Investment Insights by Shakur Investment Group brings you a podcast with James England from Debrett’s, where he shares his expertise in the field. Get exclusive access to insights from industry experts and discover different opportunities in the market. Don’t miss out on this valuable information, subscribe now!
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Hi welcome to investment insights by Shakur Investment Group um the idea was this of this podcast is to get people onto the onto the podcast that have won have done what they’re talking about have been in this space for a very long time and giving people an opportunity to access different
Types of opportunities out there in the market so we want to bring people on board who are experts in their field and hopefully we can provide those insights to the industry that otherwise uh otherwise we wouldn’t get access to them so thank you James for coming on on the podcast. James is
From Debrett’s a Corporal Finance Firm, they also do private equity and advisory as well as advisory on a lot of working capital facilities and things like that and they’ve they’ve been running for a very long time they’re based in Solihull and their name speaks for itself and their reputation speaks
For itself about that thank you very much for having me it’s a pleasure to be here oh brilliant so do you want to give a brief intro as to yourself to get an insight into you and and about yourself as well yes happily thank you, well I think your
Introduction was spot on Debrett’s is a investment and advisory firm we try and do both we have to be quite careful about making sure that there’s no conflicts there uh we haven’t been going for all that long Debrett’s as a as a company has existed for 200 and something years I can’t
Remember we should know, but lots of the things that it used to do were sort of losing relevance in today’s world anc I set up a new business that got the interest of the gentleman that owns
Debrett’s and he allows us to call our business to bretts he’s now my chairman and uh the investment and the advisory business has been going for just over two years now um and uh so far so good it’s
Interesting Market as you know all too well we’ve done uh how many of we deals in this calendar year we’ll have done 50 advised on 15 deals invested in two companies and we’ve just launched a 30 million
Fund to go and invest in other companies well how did you get into all of this like what was your story as an individual getting into because you’ve obviously got an interesting background Journey for you so I’m curious to to learn more about it it’s a des background start in a tangency
It doesn’t get any more boring uh I trained with PWC years and years ago and realized I was never going to be a very good accountant I didn’t have the attention span I saw tax as a
Um as a challenge or negotiation rather than the strict set of rules so I didn’t give my clients particularly great advice so I left that as soon as I could I didn’t really know what Corporate Finance was m and then the recruiter said to me oh there is this thing called Corporate Finance
Where you sort of have to be an accountant to do it but it’s opportunity to make more money than an accountant so I haven’t back really well and in terms of the the current market and where it’s
Headed what are you seeing from your from your sort of expertise that what are the trends what are the downfalls what are things that are that are going really well and what things aren’t going
So well um it’s a good question for our clients I would say that the uh uh the opportunities and the challenges are very much uh differentiated by sector we were chatting earlier on about some of our construction and house building clients um very tough for them at the moment but um the
Good ones acknowledge that and accept it’s part of the cycle if you go through a period where interest rates go up they know that new sales of new properties are going to be low and they you
They planned for that and they’re okay with it but the trading is not going to look as good as last year and some people are panicked by that but some people that’s just where you are in the cycle so
Construction house builders developers contractors uh we’ve got quite a few clients that that are in those sectors and they will be um not performing as well as last year we’ve got some tech companies which don’t some just anything doesn’t phase them they just grow exponentially and they’re
Doing uh really well and then there’s you know being in the Midlands we have lots and lots of industrial engineering businesses and overall um most are fine again it’s the ones that have planned ahead and can learn to live with interest rates which are you know a new feature really for
Lots of people haven’t been part of the business environment 10 years you go from Tech to very traditional businesses if you know as a fund do you what do you guys favor more so because Tech is a complete different kle of fish like it’s a completely different thing the valuations and some
Of the tech businesses are through the roof and then you’ve got the traditional businesses that are a little bit more stable have built over a decade a couple of decades and now they’re looking to exit so as a fun would you guys kind of why Tech and then why on complete opposite Spectrum
Why the traditional um well uh as an advisor we try to work with good businesses regardless of sector as an investor I think it’s critical to only look at things that you understand uh and that’s one of the only rules we have with the um our ultimate um source of money actually they
Have to understand it and we have to understand it okay my understanding is normally the the determining part of it um the main filter so for that reason when we’re investing we tend to look at easy easy to understand traditional things because our money is all private wealth there’s
