CARILLION’S BUSINESS HAD GROWN ‘TOO DIVERSE’

Dave Wilson,  non-executive director with Morphose, said that it was “obvious for some time” that Carillion’s business had become “too diverse”.

“The FM part in particular was not core to their main construction offer, but was, in my opinion, a sound operation with good people and systems. 

“It is possible – but I have no direct knowledge of this – that bidding has been too aggressive. I think that is a problem which is quite widespread in the industry as businesses chase sales and market share in a relatively stagnant market.

“From an FM perspective, this is symptomatic of a problem with the tendering process, especially in the public sector, which still gives too much weight to price and not enough to quality or business sustainability.

“I would be surprised if there weren’t potential buyers for the FM business which, the last time I looked, was well run and had good products and service in some market niches. There are some fairly obvious potential buyers for a business with a strong technology sector record and some interesting public sector contracts. Might a management buyout of the FM business, as a whole or in parts, be viable?”

Joanna Lloyd-Davies, principal at JLD Consultants Limited, called the situation “horrendous” and “a great shame”.

She told FM World: “It must have been a very difficult time for those in charge to pull the plug.”

“We’ve got to look after the people, we have got to protect the reputation of the industry and we have got to hope to God that this doesn’t happen again.”

Lloyd-Davies worked in business development at Tarmac, which rebranded as Carillion in 1999 to place greater emphasis on its services provision. She recounted: “We started all the hospital PFI contracts. We were doing great things that would be good for the UK’s healthcare.”

“We have to show the world that one company has gone down, but this isn’t the state of all companies in the industry.

She said: “The main lessons we should learn are corporate responsibility, delivering according to the agreed contract and properly bidding on contracts.”

She added: “It’s going to make everyone wiser and more alert. We have to make sure we are running sensible businesses and delivering appropriately.”

Consultant Martin Pickard focused his attention on the likely impact of Carillion’s crash on its many sub-contractors, in particular the issue of suppliers forced onto more onerous payment terms last year.

“Government should learn to utilise all of the facilities management supply chain and not give all its work to a chosen few,” said Pickard. “Also, companies should finally learn that aggressive accounting and commercial practises will kick you in the butt eventually. Forcing your sub-contractors onto 120 day terms only provides a short-term fix to your cash problems but guarantees resentment and non-cooperation.”

Pickard also emphasised the problem of organisations too often letting their FM contracts drift ‘out of mind’.“

“Clients – including governments – must learn that outsourcing doesn’t transfer all risks, and both parties need to play an active role in facilities service management.”

Jeremy Waud, chairman of Incentive FM Group, called Carillion’s collapse a “sorry but rather predictable tale and a lesson to many of us”.

“Ultimately, its collection of banks did not have the courage to lend good money after bad and refused further funding – albeit the Government doesn’t seem to have been too bothered by the issue if they kept on awarding contracts to them up until recently.”

Waud is saddened by the end to such an established name in the sector.

“Carillion has a rich and lengthy history in construction and a long association with the FM sector which predates the demerger of Carillion from Tarmac in 1999. I recall Tarmac TFM in the late 1980’s  – pioneering days of facilities management in the UK.

“It appears that the damage done to this once great and proud name has been largely inflicted from the construction sector and hence has little to do with FM services. These contracts are inevitably large, complex and risky – something it seems the company didn’t fully or accurately disclose in its financial reporting to shareholders and funders.

“What is perhaps of more interest to us in the FM sector is what will happen to the hundreds of FM contracts it is engaged in. Although almost exclusively public sector, I am sure that while some may go back in-house, others will need to find new suppliers.

Waud also questioned whether Serco may now be wondering why they recently paid £50m for Carillion’s NHS contracts, “which would now perhaps be available on the cheap from the liquidator?”

Source: FM-World

 

Edwin James Holdings Ltd acquires PEME

Edwin James Holdings (“EJH”), a portfolio business of Aliter Capital, has successfully acquired Peterborough-based mechanical and electrical maintenance provider, PEME from its founders, Ashley Maile, Darren Martin and Ian Morris.

 

The UK FM merger and acquisition specialist Morphose introduced the parties earlier this year and the deal completed last Friday.

 

PEME are an industry leading asset care provider, working to improve clients’ maintenance and engineering compliance through a blend of asset care, plant maintenance, engineering compliance, reliability improvement and condition monitoring.

 

Commenting on the transaction, Billy Allan, founding partner of Aliter Capital said:

“We are very pleased with the acquisition of PEME. This acquisition process has been exemplary and Morphose continue to prove their value by introducing complimentary parties.”

