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You may say that this is not unusual as most Chief Executives would like to grow their business every year but this year it seams different. ln 2010 clients were speaking to me about cost reduction, margin improvement and cash, this year so far it has all been about growth, market share, new revenue streams and acquisition / integration.
It is also encouraging to see the first private equity deal of the year in Support Services with Endless investing in Liberata and the big news in the industry will be about Costain if they are successful in purchasing Mouchel.
I think that we will also see many more high profile bundled deals being won by support services companies from central and local government. This could transform the service offering of the organisations who are bold enough to break into complimentary services.
I would be interested to hear your predictions for 2011.
Do you think that private equity industry should be looking into the support services sector?
Will the government back down from its plans to outsource more services?
Where will the growth in the sector come from, acquisition or organic growth?
Mark Kitchen is Head of Business & Support Services.
January 21st, 2011 at 8:08 am
Although none of us has a crystal ball, one thing is save to say:
2011 too will be a year were companies will be established, others go out of business, some will be merged, restructured, taken over, turned around - in short: As in the years befor, life will go on and business will be done.
This whole doom and gloom talk has never been helpful and will never be. If you know the principle of the self-fulfillig prophecy, you know that a good deal of rrotcause for the recession was because we talked ourselfes into it. The good news: Since we talked ourselfes into it, we can also talk ourself out of it, and that’s excatly why optimism is the prudent thing.
Yes, maybe we need to pitch more often to win an assignment, and hopefully some of those who call themselves interim managers but are really just meddling around to find their next permanent role will fail and leave the market place that should be reserved for pros, but one thing is clear: The worst is behind us and the only way is up.
Aside, perhaps it is time to be less ignorant and more open minded about international opportunities:
The German economy is booming and December 2010 has shown highest ever inquriy levels for German interim providers. Having sat down on my bottom and learned German, it has doubled my operating base and I have enjoyed many fruitful assignments over there in the last 5 years. Another booming market is Malysia, where they are so desperate for interims that I have been hired three times via LinkedIn, even without having an interviews, and it all went very well. The US Health Sector is undergoing an almost identical change as the NHS and they need more turnaround interims than they can source on the local US market - and guess what is the next best market place to look for interims because of the language?
Yes, 2011 will be great, even on my hubmle mirco level I am able to report that I went into this year with a handsome pipeline, and I am sure I am not the only one on the surface of planet interim.
January 21st, 2011 at 10:10 am
I would like to focus on the issue of growth from acquisition or organic means.
If you are talking about a sector then growth can only come from organic means as acquisition is just about redistribution within the sector. My view is that the sector should grow organically as local and central government shed staff to be able to say they have cut costs in the hope that by the time the real outcome is known the economy will have moved on and all will have been forgotten. Whether they have the fortitude in the current climate to actually reduce the cost rather than outsource it is open for debate but history tends to show the cost will be outsourced, which is all good for the private sector.
For companies in the sector I would recommend targeting organic growth. The time and energy required for an acquisition may mean the acquirer and acquiree spend so much time on consummating an acquisition that in the meantime competitors focussed on organic growth are in the lead on winning contracts. By all means look at strategic acquisitions but cheap acquisition targets are usually cheap for a reason, there’s a problem. Expensive acquisitions are usually just that, expensive. If management is recommending acquisitions I would be checking whether the real reason is that management are just not that capable of providing organic growth. If that’s the case maybe new management is required. Anyone can buy growth, delivering organic growth requires skill. With companies still under pressure why not add to that pressure by taking competitors out through competitive activity, but for goodness sake do not undermine the market, do it on skill.
No matter which route is taken I implore companies to make sure they have a strong base in place to cope with their growth strategies, and of course hire an interim executive to assist them.