|
|
Saturday, 20th April 2024 |
| Limerick based corporate finance firm taking on the rest |
Back |
BDO Simpson Xavier Corporate Finance Limerick first came to the attention of the corporate world when they led the McInerney Group through their remarkable restructuring - defying the predictions of all major market commentators. Over a period of more than a year, two partners in the firm, Brian McGann and Con Quigley, devoted the majority of their time and talent to the obsessive pursuit of the saving of one of Ireland’s best known names. Out of sight of the large corporate finance houses and corporate law firms around St Stephen’s Green, the firm has been quietly beavering away developing a reputation as movers and shakers in the corporate finance world. Looking back, McGann credits the McInerney board, and in particular Barry O’Connor, with responding to the enthusiasm of a new player in the corporate finance market in 1996. Having negotiated with McGann on a deal in Limerick, O’Connor recognised a possible source of energy for the task ahead.
At the time, McInerney was facing into its second restructuring in three years. Following large losses in the late eighties in the UK and Middle East, it had been restructured in 1992/93 as a holding mechanism in order to allow it to regroup and to attain a positive trading position. But the new management team found themselves faced with liabilities from the past, which still exceeded assets by over IR?20,000,000. All the canny commentators reckoned it was impossible to restructure it again. It had an exceptionally complex capital structure as a result of the previous restructuring. Its creditors included practically every bank in Ireland and banks and other institutions in London, Scotland, Belgium, Spain and Portugal.
Together with the new management team at McInerneys, McGann and Quigley structured the deal, presented it, and negotiated the acceptance of the creditors, negotiated the lead investment by ICC venture capital, proposed the new share valuation, devised the management option scheme and guided the process through the acceptance of the various stakeholders. Peter Murphy (tax consulting partner) quantified and rationalised the complex tax liabilities with the patient co-operation of the staff of the Revenue Commissioners in Dublin Castle.
For McGann and Quigley, it was their single biggest project to date and lasted well over a year. They assessed the risks and the probability of success and in spite of the apparent challenges, never lost faith in their initial judgement of the company and the possibility of success - nor in the ability of the client-advisor team to deliver on their goal.
McInerney Holdings plc was refloated in December 1996 with a share price of 35p. As predicted by BDO’s pricing strategy, the price rose comfortable into the 50p zone immediately and peaked in 1998 at IR?1.80 per share. McGann says: ‘We were just part of a large team but we like to think we contributed our piece’.
Since then, the firm has concentrated on working with the middle market - primarily privately-held Irish companies with growth potential and has notched up a series of impressive milestones from its Mid-West base. Most recently, it has completed the multi-million dollar sale of Shannon Aircraft Motor Works Limited to Sundstrand Aerospace Inc of Rockford, Illinois.
Since setting up a specialist corporate finance business in 1994, BDO Simpson Xavier Corporate Finance Limerick have reversed the normal flow of corporate finance work towards the capital and have brokered significant deals involving leading names such as: Adare Manor, Boots, BUPA, DH Burke Supermarkets, Derg Line Cruisers, Duggan Steel, Hegarty Hammond, Irish Car Rentals, Irish Microfilms Services Ltd., Kirby Electric, Lynch Hotel Group, MacInerney Holdings plc, The McMahon Group, Oatfield Sweets, Roches Feeds, Royal Tara, Shannon Aircraft Motor Works Ltd. and Westinghouse.
Nonetheless, both McGann and Quigley have maintained a relatively low profile in the business community at a national level. Their success in building a viable corporate finance team based outside the main corporate financial centre in Dublin remains a unique achievement. McGann opines that this is proof positive of the quality of business and talent all over the country today. Quigley notes that location outside the main financial centre brings both advantages and disadvantages - but bucking the trend in this way is clearly a source of satisfaction to both. McGann jokingly feigns surprise at the level of referred business that has come from members of the legal and financial community in Dublin with whom they have gone into battle or crossed swords in the past.
Brian McGann readily admits that as a newly qualified chartered accountant in 1984, he had no idea what he was letting himself in for when he set up as a sole practitioner on Limerick’s O’Connell St. Over the first ten years up to 1994, he steadily built a reputation
in insolvency, corporate restructuring and financial strategy. Brian McGann points to his decision to join his firm with Simpson Xavier in 1990 as perhaps the single most important factor in the rapid growth of the firm.
