Intelligent investing in Europe from

THE POINTM

AY

20

04

ISS

UE

5

w

ww

.bri

dg

ep

oin

t-c

ap

ita

l.c

om

SupportingCastSupport services moveonwards and upwards

HeavenScentDaniel Vercamer mixesbusiness with perfume

Bottom LineWilliam Lewis on changingprices in a changing world

Multi-taskingThe changing role ofcompany chairmen

Finance Director Recruitment

for Private Equity Backed Businesses

For more information contact

Sarah Hunt, Guy Moran, Joanna Adolph, Rachael Oldfield or Louise Hunter

at 10 Market Mews London W1J 7BZ.

telephone: 020 7493 2703 email: info@equityfd.com

www.equityfd.com

EDITORIAL

At the heart of private equityis the task of maximising abusiness’ potential. One of themany ways we go aboutachieving this is making surethat we have the right chairmanin each of the companies ourfunds own.

Choosing a chairman for a private equity-backed companyrequires care because you are looking for someone to sitalongside you on the same side of the table but withcomplementary skills to your own. A chairman must also be ableto represent the interests of many groups: shareholders,management, employees, suppliers and customers. As theanalysis piece on page 8 shows, these skills are rare to find andexplains why candidates to chair these companies remainrelatively scarce. It’s also why Bridgepoint spends so much timeand effort identifying the right people with the right experience.

Gerald Corbett, recently appointed chairman of Holmes Place,the European health club operator, has a wealth of experience inthis role, having tackled the thankless challenges of the UK railindustry and more recently led the turnaround at Woolworths.He very helpfully shines a light on the difference betweenchairing a public company and one backed by private equity.

Not that CEOs reading this should feel left out: I would drawyour attention to our profile of Frenchman Daniel Vercamer,head of perfumery group Nocibé, who is the subject of our face-to face profile on page 12. His story is a colourful one butnevertheless exemplifies the complementary qualitiesBridgepoint looks for in the CEOs it backs: vision, ambitionand absolute determination to grow a business.

Since the last issue of The Point, Bridgepoint has been activenot only in finding new investments (nursing home groupMédica in France) but also bolt-on acquisitions for AllianceMedical and new club openings for Virgin Active, both in Italy.And, continuing a long held view that realising investments iswhere we really make our mark, exiting investments (IMO CarWash Group, Gower Group, Blagden Packaging and DennisEagle) has been a strong feature of our activities in the past sixmonths. More details on pages 4 to 6.

Encouragingly, activity levels in our middle market spaceappear set to continue, if the latest figures in the Europe BuyoutReview (see page 7), a Bridgepoint-sponsored annual studypublished in association with Initiative Europe, are to bebelieved. Is this a sign that market confidence is on the up in2004? If the first quarter of this year is any guide, we may yet seesome interesting developments. Long may it continue.

William Jackson is managing partner of Bridgepoint

THE POINT 3

CONTENTSTHE POINT

MAY 2004 ISSUE 5

Published by: Bladonmore Media Ltd www.bladonmore.com

Publisher: Richard Rivlin

Editor: Joanne Hart

News Editor: Grant Murgatroyd

Business Development: Yago Otero

Design: Create Services

Photography: Tom Stockill, Powerstock, Vis Media

Reproduction, copying or extracting by any means of the whole or part

of this publication must not be undertaken without the written permission

of the publishers.

The views expressed in The Point are not necessarily those of Bridgepoint.

ALcontrol Laboratories 16, Alliance Medical 6, Blagden 4, Dennis Eagle 4,

Gower 5, Holmes Place 10 &11, IMO Carwash 6, Jessops 9, Kaffee Partner 8,

Médica 4 & 19, Nocibé 11 & 12, Safestore 10, Virgin Active 6.

Companies in this issue

News 4Bridgepoint investments andexits across Europe

Face to Face 12Nocibé founder Daniel Vercamer talksto François Vidal about perfume,passion and paradox

Multi-tasking 8Joanne Hart investigates the changing roleof company chairmen

Supporting Cast 14The support services sector has been on aroller-coaster ride in recent years. AndreaFelsted finds out why

French Connections 19Private equity is booming in France and themiddle market is the main beneficiary.François Vidal reports

The Guide toSmarter Living 20Charitable giving made fun; where to stay andeat in Stockholm; must-have gadgets

Bottom Line 22William Lewis on Buzz Lightyear,plumbers and the price of stuff

Spotlight 5What vendors want and howto make sure they get it

www.bridgepoint-capital.com

MaximisingPotential

4 THE POINT

Eagle-eyed deal nets £51mRefuse collection vehicle man-ufacturer Dennis Eagle has been sold byBridgepoint for £51 million. ABN AmroCapital, the private equity arm of Dutchbank ABN Amro, put together a £61.5million financing package, includingworking capital and costs, with debtfrom the Royal Bank of Scotland.

The deal represents a full exit forBridgepoint, which has made a healthyreturn on its original investment ofJuly 1999.

Dennis Eagle is an industry innovator,pioneering low entry cabs, whichimprove operator safety andproductivity. The company has 580employees based in Warwick andBlackpool. It also runs a parts andservice after-market business from anumber of service centres across theUK, and has a distribution subsidiary

NEWS

NEWSEXPRESSNEWSEXPRESS NEWSEXPRESS

in France. Dennis Eagle currentlygenerates 12 per cent of its £90 millionturnover from overseas markets.

Bridgepoint director Andrew Burgesssays: “Dennis Eagle has consolidated itsmarket position by remaining at theforefront of product development andby selective acquisition.”

The future of the business will bebased around continued growth in theUK and building on current expansionin export markets such as Ireland,Germany and France. Dennis Eagle willbe jointly owned by management,including chief executive MikeMolesworth (right) and finance directorRobert Jackson, and funds managed byABN Amro Capital. Molesworth says:“We have a clear plan to develop thebusiness into a leading internationalbusiness over the next three years.”

Healthy deal for MédicaIn a further sign of its commitment to the healthcare sector,Bridgepoint has acquired Médica, one of the top-three nursinghome operators in France. Médica was sold by the French statethrough the Caisse des Dépôts et Consignations in a deal totalling€330 million. Royal Bank of Scotland and ICG provided debtfinance to support the acquisition.

Médica operates 87 homes and more than 7,000 beds, providingnursing home facilities to individuals requiring dependence-related or post-operative care. It has almost 3,200 employees andturned over €210 million in 2003.

“Médica operates against a background of an ageing populationand rising life expectancy rates in a fragmented and regulatednursing home sector,” says Benoît Bassi, the Bridgepoint partnerresponsible for its operations in France.

The acquisition of Médica will also allow Bridgepoint to play acontinued role in the consolidation of the growing French nursinghome sector. “We believe that the Médica management team,which already has a proven track record of acquiring andintegrating new acquisitions, can work with us to build marketshare and coverage to become a leader in its field. This will notonly mean making new acquisitions for the business but alsomodernising its existing properties to reflect market andregulatory changes,” says Bassi.

In September 2003, Bridgepoint acquired Robinia Care Group,one of the UK’s leading providers of specialist care for people withlearning difficulties, in a £50 million transaction. Bridgepointbelieves the industry fundamentals across the Europeanhealthcare market will continue to deliver growth in the sector.Key drivers include ageing populations, rising consumerexpectations of the healthcare system and pressure from providersto deliver more efficient services.

The source of every deal is a vendor deciding it is timeto sell. Acquisitions might capture the headlines butprivate equity firms need to work with vendors fromearly on in the process to ensure their transactions areultimately successful.

Bridgepoint partner Graham Oldroyd says: “The keyto working successfully with vendors is to ascertain whatmotivates them and understand what drives them toexamine a deal.”

According to Oldroyd, there are different types ofvendors, so private equity investors need to react to thenuances of individual situations to make sure a deal isstruck in which everyone feels they have succeeded.