A big focus on making sure we don’t lose it so we’re less interested in the risky high growth but potentially you know larger than normal risk to fail we’re much more interested in cash generative stable yield that’s okay in fact that’s probably prer to to to the people who do not know
Anything about m&a or mergin Acquisitions or buying businesses why in this current market why in general do investors look at why should they be looking at m&a as a strategy for themselves or anyone that’s involved or investing into a fund or something that’s touches m&a why should
Why should that be attractive to them, that’s a great question, I think that the answer for me personally would be why would you want to invest in private companies and let’s call it private equity you’ll be able to answer this better than me why do all these trusting clients of yours
Give you all their money to invest on their behalf I think people are looking for a bit of excitement a bit of fun interesting things to look at and ultimately people like to think that their money
Is working on their behalf when they go to bed at night they put their head on the pillow and their money is making their money somewhere and the returns you can get in private Equity if you
Invest at the right time of the cycle in a nice business with a good team you have the potential to double triple gr duple your money over two three four years and there’s not many other
Opportunities like you get now would you agree I can 100% agree on that I think I think in in although we’re across property developments care and and M&A I think the property Market I think a lot of the people who are investing in those opportunities their money gets TI up
A lot quicker I think m& investing into business or buying businesses are actually more favorable because you have the element of cash flow or the element of being a little bit more liquid compared to being tied up in a project there’s more that can go wrong in my opinion with with an asset
Like property than m&a so for me personally I think m&a is our strategy going forward one of the questions I have is in the Midlands market now m&a isn’t something that’s talked about but it’s a very private kind of scene it’s not something that you know you don’t know who the players are
You don’t know who the investors are even the people are in in this space don’t talk to each other um they do well they do but but yeah it can be a little bit more secutive what does the
Midlands have to offer from an m&a point of view ah well um for uh all investors have different risk profiles and profiles some love the idea of trying to you know double triple quadruple your
Money um but understand the risks that you might lose it all MH so you know there’s a there’s a my chair I mentioned earlier has a rule when he was in private Equity do 10 deals three will go
Really really well and your quadruple your money three you won’t see any money back from whatsoever and the remainder will do okay so the secret is to make sure you do 10 deals analyze do as much
Deligence as you can but don’t for a minute kid yourself that you know which three are going to be the superstars and which three are going to go bust you just have to because you’d never do the
Crap ones you just have to try and do your deals and I think the Midlands is a great place to look at businesses to invest in because we’ve got loads of different sectors we have still huge amounts of traditional engineering industrial businesses um over on uh in the black country in the west
Side of um the Midlands tech um is springing up all over the place in in the city center and I know that there’s you know the latest budget has announced new um tax breaks to make it even more
Attractive to do that kind of stuff um you have media um all sorts of different sectors to attack and filter and get and research and get involved and if you want to and also it’s still the second
Biggest city I think in the UK the population is huge there’s more companies here than anywhere outside of London so you’ve got the range and you’ve got the volume um so I think it’s a a great place to look for opportunities investing and on the complete opposite side what are some
Of the the horror stories that you’ve come across or one the things that have gone really wrong with MMA oh Lots we get more still get lots more wrong than right um I think um the the uh one of the
Things I’ve learned from advising companies and people and investors and also investing a little bit of money is um yes look at the company that you’re looking to either work with or invest in
But look just as hard if not harder at the team yeah uh if you believe in them and um they’re capable and competent they’ve got good values and you know they’re going to work hard that’s almost
Everything you need to know the business is almost second so I think where people go wrong and I’ve certainly gone wrong in the past is not working with the right people in the right place CU you
Can have some very talented people but they’re just not right for where they are at the moment to find people gentleman you introduced me ear who runs what looks like a fabulous business he’s clearly energetic enthusiastic passionate but incredibly knowledgeable if you can find all that
Business and how are a lot of people buying these companies I say someone is is looking to do a buy and build or wants to buy companies what is the best way to approach it because there’s so many
Creative ways that people can buy businesses what are some of the favorite ways that you could that you guys would buy a business or you guys would look at investing into one um I mean really every
Deal is its own deal MH um you have um you can structure any deal with a blank piece of paper most of the times if it’s um an you know if it’s a private Equity Firm or professional investor
Or someone your Investment Group you have to raise a certain amount of money to either buy the thing you’re looking at or invest a certain amount so you can fill the capital structure with debt you can go and borrow money from Banks or other institutions or lend you money to go and
