Ahead of tomorrow's Dealmakers Lunch, focussed on Buy and Build, Insider editor Simon Keegan welcomed Paul Billingham, Co-founder, Knight Corporate Finance into the studio. Knight Corporate Finance are sponsoring the event, which is fitting given they have had a record year for deals.
In a special video interview Billingham notes that some consolidators might have paused because of Europe and Trump but there is still lots of activity. He advises: "The companies that do Buy and Build well are the ones that integrate and are culturally aligned with the businesses they are buying."
In a special video interview Billingham notes that some consolidators might have paused because of Europe and Trump but there is still lots of activity. He advises: "The companies that do Buy and Build well are the ones that integrate and are culturally aligned with the businesses they are buying."
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00:00Hello, I'm Simon Keegan. I'm the editor of the Northwest Business Insider and today we're going
00:16to talk about our upcoming event. It's a dealmaker's lunch, this time with the theme of
00:22buy and build. So those of you who attended our last dealmaker's lunch, that one was leveling
00:28up private equity and it was a great success. So the next event is on the 23rd of April at Manchester
00:37Hall and I'm joined today by Paul Billingham, who's one of our sponsors for the event and he's
00:43the co-founder and director of Knight Corporate Finance. Welcome, Paul. Yeah, thank you. Thanks
00:50for involving us. So it's an exciting event that we've got coming up looking at buy and build. So
00:55first of all, why was it so important for you to get involved in this event? Well, Knight
01:01Corporate Finance, a lot of our business exits are to buy and build players, people that are
01:05backed by private equity and undertake several acquisitions. And actually my own background,
01:14way back when I was at Martin Dawes, I was involved in buy and build. So I was a management accountant
01:18there, got involved in due diligence. Then that led into Opal Telecom and then Talk Talk
01:23Business. And those businesses grew very much off the back of acquisitions.
01:27Definitely. Yeah. Great Northwest businesses as well. But that's interesting to me because
01:33I think a lot of corporate finance that I come across, I associate them with being sort of
01:38founded by, you know, kind of chartered accountants. Whereas you seem to come from a lot more of an
01:43industry background, as you say. So when you're working with, you know, your clients then, I
01:50guess you must speak the same language in some respects there. Does that help you to sort of
01:55relate to what they're going through? Yeah, I like to think so. I mean, I was a chartered
02:00management accountant, which meant you were basically qualified within industry. And yeah, I've
02:06worked for very entrepreneurial led businesses. You know, Martin Dawes, Telecommunications. Martin
02:11was a serial entrepreneur. And then at Opal Telecom, working with the likes of David Goldie
02:15and Neil MacArthur. Again, very entrepreneurial, high growth and yeah, just risk takers basically.
02:23And yeah, I hope that that's rubbed off on me and the way I approach business and the same
02:28with Adam, my co-founder. And so when we are talking to business owners, we like to think,
02:33well, you know, we've got more understanding of the stresses and strains they go through and
02:39and it helps us relate to them better. Absolutely. Yeah. So just on to what, I suppose, what you're
02:46seeing in the market at the moment, I mean, what kind of buy and build activity are you seeing
02:52of late? We're very much focused in the ICT sector. So, you know, IT, managed services,
02:58telecoms, unified comms, that's sort of our real sweet spot. And over the last, well,
03:04it's night's been going for 17 years now. And in that time, there's been a rapid increase
03:11in a number of transactions and led by predominantly private equity backed or debt backed buy and
03:18builds. Yeah. We've, this year, we've had probably our record year for deals in terms of volumes.
03:24We've actually just completed five transactions in the last four weeks. Nice. So still lots of
03:30activity. There's probably a few of the consolidators pausing right now, either due to sort of a bit of
03:39uncertainty about the UK environment, the economic environment. And certainly we had one recently
03:44that's more concerned about what's going on in America with Donald Trump. So, okay. Yeah.
03:49But still lots of activity, lots of interest. And yeah. Yeah. And do you, do you tend to find
03:55that the companies, you know, they've got their platform and then as they're bolting on, does it
04:02tend to be that where it's people may be in their supply chain or complementary services,
04:09or are you seeing more of a consolidation where they may be buying up, you know, rivals?
04:16Yeah. It's a bit of both. I think M&A is often led, you know, the straightforward M&A is just buying
04:21probably a smaller version of your own business. Therefore, it's easier to integrate it.