These are his key rules:First, understand that price is not always the sole

motive. Speed and confidentiality may be key factorstoo. Equally, the dynamic between owners andmanagers is crucial. Most owners want to know their

managers will be looked after following a purchase.Others do not want to distract management fromrunning the business during the sales process, since a fallin performance during a deal can be hugely detrimentalto ultimate value.

It is important to recognise that there are, broadly-speaking, four different types of vendor – large quotedcompanies, unquoted corporates, businesses owned by anumber of private shareholders and owner-managerbusinesses run by single individuals. In every instance, itis important to find out what is driving them and to earntheir trust.

Each group also has different price expectations.Quoted corporates are often happy to let the investmentbank determine the price through an auction process;others, such as private owners, have a strong intrinsicsense of the value of their company.

It is vital to let the vendor decide on the sales process,which can range from an auction to a privatelynegotiated deal to a delisting. Bridgepoint operatesunder each of these environments and adjusts itsapproach accordingly. High-quality advisers on everyside can make a big difference.

Oldroyd concludes: “Fundamentally the art ofworking successfully with vendors is to be consistent,stick to what you say and understand that these arestressful times.”

Oldroyd is also constantly looking out for the nextdeal. When one sale completes, he says, the firstquestion to ask the vendor is: “What’s your next deal?”

The key to working successfullywith vendors is to ascertain whatmotivates them

Bridgepoint and CVC CapitalPartners have sold their interestsin Blagden Packaging Group tomanagement and the private equityfirm Alchemy. The sale represents afull exit for Bridgepoint and CVCwho report a healthy return on theirinitial investment.

Blagden was first acquired fiveyears ago in a €149m deal. Sincethen the company has completed anumber of acquisitions andconsolidated its position as theleading European new andreconditioned drum manufacturer.

THE POINT 5

Blagden package

NEWS

NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS

Nobia cooks up with Gower

Gower Group, the UK’s leadingsupplier of self-assembly kitchens toDIY multiple chains, has been sold toSwedish kitchen giant Nobia forSEK890 million (€96.02 million).Bridgepoint backed a £3.7 million buy-out of Gower in 1988, syndicating aportion of the investment to Electra.

Nobia CEO Fredrik Cappelensays: “The acquisition strengthensNobia’s position in the UK andopens up new possibilities. We gaina strong position in the UK multipleretailer market, which is particularlyinteresting as it represents a large

Buying from Vendors

Spotlight on...

and growing part of the market.”The acquisition of Gower, with 475

employees in West Yorkshire, willmore than double Nobia Group’sshare of sales to the Europeanmultiple retailer market to 10 percent. The sector accounts for aquarter of all kitchens sold in Europe.In the UK, Nobia’s best known brandis Magnet, which primarily offersfitted kitchens, bedroom andbathroom furniture.

The sale represents a full exit forBridgepoint and Electra and has provideda significant return on their investment.

Private equity firms employ all theirpsychological and strategic skills when dealingwith vendors. Richard Rivlin investigatesThe business now has 19 facilities

throughout the EU and recentlybegan working in Russia.

Bridgepoint and CVC say: “Themanagement team have done anexcellent job in a highly competitiveindustry and we regard the group asan excellent platform to continue thenext phase of consolidation nowunderway within the sector.”

The deal will provide managementwith an increased and ratchetedequity interest. The managementgroup is rolling over most of itsinvestment.

For the second year runningBridgepoint has been namedEuropean Mid-Market BuyoutFirm of the Year in FinancialNews’ annual awards forexcellence in private equity.Bridgepoint was praised notonly for its new investmentactivity but also its ability toreturn cash to its investors andwas described as ‘one of thefew mid-market firms that cangenuinely lay claim to a buy andbuild approach’.Runners-up for the awardincluded EQT, Barclays PrivateEquity and Electra.

Healthy AllianceAlliance Medical, the private operator ofdiagnostic imaging equipment, hasbought United Medical Systems’ Italiandivision. The €9.1 million deal includesfurther funding from Bridgepoint, whichbacked a €178 million secondary buy-out ofthe company in January 2001.

6 THE POINT

Alliance was founded in 1989 and hasgrown at a phenomenal rate under theleadership of Robert Waley-Cohen. Thebusiness already had operations in Italy,and this deal will make it a market leader inseveral sectors.

NEWS IN BRIEF

“A couch potato? Er...I don’t know son,but I’ll have one if you’re getting some.”

E M P T Y D E S K

NEWS

NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS

Investors clean up with£350 million car washAfter five years of rapid growth,IMO Car Wash has been bought byJPMorgan Partners, for £350 million.IMO was sold by a group of financialinvestors led by Bridgepoint.

“We are very proud of what we haveaccomplished at IMO over the last fiveyears, which have seen a large increase inthe scale and reach of the business,” saysBret Holden, CEO of IMO, who willcontinue to lead the company after theacquisition.

“Our aim now is to focus on growing ourmarket share and developing for ourcustomers the highest quality and mostefficient experience in the market.”

Based in London and founded in 1965,IMO is the world’s largest conveyor carwash business and is marketed under theIMO and ARC brand names.

Bridgepoint led an investment in 1998and then provided further funding for thebusiness to acquire its former sistercompany Toman Group in Germany in2002. This acquisition helped IMO regaina strong position in the highly fragmentedGerman market.

Under Bridgepoint’s ownership, IMOalso completed a number of otheracquisitions. As a result of these

purchases and continued organic growth,IMO doubled the number of sites fromwhich it operates.

In addition, the group tripledunderlying earnings to over €40 millionthis year.

Today, the company operates more than

800 car washes across 12 countries inEurope, including France, Germany, Spain,and the United Kingdom. It washes anaverage of at least 30 million cars a year.

Holden, 42, was recruited from BPshortly after Bridgepoint acquired IMOfor £114 million.

Italy getting more Active

Rise and shine: CEO Bret Holden – focused on developing market share and customer satisfaction

European Mid-Market BuyoutFirm of the Year

Healthclub and lifestyle group Virgin Activehas continued its international expansion,opening clubs in the Italian cities of Genoaand Bologna.

The clubs will conform to Virgin Active’s‘Life Centre’ model, focusing on health andfitness for the entire family. Bridgepointinvested in Virgin Active in a £110 milliontransaction in February 2002. Italy is VirginActive’s third territory, after the UK and SouthAfrica, and was chosen because of the highlevel of Virgin brand recognition, lack ofcomparable facilities, excellent demographicsand enthusiasm for exercise.

Bridgepoint has launched The Bottom Line, amagazine promoting the innovative BridgepointAffinity Purchase Scheme. The publication providesreal-life examples of how the scheme has helpedcompanies in the Bridgepoint family to cut costs bysecuring big discounts from suppliers on productsincluding mobile phones, software, vehicle contracthire and leasing, insurance, forklift trucks and evenvending machines. Patrick Fox, who runs the scheme,says: “It is a classic business win-win for both ourportfolio companies and our preferred suppliers.”

Buy-out investment in Europe hasrisen 4 per cent to €60.7 billion, thanks tostrong activity in the mid-market sector.The increase follows three years ofdeclining growth, according to the EuropeBuyout Review published by InitiativeEurope in association with Bridgepoint.The number of deals in the €50 million to€500 million range rose 28 per cent andvalue was up 8 per cent.

“The year 2003 marked a return ofconfidence in the European private equitymarket with the amount of investmentalmost up to that witnessed in1999/2000,” says Bridgepoint partnerKevin Reynolds. “There were a number offactors fuelling this increase, in particular,the volatility and uncertainty of the publicmarkets and the need for many largercorporates to divest non-core assets. Theoutlook for 2004 is encouraging.”

Sales of non-core businesses by localparent companies provided the largestsource of buy-out transactions,accounting for €25.4 billion, or 42 percent of all deals. Buy-outs of family andprivate businesses accounted for morethan a quarter of all buy-outs, with theamount invested up 12 per cent to €5.6billion. However, the proportion of dealsarising from these sources has fallen from40 per cent in 1999 to 28 per cent in 2003.