‘We were lucky enough to find an emerging brand that we could build together with partners who had the same vision and the same focus on growing business. We have all grown up together and I am delighted to say that we have a very special relationship whereby both offices obtain tremendous support in running their respective businesses on parallel tracks,’ he says.
In 1994, McGann approached Con Quigley with a view to building a stand-alone corporate finance business on the base which was emerging. Quigley had worked in corporate finance in the late eighties. In 1989/90, he worked in the US as client manager in the venture capital and high-tech sector. He feels that his experience in the large multinational sector has given him a great insight into the issues facing MBO teams in particular. Known as a very analytical thinker and a real all-rounder, Quigley has been a prizewinner in both the final chartered accounting and tax exams and has qualifications in both IT and marketing. He is often retained to work on corporate and management structures by family-owned businesses and high-growth, high-tech organisations.
Today, McGann is the managing partner of a multi-discipline professional firm employing almost seventy people in Limerick. The multi-disciplinary nature is central to his business strategy:
‘We are a modern financial services firm - we are not a seventy-strong chartered accounting firm. We have four separate disciplines under one roof - corporate finance, general practice/compliance, executive recruitment and tax consulting,’ says McGann.
Balancing these different businesses and cross-selling successfully has eluded many firms - including some of the largest. Quigley attributes this to a style of operation.
‘We have six active, talented partners who share a very commercial outlook and who recognise that our greatest strength is in working together,’ he says. Like all growing business, attracting key individuals is an issue nowadays. ‘We are lucky to have a very good team. But due to the fact that we have kept a fairly low profile and are located out of Dublin, candidates often don’t realise the quality of our deal flow nor the opportunity that we offer. But we have managed quite well so far and we have a very rich mix of top quality people in the team including holders of MBA, masters in finance, masters in marketing, an economist and a few accountants. The critical thing is the quality of the teamwork which brings it all together.’
In addition to the two partners, BDO Simpson Xavier Corporate Finance employs a further eleven staff - of whom three are directors. Brian McEnery co-ordinates the insolvency business. But these days, his work is more investment-oriented. He has quickly built up a reputation in the private healthcare sector (working for BUPA and a number of Irish operators) and
in the hotel sector.
‘I think our firm has been marked out by the way it maximises opportunities for clients and for the firm. In the last few years we have placed over IR?100 million in BES and other tax-based finance in growing Irish business. I think we have also proved that an international network like BDO can be used to create real deals - for the smaller Irish client as well as the multinational. Each of us now has our own personal network of overseas contacts as a result,’ he says.
Liam Hession oversees due diligence and major financial analysis projects. ‘For me, the value of careful planning and detailed financial appraisal underpins all good business - whether we are dealing with a local Irish company or an international group. We have a very modern, research-based approach and clients know that we take their business seriously.’
Stephen O’Donovan concentrates on acquisitions and sales. ‘What impressed me when I first joined the team was the refusal to compromise in the quality of business planning, investment appraisal, valuation methodologies and presentation of information. There is an ethic here that corporate finance is about good business strategy - not just opportunistic deal brokering.’
Quigley asserts that a willingness to invest in resources - recruitment, training, IT and networking - has been central to the success of the corporate finance business. ‘We did not see any future in opportunistically dabbling in corporate finance - which could so easily have happened as we were both trained in a general practice environment. We wanted a full-time team of genuine specialists.’
They are also not afraid to bring new talent into play. It is notable that all of the directors are young but yet they have already been afforded a great deal of experience.
The firm seems to have embraced the sort of best-practice policies that they would normally encourage in clients. Billy Slattery of Woodchester has recently completed three years as a non-executive director to bring experience and contacts to the table. Arising from an original initiative between Quigley and his alma mater, UCG, the firm how has a stand-alone marketing function headed up by Siobhan Walsh. There is a major emphasis on generating repeat and referral business which has been the main source of deals for the team.
Nowadays, McGann is excited with the prospects for one of his latest initiatives: DLA Recruitment - which has offices in both Limerick and Dublin and which is backed by the international DLA network based in London. Again, the formula is the same. Maurice Carr was approached to bring his particular brand of professionalism and experience into the BDO Simpson Xavier stable.
On this solid base is built a fast-growing business driven by the same
modern style and backed up by a significant financial investment. McGann hopes that their track record in attracting investment for high-growth successful ventures of their own is
a reflection of the value they bring to client situations. |
|
| Article appeared in the January 1999 issue.
|
|
|