Buy things with mostly if you want to convince a bank or a high net worth or someone who’s got some money to invest alongside you you have to be prepared to take the risk as well not um not
Forcing other people to do that makes sense and I think to to kind of focus on the some of sectors why is why is the care sector being something that’s become more popular over than us s of 12
24 months it’s probably it’s been on popular for the last few years but why is it more of a thing in this market going for I know you keep asking me questions that you’re known like this
Is an exam um I’ll give you a bad answer then you can give a good one go for it I think uh uh you can do lots of analysis on this but the ultimate conclusion you probably would keep coming back to
Is we have a um population which is getting older and therefore sicker and you can have short-term um uh Trends But ultimately it’s a bit like house prices it’s a one way bet over the long
Term okay that’s that’s inter I think um in the care sector for us why we choose the care sector is because it’s just government back you know who pays the care sector and and often times it’s
That’s the security in it for us is the fact that you’re getting paid from the local authorities and from from from other local authorities across the country so you know that you’re going to get paid and if they do go bankrupt there will be there will be people those payments will still continue
To happen and that kind of provides that extra level of reassurance for our investors um in terms of I wrote an interesting article recently on that said if you want lower taxes if you really want lower taxes get healthier because that’s where you your tax dollars go and will increasingly go
Into Care Homes and private SE people who money to look after you when you’re old the fit so you can stay for as long as possible the less that will cost you what are you guys looking for as a firm
Now going for like what is it that you guys want more of as in terms of opportunities or if people could reach out to you what would they reach to reach out to you for and what can you help them
With um we uh would love to work with um companies investors management teams private individuals who um want to get involved in in m& maybe they want to sell their business they want to raise money
To go and buy another business maybe they run a company that they don’t own but they want to um you mentioned earlier that the m&a world is um difficult one to access I I uh would really
Encourage anybody to not think like that and if you if you’re thinking about doing any of those things please get in touch with us be delighted to sit down have a cup of tea and talk about it um
Really we’re looking for passionate enthusiastic people who want to do some kind of deal which is going to um make money be fun um and is something that’s going to be exciting for us to get involved
And and what’s one piece of advice you would give to any one or a few tips you can give someone who’s looking to do a buy and Bill so they’re they’re a business at the moment they want to
Buy additional businesses going forward what what advice would you give to them what few tips would you give to them to help them on their Journey um I think I would say um have a strategy lots
Of people do a buy and build because um they want to grow their business to a certain size and then sell it mhm normally um not always but normally bigger businesses sell for bigger multiples as they say so a company that makes a million pounds of profit might be perceived as relatively small
And therefore only worth four or five times that 1 million a value of four or5 million PS business that makes 10 million pounds um a buyer would generally perceive that to be bigger more over
More defensible can roll with the punches a bit more so it might be worth six seven 8 times 10 million so you get disproportionately more value for bigger companies so when you’re doing a buy and build you’re trying to access that greater multiple on your profits but rather than just
Going and buying anything which gets your profit up it’s bit like property developing don’t just add extra rooms for the sake of it M have a plan in mind of what you want the end product to look
Like when you sell it so have you want to build a 10 million pound profit business decide what it’s going to be really good at what market share it’s going to have who’s going to lead it what
It’s going to do why it’s going to be special and then only buy things or only build rooms that are going to get you there rather than just have more profit and and what other ways can you mitigate
The risk when it comes to you know for buy and build strategies what are some of the things that you could do to mitigate some of the risk um I think that lots of buy and builds go wrong with
Integrating different teams so I think it would be a sensible idea to when you acquire a Target when you acquire another business and you you make it part of yours have a really careful look at the different uh cultures processes systems people how they do things two companies can
Work great on paper together but if it’s going to operationally and culturally be difficult to fit them together the real the reality would I would suspect normally be it’s harder than you think to do that and more expensive and takes longer so if it looks difficult it probably will be even
If it’s a great deal makes sense and what do you envision for the future of M like how is how is m& as an industry changing um that’s a great question I think AI is the thing that everyone’s looking at
Thinking what’s this going to do to the industry um and the answer to that I do not have a clue I suspect you’ve got a good answer to that but what will m&a look like I think I don’t think I don’t
Think it’s changed all that much over the last 20 years um and I don’t I don’t know this is probably wishful thinking I don’t see how it might change over the next 20 why change something why change
Something that works right well I don’t know I it doesn’t always work does it it’s a good question what what would you expect change to look like um for me m&a is is I think you’re going to