France saw the strongest increase in thenumber of deals with a 52 per cent rise,though the value fell 29 per cent to €9.5billion as there were fewer big-ticketdeals. Investment in German buy-outsincreased by more than 50 per cent to€9.4 billion in 2003 as private equity

Bridgepoint has appointed AlanMilburn MP, Sir George Mathewson andPenny Hughes to its newly-createdEuropean Advisory Committee. Thegroup, chaired by Bridgepoint chairmanDavid Shaw, brings a wealth ofexperience to the table and will workwith Bridgepoint and its investeecompanies on questions of strategy andmarket issues.

Sir George is chairman of the RoyalBank of Scotland and a non-executive

THE POINT 7

BAPS boost

Sound advice for Bridgepoint

Buoyant mid-marketdrives buy-out growth

NEWS

NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS NEWSEXPRESS

director of Santander Central Hispano andScottish Investment Trust.

He has wide-ranging businessexperience, having been on the board ofthe Royal Bank for many years, duringwhich time he helped orchestrate theacquisition of Nat West. He was alsochief executive of the ScottishDevelopment Agency.

Hughes was president of Coca-Cola UKand Ireland until 1995 and is a non-executive director of Vodafone, Gap,

Skandinaviska Enskilda Banken andTrinity Mirror. Alan Milburn wasSecretary of State for Health in the UKuntil June 2003 and was previously chiefsecretary to the Treasury.

These three industry-leading figureshave extensive experience of the retail,health and financial services sectors, whichare key investment areas for Bridgepoint.They will bring a broader externalperspective both to the firm and thebusinesses it backs.

investors spotted value in the slowly-recovering German economy. Italy had itsstrongest ever year, with investment morethan doubling to €8.6 billion, largely as aresult of the €1 billion-plus buy-outs ofSEAT Pagine Gialle, Fiat Avio and Safilo.

The UK remains Europe’s largestmarket. The value of deals was more thandouble that of any other European

country at €22.9 billion or 37 per cent ofthe total, though this proportion hasdeclined significantly in recent years.

Julian Longhurst, head of data andresearch at Initiative Europe, says:“Increasing levels of activity in themid-market sector are the best sign yetthat investor confidence is once againon the up.”

25,000

20.000

15,000

10,000

5,000

0Benelux

€m Buy-outs by country 2002 2003

France Germany Italy Nordics UKSpain &Portugal

Switzerland& Austria

private equity firms need to manage theirinvestments more actively. To that end,there is much more focus on whatmanagement is doing and a growingemphasis on the role of the chairman andnon-executive directors.

The process has to be handled withsensitivity to ensure that all sides benefit,from the private equity firm to the

portfolio business to the incomingchairman. Normally this is managed byintroducing the concept of an externalchairman early on in negotiations.

“Of course, we will appoint anindependent chairman,” is the phrase mostcommonly used and, by slotting it in early,there is less potential formisunderstanding at a later stage.

Nor is the suggestion made in isolation.Instead, it is an integral part of theconversations held with managementabout how to make their business workbetter under its new owners. Private equityfirms leading the way in this area define asclearly as possible what they expect fromthe business before signing the finalcontracts. They then work withmanagement on the new strategy anddiscuss jointly what sort of chairman isrequired. At Bridgepoint, for example, anappointment is never made without the

Multi-tasANALYSIS: CHAIRMEN

Once, private equity firms did dealswith management. Now they do dealswith businesses.

The difference may seem superficial tothose living outside this world, but itrepresents a profound shift in approach bythe industry and it has seriousconsequences for those at the receivingend of bids and offers.

In essence, the industry has become morecomplex. Fewer deals are done and theytend to cost more. Therefore firms have todo more with them to make sure theirinvestments reap the necessary rewards.

What this means is that far greateremphasis is placed on transformingbusinesses. Private equity firms do notwant to be seen to be interfering in theirportfolio companies but they do want tomake sure there is a clear strategy in placeand that it is being followed. Rather thansimply backing management teams,

8 THE POINT

Approval is not

hard to find,

particularly as many

businesses do not

have an existing

chairman

As private equity becomes increasingly competitive, chairmen of portfolio businesseshave an ever more important role to play. Joanne Hart looks into the changinglandscape of portfolio company boards

GermanyQuoted companies and large private

businesses in Germany have a dual board

structure. The Vorstand, or management

board, consists of around five senior

managers, each with executive responsibilities. Standing

shoulder to shoulder with the management board is the

Aufsichtsrat or supervisory board, which is expressly

forbidden from engaging in day-to-day business activities. Its

only job is to control the activities of the Vorstand and deal

with hiring and firing its members.

The supervisory board always includes at least one

employee representative, generally a union member, whose

role is to safeguard the interests of the workers.

For Anglo-Saxon businesses, operating in this environment

can be challenging. Bridgepoint portfolio companies have tried

to work round this by moving towards the same procedure in

Germany as they do in the UK.

“We have begun to simulate the UK model with a board

that meets regularly and includes one representative of

management, one or two external representatives appointed

by Bridgepoint, including the chairman, and an observer from

German shareholders aregrowing frustrated with thetwo-tier structure

Bridgepoint itself – either myself or a colleague,” says

Wolfgang Lenoir, who runs the firm's German office.

“The chairman makes sure the company develops

according to its strategy and all the outsiders oversee and

review the business,” he adds.

The German coffee and water dispenser firm Kaffee

Partner, owned by Bridgepoint, is an example of this policy

in action. Chairman Andrew Simon meets the management

twice a month and is closely involved with the company.

Some in the corporate world are against this type of

development. Intriguingly however, German shareholders are

themselves growing frustrated with the two-tier structure of most

domestic boards and are calling for change.

Any steps that take them towards the Anglo-Saxon system

will be welcomed by UK institutions in both the quoted and

private arena.

they want to see a significant return threeto five years down the line. Thechairman’s role in this exercise is oftenpivotal,” says Luke Meynell ofheadhunting firm Russell Reynolds.

In the UK, the role of the chairman maybe broader in private equity firms than inthe quoted sector but it is not too difficultto explain the difference to potentialcandidates or investee companies. In otherparts of Europe, the process can be morechallenging. Countries such as Germany orItaly have radically different corporate

THE POINT 9

skingANALYSIS: CHAIRMEN

express and explicit approval of theportfolio company’s directors.

Approval is not hard to find, particularlyas many businesses do not have an existingchairman, having originally been part oflarger listed companies. Ten of the 13businesses bought with Bridgepoint’slatest investment fund have independentchairmen. The practice brings rewards toall sides.

“In private equity, there is completeclarity about what is required. Investorshave put £100 million into a business and

The chairman is the bridge

between managers and

investors and a catalyst for

ideas rather than a power base

in his own right

Gerald Corbett: “Being a private equity chairman is rejuvenating.”

structures. Private equity firms are keen touse the Anglo-Saxon board model but adegree of diplomacy is required topersuade some companies to adopt thesingle board structure.

Additionally, finding the right peoplecan be a challenge across Europe.Bridgepoint uses its new club for existingand former portfolio company directors,MEET, and a roster of search firms.Frequently, headhunters are used during adeal to appraise and referencemanagement. Once the deal is done, thesame firm can be used to find newdirectors and chairmen.

Private equity chairmen have a varietyof responsibilities but they are fund-amentally responsible for the businessplan and its effective delivery. They are

expected to act as a mentor to themanagement team and can also act as aneffective bridge between managementand its private equity owners.

Tim Brookes has worked with severalventure capitalists and chaired the formerBridgepoint company Jessops, where hehelped the business do a string of dealsbefore it was sold to ABN Amro in 2002.