04:26Yeah. You understand what they do, but then also there's opportunities to maybe make a strategic move.
04:32So what we've seen in the last few years is telecoms resellers buying IT resellers because they want to
04:39move into IT. You know, the IT and telecoms is converging anyway, but to bring in that expertise.
04:46So there's a lot of that going on at the moment in the market.
04:48Yeah. So you're buying the expertise, you're buying the talent really in some of these cases,
04:53aren't you? And it's the, I mean, do you, do you find yourself seeing like a winning formula
05:01sometimes in buy and build? You know, is there, are there good do's and don'ts when it comes
05:06to things like company culture?
05:08Yeah. I think the people we've, well, the businesses we believe have been very successful
05:13with buy and build, uh, in our sector are the ones that, um, integrate well, but they're
05:20culturally aligned with the, with the businesses they're buying. Right. Uh, I think that's really
05:24important. I think if you, if your culture is not aligned, it makes the whole integration
05:29difficult. It means, it means they'll have a different way of managing their customers.
05:33And that will that fit with you. And so it's those that have, you know, they, they look
05:38at businesses and know, well, do we integrate this one fast? Do we actually hold it out and
05:43actually leave it as a, almost like a, a division within its own brand and keep it separate.
05:49And that's the, they're the ones that are really successful. The ones that are really
05:52good at judging whether to bring a business in and consolidate it completely or, or actually
05:58just leave it to continue doing what it does well on its own. Not just on paper, is it? It's, uh,
06:03it's, it's very much about that culture. Now, another, uh, you, you mentioned sort of ICT,
06:08but another sector that we're seeing a lot of that consolidation in, I think is professional
06:12services. You guys are a good example of that because you're part of a wider group as well, um,
06:18with a buy and build strategy. So, you know, you've got, you've got first-hand experience
06:23of that as well. Tell us a little bit about your group. Yeah. So, uh, Knight Corporate
06:27Finance is now part of K3 Capital Group. We got acquired, um, in July, 2021, um, by K3 Capital.
06:35At the same time, they acquired another business that Adam and I were involved in,
06:39which was Knight R&D, an R&D tax credits business. Right.
06:42So, the, those two businesses sold to, to K3 Capital at the time. They were AIM listed.
06:49They've since, uh, delisted and been acquired by Sun Capital. Um, and Sun are, uh, you know,
06:55basically working with K3 to accelerate their buy and build strategy. And since they've acquired us,
07:01they've now acquired, um, Pinnacle over in Northern Ireland, for example, or a Sage reseller.
07:07Uh, they've expanded in the restructuring area with K3 8. Yeah. Um, and, um, and also K3 Advantage,
07:14which is sort of not so much a buy and build with K3 Advantage. It's been grown organically,
07:19but obviously a co-sponsor of this event. Yes. Um, yeah, they, uh, you know, just, uh,
07:24they're broadening out the professional services that they can provide as a group now. Yeah.
07:29Quite, quite, uh, wide reaching really, isn't it? Well, we've, we've, um, I don't want to spoil it
07:35too much because obviously you're on the panel as well for the event. So I think, um, I mean,
07:41for people who attended the last Dealmakers lunch, you know, we had that really nice mix of
07:46of professionals and also the companies. And I think we've got that again, and I'm really
07:52interested to hear directly from the companies about their approach to buy and build, not just,
07:59um, you know, as we say, the facts and figures, but also that cultural approach for how you make
08:05it work, how you integrate it, how you just build a winning buy and build strategy. So we've got the
08:12companies, we've got the advisors like yourself. Um, I think it's going to be going to be a really
08:16great event. Yeah, no, really looking forward to it. You know, we, we were at the last event
08:20and, uh, it was a great mix of people from the professional services sector, but also within,
08:25you know, private equity as well and debt providers. So it's a good mix and, uh, yeah,
08:30I'm looking forward to the event in April. Fantastic. Well, if, um, you're interested in
08:35coming along to this event, it's on April the 23rd. It's at, uh, Manchester hall, which is a,
08:41which is a great venue for an event like this and right in the center of Manchester.
08:46Um, it's a dealmakers lunch, buy and build. We're going to pop the link up next to this video.
08:51Um, so I'll just say thanks very much, Paul, for joining us and we'll see you at the event.
08:57Yeah. Cheers. Thank you.