Posted by Charles
Marvellous news from last Wednesday’s Telegraph:
The Duke Street consortium, which includes Babson Capital Europe and Metric Capital Partners, has acquired LM Funerals from Sovereign Capital, a buy-out firm focused on investing in small companies.
LM Funerals is the third largest funeral company in Britain, with more than 60 branches – mainly in the Midlands and the south-east of England.
Sovereign bought LM Funerals in 2003 and used the company as a platform to consolidate what is a highly fragmented sector. Under Sovereign’s ownership, the company grew from 29 sites to 65 through a series of nine acquisitions and several new branch openings.
You’ll like this next bit:
Often the acquired businesses continued to trade under their original names after the deals were completed. This was done to ensure the “preservation of trusted local reputations and relationships that have been built over a sustained period”. [Source]
QUERY: If consolidation of a highly fragmented sector is a Good Thing, why the reticence about ownership?
FOLLOWUP QUERY: No mention of the benefits for consumers? (Oh, them.)
FACT: Sovereign Capital paid £11m for LM in 2003. They’ve sold for £37.5m. The deal therefore represents a 3.4 x return.
FACT: The name of the managing partner of Metric Capital Partners is John Synic. Really.
THE GFG SAYS: Take the money and run, boys. Trebles all round!!
Hat-tip to Andrew Plume.