“Sometimes, there can be conflictbetween what management want and whatthe private equity owners want. I getround this by saying, ‘I look after the

The Perfect Chairman

-1) Sharp elbows

2) A secret desire to be the chief executive

3) Poor delegation skills

4) Detachment

5) A tendency to indecisiveness

6) Youth

+1) A wide range of experiences

2) Good communication skills

3) An understanding of private equity

4) An ability to inspire trust and respect

5) Charisma

6) Maturity – unlikely to be under 45

In the wake of the Parmalat scandal,

Italian regulators decided to change the

way companies were allowed to structure

their boards. Anxious not to place too

many restrictions on leading businessmen however, the

authorities have given industry three choices.

Companies may either adopt a single board, a two-tier

board or a modification of the current Italian model. Under

this last option, there is a single board but also a so-called

Collegio Sindacale, comprising between three and five

individuals whose job is to check on management and

audit the business.

10 THE POINT

Italy

ANALYSIS: CHAIRMEN

The system has attracted international criticism

because the members of the Collegio Sindacale are

considered insufficiently independent. “They are officers

of the company but they are giving opinions on the audit

as if they were outsiders,” said one corporate

governance source.

They are officers of thecompany but they are givingopinions on the audit as if theywere outsiders

The basesalary of achairman is notparticularlylarge but thereis always theopportunity tosubscribe forequity

company’, which means I should be actingin everyone’s best interests. One of thebiggest roles, I feel, is to build the venturecapitalists’ confidence in the managementteam,” he says.

A chairman will also providecomplementary skills to management,offering expertise that may be lacking onthe board. Many businesses may beexcellent operationally but have scantknowledge of the financial world. Achairman can provide this and therebyfacilitate the process of expansion throughmergers and acquisitions.

Within the Bridgepoint portfolio, forexample, Gerald Corbett was appointed aschairman of Holmes Place. The company

is going through a period of radical changeand Corbett has extensive experience inthe quoted sector. He is chairman ofWoolworths and previously held executivepositions at Railtrack, GrandMetropolitan, Redland and Dixons.

“Lots of chairman have plc and privateequity roles. A broad portfolio is quiteattractive for them and the companiesthey work with,” explains Meynell.

Nonetheless, the jobs are very different.“In a public company, the chairman

has the power and he delegates to thechief executive. Shareholders only reallyget involved when something goeswrong. In private equity, the power lieswith the private equity firms. Thechairman is the bridge between

managers and investors and a catalystfor ideas rather than a power base in hisown right,” says Corbett.

“But being a private equity chairman isrejuvenating because you are workingwith people who are young, intense andintelligent. It is very refreshing. Also,the economic alignment betweenmanagers, owners and the chairman is sopowerful. Everyone is on the same side,”he adds.

Like every other profession, privateequity firms enjoy working with peoplethey know and people who understandtheir business. There are not many serialprivate equity chairmen around but the fewthat do exist are in great demand. Overtime, this circle is likely to grow as the

spotlight on the quoted sector becomesincreasingly bright; too bright in theestimation of many listed companydirectors.

Situations in the UK, such as the verypublic refusal of investment institutions toaccept Michael Green as chairman of thenew ITV or the intense criticism of Sir IanProsser as potential deputy chairman ofSainsbury’s, make many experiencedbusiness people look longingly at theprivate sector. Directors from quotedconcerns are in frequent dialogue withprivate equity firms and recruitmentconsultants to see if the grass is greener onthe other side.

In many respects, it may be. There is

greater clarity of purpose, less scrutinyfrom numerous shareholders and theprospect of making considerably moremoney, without being lambasted for it byinvestors and the media. The base salaryof a chairman is not particularly large butthere is always the opportunity tosubscribe for equity.

Nonetheless, the role of chairman is, inmany ways, far harder than it once was.The private equity sector is intenselycompetitive so firms look far more closelyat the performance of the businesses theyhave bought.

“The demands on the chairman are fargreater in private equity. Communicationis not just at board meetings, it isperpetual,” says Corbett.

There are not many serial private equity chairmenaround but the few that do exist are in great demand

THE POINT 11

ANALYSIS: CHAIRMEN

The phrase “non-executive director”used to be one of the least contentiousin the corporate lexicon. Everyone knewthat NEDs were chums of the chairman.They would show up for the odd boardmeeting and happily agree to everythingthat was being proposed by theexecutive team.

In some companies, this is still thecase. Increasingly however, corporategovernance codes demand that quotedbusinesses appoint independent non-executives who will make an effort tounderstand the company for which theyare working, participate regularly in

board meetings and carefully considerany of the schemes and strategies beingproposed by the executive directors.

While this mini-revolution occurs onthe quoted scene, private equity is alsoplacing increased importance on the roleof the non-executive. The glare of themedia and the constant criticism ofinstitutional investors may not beapparent in the private equity sector butthe rationale behind firms’ desire for

strong non-executives is broadly the same:they want the companies in which theyhave invested to fulfil their potential.

NEDs in private equity-backedbusinesses tend to come either from theoutside world or from the firmsthemselves.

During any set of negotiations with apotential private equity business, there isone private equity director who will becharged with spending time with themanagement, making sure everyone ishappy with the deal and all the necessaryinformation is available on both sides ofthe fence. If the transaction goesthrough, that person will generallybecome one of the non-executives on thenew board.

During the deal process, another privateequity director will take on the role ofdevil’s advocate, asking difficult questionsand probing everyone concerned to makesure those questions are answered. Thatperson is also likely to be appointed to thenew board and given responsibility formanaging change when the company isfirst acquired by its new owners.

Who is chosen depends on individualcircumstances. Non-executives are notselected on a random basis: they are hand-picked for their particular expertise.

Frequently they are internal –occasionally they are appointed fromoutside.

At Holmes Place, for instance, ArchieNorman, who was responsible for the rags-

Frequently, non-executives come fromthe private equity firmsthemselves.Occasionally they comefrom outside

Non-executives on the board

to-riches transformation of Asda, is a non-executive. He also chairs the telecomsgroup Energis and is ideally suited toencourage the change programme at thefitness clubs group.

Frequently however, the necessarytalents can be found in-house.Occasionally, there are as many as threeinternal non-executives. At the perfumecompany Nocibé, for instance, oneBridgepoint director is on the board forhis retail and forensic expertise; another ishelping on the company’s expansionprogramme and the third is looking atbanking relationships.

The Nocibé situation is rare now but itmay become more prevalent as dealsdevelop an increasing complexity. Forprivate equity firms, like their quotedbrethren, the pressure to perform is moreintense now than it has ever been. Firmscontinually search for points ofdifferentiation and ways in which they canimprove returns. Efficient and productivenon-executive directors are an integral partof that process.

The pressure toperform is more intensenow than it has everbeen. Productive non-executive directors canmake a real difference

Under French law, companies are allowed to

choose between two types of board

structure. They may either go for a unified

board, run along similar lines to the Anglo-

Saxon model, or they may select a two-tier

system, similar to the German model, with a management

board and a supervisory board.

In each case, they can also choose whether to unite the

jobs of chairman and chief executive or separate them. An

employee representative is invited onto the board, if staff

own more than 3 per cent of the business.

France

The law states that vested interests should not be

allowed to interfere with the principle that quoted

companies are run for the benefit of their shareholders

but many overseas investors believe their interests are

often superseded by other factors.

Regulators are trying to improve the situation but

progress is slow.

Regulators are trying to improvethe situation but progress is slow

Daniel Vercamer is not a lover of perfume. It is all the moreintriguing then that, over the past 20 years, he has created thethird-largest chain of scent and cosmetics shops in France, with300 outlets and sales of €280 million.

Built up through a series of acquisitions since the early 1980s,Nocibé is a well-known brand throughout France. Growing thebusiness undoubtedly required plenty of energy and enthusiasm.Yet Vercamer, a 55-year-old native of northern France, is perfectlyopen about the fact that he has only a limited interest in luxurygoods and fragrances.

“It’s very simple,” he says. “When I put on a scent, it usuallycomes from a bottle that has been rejected.”