 

Morphose Managing Director Nick Atherton commented:

“It has been a pleasure working with the EJH and Aliter Capital team. We wish them every success in developing their business.”

Incentive acquires Weston Electrical Services

Incentive FM Group has successfully acquired Somerset-based electrical maintenance provider, Weston Electrical Services (WES) Ltd from its founders, Ian Rogers, John Rogers and Linda Rogers.

 

The UK FM merger and acquisition specialist Morphose brokered the deal, which completed today. Morphose have successfully advised on a fourth bolt-on acquisition for Incentive FM Group, with the purchase of the electrical maintenance business in Weston Super Mare. WES adds around £10m of turnover to Incentive Tec, the group’s M&E business, lead by Chris Windass.

 

Weston Electrical Services Ltd. is an electrical and mechanical contractor providing commercial, industrial and domestic services. This acquisition provides Incentive FM Group with improved coverage in the South West region, further improving their geographic offering.

 

Incentive FM Group’s trading companies provide services in the areas of; Facilities Management, M&E installation and Maintenance, Cleaning, Security and Consultancy. The business is located in London and has a run rate turnover in excess of £120m.

 

Commenting on the transaction Chris Windass, Director of IFM’s M&E division said:

“Morphose provided invaluable support to us throughout the deal. They quickly pulled together historical information and key metrics before working with management to develop financial forecasts. Our trust in their capabilities allowed us to proceed with confidence throughout the transaction.”

Morphose Managing Director Nick Atherton commented:

“It has been a pleasure working with Chairman Jeremy Waud and CEO Martin Reed as the business expands. We wish them every success in developing their business.”

Morphose delivers expert consultancy for sale of Active Security and Yeoman Monitoring Services to Scutum Group

International advisory and brokerage services business Morphose has provided expert consultancy to Active Security and Yeoman Monitoring Services on the sale to French company Scutum Group. Active Security and Yeoman Monitoring Services presented themselves as an attractive acquisition opportunity after a sustained period of growth in the UK market, with a combined turnover of circa £7 million.

 

Morphose seek to optimise the infrastructure of businesses that are looking to improve, buy or sell their organisations. In this instance, Morphose were retained to market, advise and coordinate the sale of the jointly owned security business. The deal was finalised in late 2016, with Scutum Group anticipating further growth and looking to expand operations in the UK in the coming years.

 

Active Security Group and Yeoman Monitoring Services has a well-established heritage and history of excellent service in the UK, being founded over 44 and 32 years ago respectively. Self-described as having a “raft of industry experience” the Essex based business has been actively involved at a senior level with industry trade associations, standards committees and inspectorate throughout its history. It is this experience that brought interest from Scutum Group, a European mainstay of integrated protection solutions, with over 25 years of trading.

 

Nick Atherton, Managing Director of Morphose, commented:

“As an established and profitable joint business, Active Security and Yeoman Alarms are an excellent acquisition for Scutum Group. Clients are now looking for a more intimate working relationship and Morphose were delighted to be on hand every step of the way. We look forward to further overseas M&A interest in the coming year.”

 

Franck Namy, Chairman for Scutum Group, added:

“We are very pleased to acquire Active Security and Yeoman Alarms and welcome them to the wider Scutum Group. This acquisition process has been exemplary and Morphose were invaluable throughout negotiations. Scutum Group look forward to honouring the heritage of this business and building on its great service.”

Serial Entrepreneur Robert Kilgour joins Morphose as a non-executive director

International brokerage and advisory service business has appointed Robert Kilgour as a non-executive director.

Self-described as a ‘serial entrepreneur’, Kilgour has over 35 years’ experience as an investor, business founder and property developer. He was the founder of Four Seasons Health Care, which is now the UK’s largest care home operator with some 460 care homes and employing over 30,000 staff.

Robert will provide specific advice and expertise on facilities management with an emphasis on new developments and innovation in the healthcare and security sector.

Kilgour commenting on his appointment said:

“With this appointment I look forward to complimenting an already fantastic group of knowledgeable professionals. With many years in business, throughout a number of sectors and interests, I aim to offer advice that will aid the expansion of Morphose both domestically and internationally.”

Nick Atherton, Managing Director, Morphose, added:

“Robert will undoubtedly bring a wealth of experience and knowledge to the growing Morphose team. His excellent business acumen and entrepreneurial credentials will help cement our place as industry-leading advisors in increasingly specialised markets.”

Robert’s additional interests include Dow Investments plc, Renaissance Care, NW Systems Group (video and security system specialist) and Kingdom FM Radio.

Kilgour now splits his spare time between London and Scotland, wherever possible raising money for Macmillan Cancer Support and spending time with his family.