M & A Review: August 2008

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The last six months in London have definitely been a game of two halves in deal making. Since April 2008, the market has been quieter particularly with respect to buy-outs as buyers have become more cautious with vendors’ price expectations re adjusting.

Octopus has exited one London business and invested in three others, making us one of the most attractive investors in the sub-£20 million buy-out market in the last six months.

In January 2008, Octopus disposed of Gyro, a B2B integrated US communications agency, to a US private equity investor, realising a 58% IRR. During the period of Octopus’s investment, the company made five acquisitions, opened offices in Europe and the US, and grew turnover by 45 per cent a year.

This is a classic example of how a small London business can benefit from a supportive private equity partner to grow into a leading global service provider.

Where opportunities arise, we are supporting our portfolio companies to make acquisitions. In July, AVM acquired Matrix to become the UK’s largest video-conferencing and audio visual services business. In the last three years, it has made six acquisitions to consolidate this fragmented, yet growing marketplace.

In March 2008, another Octopus portfolio business, Promotion Space, acquired Victoria based Brandspace, to create a £20 million-turnover market leader in shopping centre commercialisation.

With declining yields in retail property and rents under pressure, shopping centres are focusing on generating more revenue from their footfall. Promotion Space benefits from this trend as the largest business in the UK undertaking this non-core activity for Property Owners.