This is not the whole story however. Vercamer admits: “I’m notproduct-focused. I could have sold something else. That's anadvantage when dealing with suppliers. I’m more concernedabout delivery times and margins than the shape of the bottles.”

Indeed, Vercamer is someone who does not worry aboutcontradictions. He practices the art of paradox with as much skillas he handles the vintage sports cars that he collects and drives inrallies two or three times a year. “For the pleasure – not to win,”he is quick to point out.

This talent has been evident from early on. Born into abourgeois family in northern France, Vercamer inherited the

family business, a wholesale supplier of hygieneand beauty products, when his father died in1984. He is still its top executive and theheadquarters are still in the same northernFrench town of Villeneuve-d’Ascq. Itwould be wrong, though, to concludethat Vercamer has been happy just to geta return on his inheritance.

The Nocibé of today is nothing like theVercamer SA of 1984. “I created Nocibé inthe mid-1980s because I sensed that our

12 THE POINT

Daniel Vercamer inherited the family

business when he was 35. But he is, above

all, an entrepreneur. François Vidal meets

the contradictory man behind Nocibé, the

French perfume chain

PROFILE

Heaven scent

FACEFACE

T O

Vercamer is someone who does

not worry about contradictions.

He practices the art of paradox

with as much skill as he

handles the vintage sports

cars he collects

businesses classically exhibit. Soft emotion may be lacking butdetermination to press on is clearly in evidence. When Vercamersold Nocibé to Kruidvat, it was understood that he would stay onno more than two years. That was in 1998 and he is still there.

Admittedly, he has stepped back a bit in recent years. He hasbrought in two of his four children to work at the company and heis no longer head of operations. He has also stopped holdinggrand, American-style conventions on the Normandy coast,attended by as many as 1200 employees. These used to be a regularfeature of the business in 1990s but they are no longer.

Nonetheless, Vercamer remains chairman and chief executive ofNocibé. The chief operating officer, Xavier Dura, handles day-to-day management of the business but Vercamer is the driving forceand strategy-setter. This has been a full-time role sinceBridgepoint became a shareholder.

“After four years of very rapid growth, during which Nocibéwent from 57 to 235 stores thanks to the support of our Dutchshareholder and its investment of €180 million, we had to focusagain on the issues of profitability and cash flow management,”says Vercamer.

As for the future, he views it with infinite calm. He has alreadymade a fortune, even if he has reinvested a good part of it in themanagement buy-out. “It’s mainly the pleasure that drives me,” hesays, though he hopes to be able to expand Nocibé internationallyand to continue growing in France, until the company has at least450 shops in the country.

In any case, one thing is certain: if he decides to stop workingat the end of this MBO, it will not be to retire to Nosy Be, theisland for which the company was named. Located northwest ofMadagascar, this spot of land is famous for Ylang-Ylang, a tropicalflower whose essential oil is especially prized by the creators ofperfumes. Vercamer went to Nosy Be a few years ago on holiday.He had planned to stay for a week but he packed up and left aftertwo days. He did not like the place. He is, as we said,a man who does not worry about contradictions.

François Vidal writes for the French business daily Les Echos

business, distributing goods to independentpharmacists, was being squeezed out by the

large retail chains,” he explains. “We had tofind some way to keep going.”

Things were initially very hard. Fundswere short, of course, but there wasalso hostility from suppliers, whofound the concept too innovative. Ittook five years to buy the first fiveperfume and cosmetics shops.

“There were times when I openedshops without having anything toput in them,” Vercamer recalls.During this period, the family

business was collapsing. By the early1990s it was on the verge of

bankruptcy and had to be restructured.That is when Vercamer gave the first

proof of his independent spirit anddistanced himself from his origins.

He laid off about 50 employees and gothis uncles out of both the company and

its capital. In so doing, he won morefreedom…and a huge amount of

ill will from the family.This difficult experience

prompts him to say todaythat he did not start atzero, but at “less thanzero.” It also explains nodoubt why he continues tofight so hard to see that hisbusiness expands. “In someways, his approach to

Nocibé is more that of aninvestor than the head ofthe company,” saysValérie Téxier, who

works in the Parisoffice of Bridgepoint,the majorityshareholder inNocibé since late2002.

Evidence of thiscan be seen inthe fact thatVercamer hasc h a n g e dpartners fourtimes since 1994.

First there wasAvenir Entreprise, a

subsidiary of the Frenchfinancial giant Caisse des

Dépôts et Consignation. He then tookthe company public in 1997 and, just a year later,

sold his shares, following a takeover bid from the Dutchgroup Kruidvat. Finally he joined Bridgepoint through a leveragedbuy-out of the Nocibé business.

Four transactions – no soul-searching. Indeed, Vercamer appearstotally devoid of the sentimentality that the founders of small

THE POINT 13

PROFILE

FACEFACE

T O

In some ways, his approach to

Nocibé is more that of an investor

than the head of the company

CAREER PROFILE

Name: Daniel Vercamer, Chairman and CEO of Nocibé.Origins and family: Born in France in 1948. Married, 4 children(two girls, two boys) between the ages of 22 and 29.Educated: Business studies at the EDHEC (Ecole des HautesEtudes Commerciales) in Lille (Nord).Early career: Worked in the United States for a drugstore productswholesaler. On returning to France, he joined the family business(Vercamer SA), where he has worked ever since.Biggest success: Saving the family company by creating Nocibéwhen the market of Vercamer SA was shrinking.Biggest mistake: Not having believed soon enough in internationalexpansion.Cars: Drives an Audi A6 and, less frequently, the seven vintage sportscars that he owns (they include a 1934 Bentley and a Ferrari Modena).Ambition in life: It is possible to have more than one. Myambition right now is to make the MBO with Bridgepoint a success

He laid off about 50 employees

and got his uncles out of the

company. He won more

freedom…and a huge amount of ill

will from the family

It is hard to believe that companies carrying out suchmundane tasks as council tax processing could once have hadstar billing on the stock market.

Yet, in the late 1990s, these firms commanded valuationsrivalling the headiest of those achieved in the dot com boom.And just as the dot com bubble eventually burst, the City’s loveaffair with support services companies came to a sudden endtwo years ago and valuations plummeted.

The change of heart began in March 2002, when Ameyproduced an underlying pre-tax loss of £18.3 million. Analystshad been expecting a £55 million profit but the loss wasattributed to the implementation of new accountingstandards, relating to the treatment of costs involved inbidding for new contracts.

Amey’s difficulties intensified the debate over how servicescompanies should be valued. Investors had several concerns.

First, there were worries about the expense associated withbidding for contracts, and the start-up costs in preparing forthem once they were actually awarded.

Market sentiment was also affected by the way supportservices companies approach projects under the government’sprivate finance initiative. Under this scheme, private sectorcontractors provide a package of services for 25 to 30 years andoften build the asset itself, perhaps a school, hospital or prison.The way most companies approach PFI is to create separateentities known as special purpose vehicles. This can make itdifficult for those outside the business to obtain a clear pictureof the performance of individual PFI contracts.

In addition, many companies from lower rated sectors suchas construction and packaging had moved into support servicesin the hope of obtaining higher share prices. Facilities

management, which had been seen as avery attractive market, became more of acommodity service, eroding margins,while some of the more cyclical companieswithin the sector, such as staffingspecialists, were hit by the globaleconomic downturn

The impact of this fall from grace wasnot only in the equity markets but also inthe private equity industry.

Some observers suggested thedownturn in valuations meant there waspotential for private equity firms tomake investments at less demandingprices. Trade buyers were more cautiousabout embarking on corporate activityso there was less competition and thechallenges faced by some companiesforced them to restructure theirportfolios, generating interesting targetsfor private equity buyers. In realityhowever, when valuations weretumbling, making acquisitions wasextremely tricky.

“It was like catching a falling knife.

Just as the dot com bubble

eventually burst, the City’s love

affair with support services

companies came to a sudden

end two years ago and

valuations plummeted

The support services sector has had a roller-

coaster ride in recent years, moving from

favoured child to black sheep among

investing institutions. Now there are signs

that the industry is picking up again.