Have a lot of people from an entry level point of view coming into the industry there’s going to be a lot of new players um there’s definitely going to be more people looking to sell I think people understand that in business is not easy it’s not it’s not the most simplest thing to
Do and I think if you’re I think people will be selling early you know people have come a little bit more accustomed to the the VC Tech strategy of of okay you start a business you run it for
Five seven years you get to a good valuation then you exit I think more and more there’s going to be more and more people who make money from doing just that and but I think m& is a lot
Of people would deem it as a risky investment I think over the years that’s going to be more of a safer investment for a lot of people going forward because the cash flows there the the
Contracts the agreements or profits are there and it’s going to be a little more tangible for a lot more people and I think the accessibility of m& is super important like I think how accessible m&a is
To business owners to to investors to people is is is going to be uh I’m I’m interested to see how that evolves especially outside of London I think London this stuff happens day and day
Out I think people are still yet getting used to the idea of that taking place outside of that or the type of wealth that’s been built in in the Midlands region I think that’s going to change there L points interesting one lots of people know somebody who have started a business which
Has gone really well very quickly and they’ve made lots of money out of it um I don’t know if there are going to be the same number of people trying it for themselves in the future I don’t know what
Access to funding for the start I think that’s I think the it’s a lot easier to buy a business than it is to start one I think um I’ve I’ve gone off the view now I think when I first started in
Business maybe 14 years ago I was in view that oh I’m going to start every time I have an idea I’m going to click my fingers I’m going to start I’m going to start a business right when you get
To a certain level of once you’ve done or exits or once you’ve exited a few times once you’ve got you know good couple years under your belt from an experience point of view I think you get to that
Point like I’m just going to go buy them it’s a lot easier so it’s it’s interesting cuz I never thought I’d be in this position to be able to to do that but I think I think it comes it comes with
Experience I think you have to be a business owner or someone who understands how to build something those people will be more successful at m&a than the people who are trying to do it for the first
Time yeah there’s a lot there’s going to be a lot more advice needed two people who are starting off in their journey I think there’s a there’s a gap there okay that would that would suggest you be fewer startups yeah 100% think so I I think startups are I think people are coming
To terms with the fact that it’s not as easy as people think it is even taking on Capital like you know we I’ve recently met with a few people have taken on Capital from from investment firms in the
Midlands and they’ve and they’ve got to the stage where the with those contracts and the pressure of Performing to the investors is is an is too much for them to handle and that’s adding pressure to
Them yeah yeah and there is a perfectly well truen good route available to people which is go into an industry that you are interested in and you think you can do well in go and work for a good company
If you do well there you will become s important to that company they won’t let you leave and if you’re that important you can buy it that’s what the private Equity buyout World exists to do it provides money to people who are so important to their business that it can’t manage without them
And they want to buy it but they don’t have the personal funds to do so so that’s where that’s what private Equity investment is so the alternative to setting your own business up is
Go and run one and then buy it from its original own so do you think careers are now changing do you think people will stop working for the top firms in the city and start working at the mid
Tier Boutique type of businesses that they can eventually buy out in the future do you think that’s going to be a trend going forward I think so yes I think so I think um increasingly people
Care more about their lifestyle and um are less worried about the uh the brand the size of the business they work for they care more about what it does and its values and how how that impacts
Them and what it means for them um and also yes maybe if um people aren’t going and setting their own businesses they they want to work in smaller firms that they one day run and then perhaps buy that’s I think happening a lot in Professional Services right law firms and accountancy firms
Um in in Generations gone by everybody that went to work for an accountancy firm or a a law firm wanted to one day be a partner so they go and work really hard and hopefully one day become
A a partner and have a share of the business um and the bigger the law firm the bigger the accy them the better definely that’s the case inore I think people want that want to want to have
A work for a brand that they resonate with and it be smaller manageable and quicker and easier reach the top which may not involve ownership good I think we’ll end on that positive note I appreciate your time thank you for coming down um and I look forward to working with you as well
The next hope so definitely do some deals sounds sounds like a plan thank you guys for listening I hope that was insightful again we’re trying to bring more and more uh valuable content to our viewers to our listeners to the people that we are engaging with on a regular basis and hopefully
This gives you little bit more of an insight into the world of m&a stay tuned for our next podcast