few years since we've been selling businesses is the real aggressiveness of the private equity groups," says Robin Taunt, director of business development at engineering company Smiths Group plc and another one of ACG U.K.'s founders. "They've become very, very professional at what they do. And that means that when you're dealing with private equity firms, you have to be very well prepared."
Another recent feature of a British corporate dealmaker's life, Taunt says, is a decline in investment banking service because of layoffs and rapid turnover of bankers in the recent bear market. "It's difficult to brief them properly because they're here today, gone tomorrow," Taunt says. "Banks are trying to win our business, but it's difficult for them if there are new guys coming in that aren't really familiar with that business." He says the churn factor at banks has led many corporate dealmakers to choose advisers more carefully and to try and get by without them wherever possible.
But the dealmakers talk about opportunities, too. One hot topic: the possibilities in Eastern Europe after 10 new countries join the European Union in May. In theory, the expansion of the EU will make doing business, including making acquisitions, easier in such countries as Poland and the Czech Republic.
"Of course some companies, including our own, have already made inroads into Eastern Europe," says Roger Humm, director of corporate development at Oxford Instruments plc.
"But I think what you're going to see from May is that region finally coming into its own. At the moment it really is an underexploited territory."
And, of course, they talk about their positions within their own companies. There, too, the trends are encouraging, according to Murrin.
"Over the past 10 years, corporate development has emerged as an identifiable and valid function within U.K. companies," he says. "That function has increased in status as the need for it has increased." -Brian Cattell
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