Andrea Felsted investigates

SupportinS

ecto

r w

atc

h

14 THE POINT

lighting, carrying out routineadministration for insurance companiesand providing temporary staff. Manybusinesses have traditionally beenregarded as attractive growth stories andthe increase in outsourcing – whereby anorganisation employs a third party to carryout functions regarded as non-core to itsbusiness – has meant plenty of demand fortheir services.

Some groups have also begun to benefitfrom the early stages of an economicupturn and accounting worries haveabated, although both equity investors andprivate equity executives remain mindfulof the sector’s accounting complexities.

These apart, there have been a fewspectacular recoveries. Shares in WSAtkins, which fell 72 per cent to 52pfollowing a profit warning in October2002, are now trading at over 500p. Sharesin recruitment companies, which arehighly sensitive to the economy, have alsobenefited from expectations of an upturnin the jobs market.

In the UK, the Government continuesto involve the private sector in thedelivery of public services. PFI is set toremain a key plank of UK procurementpolicy, while overseas governments areadopting it too. Outsourcing by theprivate sector is gathering pace and mostcompanies’ work is backed by long-termcontracts, which private equity buyerslike, since they provide a good indicationof what turnover and profit will look likein the future.

Corporate restructuring remains afeature of this sector. Securities giantGroup 4 Falck is currently spinning off itssafety and custodial businesses as part of a£1.7 billion merger with Securicor.Although it intends to float thesebusinesses on the Copenhagen StockExchange, the custodial business, which

Most companies’ work

is backed by long-term

contracts, which

private equity buyers

like, since they

provide a good

indication of what

turnover and profit will

look like in the future

THE POINT 15

We were not sure where it was going toend up. When prices are falling veryquickly, you never see very much activitybecause there is no solid ground, and it isquite hard to buy things in that sort ofsituation,” says Kevin Reynolds,Bridgepoint partner responsible for UKinvestments.

Furthermore, lower valuations did notautomatically make investments cheap. “Ialways think of what happened in thequoted support services sector as a minitech bubble. It was pretty similar, and thesector was frankly overheated to startwith,” he adds.

Consequently, Reynolds explains that,while there have been some deals in the

support services sector over the pastyear, merger and acquisition activity hasbeen limited.

The sector rout also made it harder forprivate equity groups to exit supportservices investments. Trade buyers werereluctant to acquire businesses and therewas almost no appetite for companiesfloating on the stock market.

Fortunately, there are signs that supportservices companies are now enjoying amodest recovery.

Back in 2002, share prices in the sectorfell 20 per cent relative to the FTSE AllShare Index. In the first three months of2004, they rose by 3.55 per cent, relative tothe All Share.

Prices are still well below the racymultiples seen a few years ago but at leastthey are moving in the right direction.

The sector embraces a wide range ofcompanies covering a spectrum of serviceactivities, from building and maintaininghospitals, schools and prisons, tocollecting rubbish, looking after street

ing castSECTOR WATCH: SUPPORT SERVICES

“It was like catching

a falling knife. We

were not sure where

it was going to end up”

16 THE POINT

SECTOR WATCH: SUPPORT SERVICES

ALcontrol Laboratories exhibits many of the characteristics thatdistinguish support services companies from those in other industries.

The business was acquired by Bridgepoint in December 2000 and carriesout environmental and food testing in the UK and Europe.

Traditionally, companies such as food manufacturers and environmentalconsultancies carried out their own testing. But, as the work becomes harderand more costly, they are choosing to outsource this process. And since testingis a business critical operation, ALcontrol can escape the pressure on pricesfaced by suppliers of longer-established and more commoditised services.

In addition, many of ALcontrol’s customers use its services on a long-termbasis so it has preferred-supplierarrangements lasting 20 to 30 years.

These elements clearly attractedBridgepoint to the business but there wereother factors too, in particular the fact thatenvironmental and food-testing legislationis being harmonised across Europe. Overthe past three years, Bridgepoint hassupported ALcontrol in nine acquisitionsworth around €30 million. The companynow operates in France and Scandinaviaand is keen to expand into Germany andSouthern Europe.

The testing market is developing too, from a science-based into a service-oriented industry. Carrying out correct procedures is no longer sufficient.Results must be returned to customers quickly and efficiently.

“Testing is moving from being a cottage industry to being more of acorporate industry, and moving from being a scientific industry to being aservice-oriented activity,” says Stirling.

With this in mind, Bridgepoint has invested about €30 million inALcontrol’s infrastructure, including laboratories and informationtechnology systems. All laboratories now operate on a uniform system.Samples are bar-coded, and test results are provided electronically tocustomers. They can log in, through a website with secure passwords, totrack samples and access test results.

By this summer, ALcontrol will have six so-called ‘super-labs’; facilitiesdesigned make the testing process more efficient, without compromising itsscientific basis.

Eventually, Bridgepoint’s attention will turn to exiting its investment inALcontrol. Over the past three years, ALcontrol’s turnover has grown byabout 2.5 times to more than €120 million. Efficiency gains have helpedprofits to grow by a similar amount. A trade sale is the most likely exit route,but as ALcontrol expands its operations, a stock market flotation could comeonto the agenda.

runs prisons and detention centres, is alreadyattracting the interest of both private equity andtrade buyers.

There is scope too for merger and acquisitionactivity within niche markets. “A lot of the sub-sectors are pretty immature so you can create quiteinteresting businesses by acquiring a number of smallbusinesses on a roll-up basis,” Reynolds explains.

With valuations rising however, the opportunity toacquire attractive support services business forreasonable prices may be limited and the chance tomake opportunistic acquisitions, while equityinvestors shunned the sector, has now passed.

“We are seeing more opportunities but thelandscape is more competitive and we are probablyhaving to pay more for them if we wish to buy them,”says Reynolds.

Nonetheless, he expects stable valuations to heraldmore, rather than less, interest in the sector.

“The worst nightmare for us is to buy a business onthe basis that the sector price earnings multiple is 15,and find out that the multiple is 10. We feel verycomfortable that is not going to happen,” he says.

Consequently, he expects merger and acquisitionactivity in the sector to pick up this year.

“The technology bubble analogy is a good one,” hesays. “Technology was incredibly frothy. Then thebubble burst, and there was no IT merger andacquisition activity, apart from complete extremes,for a long time. It has now settled down. People feelmore confident that the bottom of the market hasbeen reached and the level of IT activity isincreasing.”

Nor do rising prices mean an end to finding valuewithin the sector. “It is all about growth, and if youget a business that can really deliver on its growthprospects, I am sure there is still some real value tobe had,” he says.

Some equity analysts believe too that supportservices companies remain keenly valued.

More interest in the sector could make it easier forprivate equity groups to exit investments. Tradebuyers are once more looking to snap up usefuladditions to their portfolios, and there are hopes thatthe market for initial public offerings may also bereopening. This will be a key test of whether supportservices companies are on their way to winning backtheir star status.

Andrea Felsted covers UK companies for the Financial Times

“It is all about growth,

and if you get a business

that can really deliver on

its growth prospects, I am

sure there is still some real

value to be had”

Testing is a business critical operation, so

ALcontrol can escape the pressure on

prices faced by suppliers of more

established and commoditised services

ALcontrol Laboratories is a classic support

services business. Andrea Felsted discovers

what it does and where it is heading

The statistics leave no room fordoubt: management buy-outs have neverbeen as popular in France as they are now.More than 150 deals were completed lastyear, an increase of 50 per cent from 2002and an all-time record.

“The trend is clearly toward structuralgrowth in our market, even if there aredips due to the economy,” says BenoîtBassi, head of Bridgepoint in Paris.

A host of positive factors have boosteddevelopments in the past two years. Theseinclude the virtual disappearance ofcorporate buyers between mid-2001 andmid-2003, pressure on vendors and a sharpdrop in valuations as equity marketsplunged. In addition, institutionalinvestors have been very attracted toFrance because the persistent weakness ofthe German economy has made it thepivotal country in the Euro Zone.

