SECTOR FOCUS: IT SERVICESThe acquisition opened up implementation, management andsupport facilities for JT’s customers in the UK, Europe, the USand Asia. Worldstone’s offices in the City of London offered JT anattractive strategic presence in a key location, and its data andnetworking expertise should see JT up-sell and cross-sell its moretraditional clients.Acquisition synergies were also key to Alcuin’s investmentin AVM, although in a different way. AVM’s growth had beenaccelerated by a number of bolt-on deals, and acquisitions werea key part of the ongoing investment story. AVM had alreadylined up a deal with UK rival Impact Marcom, to be completedsoon after the buy-out with the investment Alcuin could provide.The deal done, the combined business is now the clear leader inthe UK market by scale, reach and capability, and is of sufficientsize to appeal to a growing number of acquirers keen to use it asa point of entry into Europe.BIG DATA, BIG DATA CENTREAnother topic the round-table attendees discussed at lengthwas the strategic decision for IT services providers to own oroutsource data centres, especially given their expense and capitalcommitment. Some clients want to see a service provider controlits own physical assets, while others are more focused on overallnetwork security. Along with security, disaster recovery andbusiness continuity are becoming more important as clientstransfer data off their own sites.EXITING TO GROWOn the softer side, the gatherings discussed at length how manyentrepreneurs are not looking at a transaction to retire, but tobring in a new business partner to take their business to the nextlevel or help bankroll their next venture.BY THE END, THEQUESTION ON MANYLIPS WAS: WHEN DOESA BUSINESS BECOMETOO BIG TO SELL?The sale of AVM allowed its Chairman and its investor,Octopus, to exit completely, but CEO Edward Cook is staying withthe company to drive its growth. Alcuin is backing his vision, andfor him, ‘life after the deal’ means integrating Impact andpursuing further expansion. “This transaction gives us the addedfirepower to take AVM to the next level,” he says. His new partnersat Alcuin agree: Partner Adrian Lurie says: “We are delighted tobe investing alongside Ed and his team to support the continuingsuccess of AVM.”Although the sale of Worldstone was an exit for founder SureshPunjabi, who left when the deal was done, he isn’t retiring either.Still relatively young, he and his co-founder are exploring ways toinvest in other exciting non-competing businesses in the broadertech and telecoms space.“This is an exciting move for Worldstone, from both an employeeand customer perspective,” he explains. “JT and Worldstone are aperfect fit, and now it has a fantastic platform to continue to dowhat it is best at – but on a much larger scale. For me, it’s anopportunity to look at other things. It’s a beginning, not an end.”Discussed ’round the tableIn addition to exploring the trends behind and opportunities created by the cloud, and the strategic role of data centres,attendees also discussed:Private equity investment and exit: Although some privateequity (PE) houses have historically had their fingers burnt inthe sector, a number have current investments in successfulplatforms and are actively looking for bolt-on acquisitions.Several other PE houses are still looking for the right platformfor them to enter the sector. The majority of attendees feltthat the high levels of PE interest remain justified, and thatinvestment would continue, both in buy-and-build platformsand in bolt-on acquisitions, as the fragmented nature of themarket offers ample acquisition opportunities.The question then becomes exit – as acute for PE houses as itis for entrepreneurs. For owner managers, sales to PE housesand their platforms still offer attractive options, while for thePE platforms themselves, the most likely routes are sale to anoverseas trade buyer or secondary MBO.Building shareholder value: A broader debate on valuecreation ensued, and it became clear that ownership of strategicIP, a differentiated and well-positioned service offering, andscale, remain key value drivers. These help generate strategicinterest and premium valuations from acquirers. There is muchless appetite for acquiring generic ‘me too’ players as anythingother than bolt-ons for scale, and this means they are not ableto command the same valuation levels as their moredifferentiated peers.Opportunity: Attendees were unanimous on the scale of theopportunity within the IT services sector; by the end of thediscussion, the question on many lips was: when does abusiness become too big to sell? A high-quality problemto have, and testimony to the strength of the sector.12 // WWW.LIVINGSTONEPARTNERS.COM // SPRING <strong>2013</strong>
Safe and soundAs CEO of security products and solutionsprovider Gunnebo, Per Borgvall is steeringthe company towards growth in newmarkets. He spoke to James de Mellowabout the company’s strategy and howacquisitions are vital to its successCLIENT HEROWHAT IS YOUR STRATEGY AT GUNNEBO?I joined Gunnebo as CEO in March 2009 and, sincethen, my strategy has been to transform the companyfrom a European security products and solutionsprovider into a global one. Four years ago, Gunnebo only had asmall presence in a number of its markets and, essentially, we aretrying to move the point of gravity toward being a global business,with a focus on the growth economies of the world.Within that process, we need to support our growth – and thespeed of expansion – with acquisitions. Our acquisition strategyalso supports improvements in Gunnebo’s value chain, by addingbusinesses that give us access to new markets.HOW DID YOUR RELATIONSHIP WITH LIVINGSTONE BEGIN?I first encountered <strong>Livingstone</strong> during my time with IMI, a Britishindustrial group, when I was Divisional President of IndoorClimate from 1997-2004. But my relationship with them reallystarted when I moved to being CEO of Fagerhult, a Swedishcompany in the lighting and fixture industry. Again, with a strategyof increasing globalisation, the UK was a key market into whichI was keen to acquire, so I contacted <strong>Livingstone</strong>, and they helpedwith the successful acquisition of Whitecroft Lighting in 2005.Then, in August 2012, with support from <strong>Livingstone</strong>, Gunnebosuccessfully acquired Hamilton Safe.MORTEN BRAKESTADWHICH MARKETS ARE IMPORTANT TO GUNNEBO AND WHERE AREYOU LOOKING TO EXPAND NEXT?The US market is especially important to Gunnebo and the banksare a major customer group there, so our acquisition of HamiltonSafe was very strategic. Gunnebo had been looking for four years todo something in the States and already enjoyed a good relationshipwith Hamilton Safe. Wrapping up the deal was something weneeded <strong>Livingstone</strong>’s help with, though. For me, turning to<strong>Livingstone</strong> was the obvious step.This acquisition has added 10% to Gunnebo’s top line, makingthe company the second largest in the physical security sector in theStates. Hamilton Safe is a quality business, with good cash flowsand profits that are above the average for its peers.Acquiring more businesses in the US is on my wishlist andhas been for the past two years. When it comes to timing andacquisition, if you don’t have that pipeline of potential offers thenyou may miss opportunities. We are also looking to move furtherinto markets in India, Indonesia and Australia. If we can, we arealso happy to make acquisitions in the UK and Germany.My philosophy is that the relationship with <strong>Livingstone</strong> issomething that works, and I believe that it is something thatwill continue in the future.WWW.LIVINGSTONEPARTNERS.COM // SPRING <strong>2013</strong> // 13
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