In the middle of last year, no fewer thansix private equity firms were trying to raisefunds for French middle-market activity.New entities emerged too, such as MBOPartenaires, Activa Capital, Eurazeo andWendel Investissement. Within 15months, Eurazeo had taken part in thebuy-outs of Eutelsat, Fraikin and Terreal,while Wendel had participated in thebuy-out of Legrand. Meanwhile the Parisoffices of established players such asDoughty Hanson and KKR are taking onmega-deals when they emerge.

The environment has therefore becomemuch more competitive. Nonetheless,while fierce battles rage on the mega-buy-out front, as an increasing numberof contenders fight over feweropportunities, the possibilities in smalland medium-sized deals far exceedthe number of suitors.

The statistics reflect thisphenomenon. Several mid-marketplayers for instance had a record-breaking year in terms of funds

invested, particularly those whoseoperations are segment-based. FondsPartenaires (Lazard) invested more than€70 million last year, nearly double the€41 million it invested in 2002. Over 12months, there was a 61 per cent increasein deals worth less than €75 million.

The upper end of the mid-market wasnot far behind. The second half of 2003saw MBOs of Actaris (€420 million),Frans Bonhomme (€520 million), Terreal(€500 million), Ceva (€200 million) andMédica (€330 million), among others. Alltold, the number of MBOs valued at morethan €200 million grew by 445 per centlast year and most established firms did atleast one transaction. The only cause forconcern was that secondary buy-outsbecame the most common type of deal. Asthe stock market recovers and corporatesreturn as buyers however, this trendshould weaken.

THE POINT 19

Management buy-outs have become commonplacein France and activity has been dominated by themid-market. François Vidal analyses the Frenchprivate equity sector

MARKET VIEW

Frenchconnections

While the battlesare fierce on themega-buyoutfront, thepossibilities insmall andmedium-sizeddeals far exceedthe number ofsuitors

On the big deal front meanwhile, thecrop was much less impressive. Last yearsaw only one deal worth more than €1billion: the secondary buy-out of Materis(€1.15 billion). Several buy-outs thateveryone in the market expected, such asUGC and Editis (from Vivendi Universal)or But (from Kingfisher) did not happen.They were either cancelled (UGC, But) orsold to corporate buyers (Editis).

It is not surprising therefore that thefigures for the French MBO market in2003 show a sharp, 46 per cent decline.But do not be fooled. While this dropaccurately reflects the sluggishness of themarket for very large deals, it totallyobscures the excellent health of theFrench mid-market.

François Vidal writes for the French business daily Les Echos

A host of positive factorshave boosted developmentsin the past two years

20 THE POINT

MAKING THE MOST

Charitable giving

You have worked hard for your money and you deserveto enjoy the fruits of your labour. What better way to do sothan by giving away large amounts to charity? As a sensibleinvestment scheme it might turn a head or two, but askanyone who has seen their generosity put to good use andthey will tell you it is one of the most rewarding ways ofspending money.

Unfortunately however, there are not enough donationsto go round so the UK’s186,582 charities areconstantly searching forlucrative cash-raisingschemes. Bring and buysales may make for goodl o c a l n e w s co p y, b u tthey cannot bring in thesort of substantial capitalinjections charities need toensure they are not leftbehind in an extremelycompetitive marketplace.

What this means is thatcharities tend to devote asubstantial amount of timeworking on how to appeal tothose with the most to give.

One successful approachhas been hit upon by theFunding Network (www.thefundingnetwork.org.uk). Itbrings together charitiesand potential donors on so-called ‘funding days’, whereeach charity gives apresentation and participants then have the opportunity todonate in an informal ‘pledging session’. Co-ordinator,Lizzie Gillett, explains: “Giving is often a very lonelyendeavour, and giving with a group of other people in a

As competition becomes more intense, charities are looking for innovative ways to persuade companies to

part with their cash. Andrew Morris reveals some of the more successful schemes on offer

Richer people are often

personally targeted by charities

in a way that the less wealthy

are not, and people can become

overwhelmed by the number of

requests for help, which may

make them more cautious

situation where it is easier to get a sense of what gift would beappropriate, means it can feel safer.”

The charity’s philosophy is that donating should be a positiveact and not one done grudgingly. “We work on making eachfunding event a day people would like to attend rather than onethey feel obliged to, and where people will feel inspired by thecharities,” says Gillett.

“Richer people are often personally targeted by charities in away that the less wealthy are not,and people can becomeoverwhelmed by the number ofrequests for help, which maymake them more cautious,” shesuggests.

Other charities believe thatsuccessful business people can beencouraged to make majordonations if they are given theopportunity to see the fruits oftheir investment. Workingequine welfare charity, theBrooke Hospital (www.brooke-hospital.org.uk) encourages high-level givers to travel to thecountries where their cash hasmade a difference.

“Major donors who are able tofund an entire project are morelikely to want to visit it, havetheir name on it and monitorits progress,” explains Brooke’sDi r e c t o r o f Fu n d r a i s i n gand Communica t ion , JohnTrampleasure. This is what

charity professionals call the fund-raising pyramid: simply put,the greater the donation, the greater the appreciation.

Another productive strategy is the one-off, high-calibre event,in which donors are given the red-carpet treatment. Largercharities with the capital and connections to put on suchevenings were quick to realise that everybody likes mixing withA-list celebrities. After all if you are going to give, you want to doit in style. Those who attended the premiere of Cold Mountainand donated £275 a ticket to the Prince’s Trust (www.princes-trust.org.uk) for the privilege may not have been motivatedprincipally by philanthropy. They were almost certainly moreexcited by the prospect of hobnobbing with HRH, NicoleKidman or Renee Zellweger. But whatever the reason that thewell-heeled attend such events, it is still a great money spinnerfor a good cause. Who said altruism can’t be fun?

Andrew Morris, former charity worker, writes on social affairs and community relations

THE POINT guide t

Earlier this year Edsbacker Krog, a short drive beyond the city, wasawarded two Michelin stars. The surrounding area is not the mostsalubrious but the restaurant is considered the best in Stockholm.Almost as exclusive but situated in the centre of the city is Paul &Norbert, an excellent and elegant choice. Eriks, too, is highly popular,frequented by Swedish celebrities, and even royalty.

More homely options include the popular Ulla Winblad, servingtypical Swedish food and Sturehof, a 100 year-old fish restaurant,

recently refurbished to resemble some of NewYork’s seafood eateries.

Bars abound and a good place to find them isin Gamla Stan, Stockholm’s old town, wherecars are restricted and the atmosphere is old-world charm.

It is worth noting that the Swedes eat lunchand dinner earlier than in more Southern partsof Europe. Lunch is served from 11.30am and

people frequently meet for for dinner at 6pm.Graham Oldroyd, Bridgepoint partner in Sweden, says: “My

preferred place to stay is The Lady Hamilton Hotel in Gamla Stan. Afavourite restaurant is the Kryp In, a small, intimate restaurant not farfrom The Lady Hamilton. The menu has a good mix of traditionalSwedish meat and fish dishes complemented by some more unusual‘signature’ items. There is a counter bar overlooking the small kitchenarea where guests can see the food being prepared.”

THE POINT 21

MAKING THE MOST

Stockholm

It is a well-known fact that boys like their toys. But with the digitaland mobile revolution spreading like wildfire across all our lives, it isharder than ever to keep up with the latest gizmos. Take Apple’siPod. The ultra-hip MP3 player (compressed digital audio files forthe technologically challenged) burst onto the scene last year andwas touted as last Christmas’s hottest present. So great was thedemand that many of the present-buying public were disappointed.

Or were they? The next issue of Stuff magazine – which gets65,000 readers a month in the UK alone and is a huge fan ofApple’s icon – could nudge the iPod out of the way in favour ofRio’s Karma, which does much the same thing. A clear case of heretoday, gone tomorrow.

Boys’ toysThese days, gadget-lovers

are spoilt for choice. But

buying the wrong gizmo

can be a fashion disaster.

Grant Murgatroyd

gets upwardly mobile

Business travel can be frustratingly dull. Joanne Hart discovers

how to avoid the mundane when staying in Stockholm

Sweden used to be considered one of the least attractivedestinations in Europe, dismissed as dark, dull and northern.Low-cost airlines and a more adventurous travelling publichave put paid to that and flights to the country’s capital areroutinely packed, particularly on the weekend.

Business travellers may not have as much time for revelryas regular tourists but there is no reason why they should nottake advantage of the myriad hotel and dining opportunitieson offer in Stockholm, popularly known as ‘The Venice ofthe North’.

The most established luxury hotel is The Grand, built on thewaterfront almost 150 years ago. Steeped in history, The Grandis for travellers who enjoy pomp and splendour. The Strand,too, is a large, lavish establishment, which treats its guests welland caters for most business needs.

Those looking for something a little different might preferone of the new, boutique-style hotels, such as The Rival, inwhich former Abba member Benny Andersson, has an interest. The Rival issituated to the south of central Stockholm and is extremely chic. Anyonewanting to be right at the centre of the action however should consider TheLydmar, so trendy that even its website resembles a work of contemporary art,warning potential guests: “If you are looking for a standard hotel, you arelooking in the wrong place.”

All these establishments provide restaurants and bars but travellers keen toexplore beyond the hotel have a multitude of choices.

The Lydmar Hotel’s

trendy website

resembles a work of

contemporary art

So what are the must-have gadgets for 2004? According to the experts atStuff, no toy-lover should feel complete without:

Nokia 6600 Bluetooth enabled mobile phoneApple iPod MP3 jukeboxPioneer PDP-434HDE plasma screen TVPioneer NS-DV990 home cinema systemSky+ personal video recorderPentax Optio S4 digital cameraMicrosoft Xbox games consoleSony Vaio wi-fi laptopNetgear wireless networkSeiko Arctura Kinetic watch

This is no longer just about electronics and audio visual products. Theworld of gadgetry has evolved into a mind-boggling array of products.What outdoor enthusiast would not want to keep warm with the NorthFace Met 5 jacket, complete with an in-built electric heating system? Orperhaps a Rally Office chair, which uses genuine Cobra rally seats forergonomic comfort.

My personal favourite offers the chance to replicate that seventies iconSteve Austin, the Six Million Dollar Man. On offer for a mere €500, a setof Powerisers allows you to run at 30 kph and jump almost two metres inthe air, as well as do somersaults and backflips. Time to start shopping.

Grant Murgatroyd is editor-in-chief of Bladonmore Media

e to smarter living

When I was growing up, life was pretty simple. If your TVor video broke down, you called a man (yes, a man) to fixthem. The idea of flying to Barcelona for the weekend wassimply absurd but if your boiler broke down you could affordto call out a plumber. Clothes were something that you savedup to buy, and a new pair of Levis was the ultimate in cool.But at least it was cheap to get around. Some blokecalled Ken Livingstone made sure that it only cost5p to use the bus.

Things are different now. The world hasturned upside-down. I know because I’ve beenbuying lots of Buzz Lightyear stuff for my sons inrecent months. Big Buzzes, medium Buzzes andsmall Buzzes line up on the floor each morning forus to salute. The big one cost £19.99 and in the olddays we would have called it a computer. Ittalks to us, saying: “To infinity and beyond!”or: “This is an inter-galactic emergency!”

It is a seriously excellent toy, almostexactly like the not real-life Buzz in ToyStories 1 and 2. We have written Andy onthe sole of one of his feet (just like inthe film) but on the other it says“Made in China”.

And there it is: China. Thanks tothe extraordinary boom out there, stuff is seriously cheap.Getting things fixed, by contrast, is seriously expensive.

Our plumber clearly knew this when he came round tomend our toilet two weeks ago. Cup of tea in hand as hestruggled manfully to find the fault, he picked up the bigBuzz from the kitchen floor and grunted: “It’s incredible howcheap these things are nowadays.”

That thought resonated with me 45 minutes later as Ihanded him a cheque for £248. He’s just charged me morethan twelve Buzzes to fix our toilet, I thought. That can’t be

right. It was even more disconcerting the following weekendwhen his mate came to fix our boiler, our own little inter-galactic emergency. The charge?

Nineteen Buzzes, of course.It doesn’t take a great brain to realise that there is a state

of disequilibrium between the cost of things and domesticservices. It can’t go on; at least I don’t think it can.

Take the price of a new car. You can buy one for about

International labour markets have revolutionised our world. Toys,

televisions and Tesco jeans are incredibly cheap. Plumbers and

handymen are hugely expensive. William Lewis, Sunday Times

Business Editor, ruminates on the costs of goods and services

£5,000 now. Not bad, particularly when compared with theprice of a two-week holiday in the Mediterranean. Hiring agite in the South of France costs at least £2,000 and if youare on some sort of Mark Warner holiday, then it really willcost more than a new car. For sure, I recall foreign holidaysbeing special but boy, was it a big moment when my Dad

brought home a new car. We would ride around the suburbin it, testing all the brilliant new gadgets – like electric

windows. Not any more. I recently took a new car hometo show the children, and my daughter told me to“grow up”.

As for clothes – you can buy decent jeans for £5 inTesco as well as dirt-cheap TVs and videos. But,when your fridge breaks down, you are forced to

consider whether to get it mended or buy a newone. Yes, in case you didn’t know, fridges aren’t

expensive anymore, at least compared to theprice of calling out the fridge doctor. You

can buy a new Hotpoint from John Lewisfor £212. How much is some mender-chap going to charge? First, you don’tknow. Second, loads.

Or how about the DVD player. Can’twatch Toy Story 2 because your DVDkeeps jumping? What’s the answer – buy

a new one of course, for just £99.50 from all goodelectrical retailers.

On the other hand, my mile and a half bus trip homefrom the tube costs one whole pound. If I walk it, I couldbuy a load of Buzzes in no time. Madness, as my three-yearold son says.

The point is clear, and I haven’t even mentioned theweird world of house prices. Stuff is cheap, but getting stuffdone, getting stuff fixed, and getting around London isanything but.

There is an opportunity here, but where is the pukka easy-plumbing company?

Or the easy-fix outfit that guarantees to fix your fridge,boiler and Buzz toys for £50? You can’t really blame theGovernment: ultimately it comes down to entrepreneurs andthose with capital. So unite would-be plumbers of the worldand heed my rallying cry: “To infinity, and beyond!”

William Lewis is Business Editor of the Sunday Times

22 THE POINT

OPINION

The

bo

ttom

line

He’s just charged me more than twelve Buzzesto fix our toilet, I thought. That can’t be right

THE POINT

“

”

News Bridgepoint investments and exitsacross Europe. Page 4

Spotlight What vendors want and how to makesure they get it. Page 5

Supporting Cast Support services companies have been on a roller-coaster ride in recent years. Now they are regainingtheir appeal. Page 14

French Connections French private equity has had a bumper yearand the middle market is the main beneficiary.Page 19

Guide to Smarter LivingCharitable giving made fun; an inside guide tovisiting Stockholm; gadgets galore; must havegizmos for 2004. Page 20

Bottom LineFor Sunday Times Business EditorWilliam Lewis, the price is not right.Page 22

Multi-taskingThe changing role ofcompany chairmen. Page 8

Face to FaceNocibé founder Daniel Vercamer on perfume,passion and paradox. Page 12

Bridgepoint 101 Finsbury Pavement, London EC2 1EJ

Tel: 0044 (0) 20 7374 3500

www.bridgepoint-capital.com

Bridgepoint Capital Ltd is regulated by the FSA

THE POINTIN SIXTYSECONDS