Posted on Wednesday 8 May 2013 by Ulster Business

QUINI

John McGuckian, Paul Millar and Tom Smyth from the QUINI steering committee.

What happens when you put 70 bankers, lawyers, accountants and fund managers in a room together?

It might sound like the start to a bad recession-themed joke, but that is what the organisers behind a new informal networking event for the advisory community wanted to find out.

Quarterly in Northern Ireland (QUINI) held its first meeting at the end of April, an invite only event that consisted mainly of CEOs, Directors and Partners from the main law firms, banks, accountancy firms, corporate finance advisers and investment providers. The meeting had no formal agenda and no speeches but was instead billed as a chance for high level decision makers to network over a glass of wine and food with the key aim of stimulating deal activity.

It is based on the Quarterly in Dublin (QUID) model created last October by Tom and Pete Smyth from Broadlake Capital, a €100m family office fund which invests in growing companies in the Republic and Northern Ireland.

"The rationale behind it was to create a quarterly networking event which would stimulate dialogue between the key people involved in deal-making activity," explains Tom.

"The rate of change is such that it is important for people to keep in contact. US, European and UK investors are coming to Dublin on an ad hoc basis so we wanted to create an event that would reward them for taking a flight by letting them meet key people in a friendly environment and engage in dialogue that might lead to deals."

The first meeting in Dublin attracted 60 people, the second 80, including representatives from a number of overseas investment houses. Feedback to date has been very positive.

"What we found in Dublin is that while a lot of people know each other they maybe haven't talked in a couple of years because they've been working on different sorts of projects. This is an opportunity for them to reconnect," says Tom.

"If it is quarterly it is an event people can put in their diary in advance and if they are coming in from elsewhere they can tack on meetings to make it worthwhile."

Tom has joined Craig Holmes from corporate finance advisers Horwood Neill Holmes, Paul Millar from Growth Loan Fund managers WhiteRock Capital, and John McGuckian from solicitors Tughans on the steering committee for QUINI.

The independent committee have ensured there's no agenda, no branding and nothing corporate – a key factor in getting competing firms to attend.

Craig Holmes, who attended the Dublin meetings, says it is for those who are keen to promote M&A and investment activity and won't just be a talking shop.

"We decided this was something we should extend to Belfast because it would not only be good for Northern Ireland business and help grow the private sector, but also good for the guys themselves to meet international people in their sector," he said.

"The idea is that it is very focused so there are no companies there. One of the things advisers are distracted by at other events is the companies being there, because they all want to talk to potential clients. But whenever you get the advisers and funders in a room themselves and talking about what's going on in the market, and talking about the companies, that is a powerful tool."

Like the Dublin events the first QUINI meeting saw corporate finance advisers, funds, banks, Invest NI, university spin out funds and non-executives in the sector attend, as well as some investors and advisers from Dublin and GB who see Northern Ireland as an un-fished market with a number of attractive businesses.

"We're not expecting 10 deals to come out of this in the first month, it is about planting seeds, getting people talking to one another and then letting them join the dots. It may take time but it is better to at least make those connections," says Craig.

"If one deal happens in the next 12 months from that initial meeting, from people exchanging business cards and then going for a coffee, that would be a success. Hopefully there will be more but just one deal would justify it," he adds.

"It's not quite speed dating but at the Dublin event I went away with 20 business cards from people I didn't previously know. You can't do that at a black tie event."

THE RIGHT TIME

Paul Millar from WhiteRock says it is timely to hold such an event now because there are tentative signs M&A activity is picking up, despite the ongoing economic gloom.

"All the advisers are starting to see a bit of a pick up in confidence from companies and this is designed to help stimulate that. Everyone is looking at how they can get involved in the next deal," he said.

"There have been a number of deals done in the last 12 months where private equity has come into Northern Ireland. Companies here are attractive because of the strength of the management teams and the lack of available development capital over the last few years. Even with the new Invest NI funds addressing that there will always be deals that will attract outside players who are here to do one or two deals a year."

Millar cites the interest in the Growth Loan Fund since it launched in September as evidence of potential activity. It has approved 30 loans since then with a combined value of £7m and has another 20 of similar potential in the pipeline.

Of the 200 loan applications WhiteRock has received, 70% of companies have been trading more than five years and 25% are looking for more than £3m. A third of those applications were rejected, but Millar says that doesn't mean they weren't suitable for equity funding.

He believes the recent £6.6m investment in Seven Technologies by YFM Equity Partners proves there's interest from outside investors.

"There is certainly demand out there for growth capital, we're seeing that first hand. The most interesting thing is the size of companies – it is probably bigger than we expected, right up to £25m turnover," he said.

"Companies are potentially either reluctant to ask the bank because they know the answer or they are exploring other avenues. The penny is starting to drop that you can't fund your business just through bank funding."

Millar too hopes that getting senior people together in a relaxed setting will help create confidence among the advisory community about the potential for deals.

"Most events you go to you are sitting at a table for the vast majority of the evening and then maybe networking happens at the end where people just go and speak to others who they know. If people come with no agenda other than to be upbeat and prepared to talk about the type of deal activity they are currently seeing it will generate discussion and hopefully stimulate activity."

COMPETITION

Of course as anyone in Northern Ireland's relatively small advisory community knows, competition between law firms, banks and accountants is fierce.

But bringing those people together is not something that John McGuckian from Tughans has any reservations about, noting that nothing confidential is expected to be discussed.

"Every other lawyer in the room, Tughans will have worked with on the other side of a transaction," he said.

"But we have to realise we're in this together. We're trying to get deal flow going together and if another law firm's client is buying a business it may very well be my client – you have to think like that," he adds.

"We want other law firms to be busy because it makes us busy. Instead of a cloak and dagger approach this sort of event and the opportunity to discuss at a high level will hopefully encourage that. If everyone's busy, everyone's happy."

McGuckian said that having worked with Broadlake Capital in the past it made sense to hold an event in Belfast which allowed open and frank conversations that would allow knowledge to spread and ultimately benefit clients.

"It was refreshing to hear how it works in Dublin, that it is an open forum for people to speak, so it is not just client focused and lets people know what's out there," he said.

He too believes that, with investments still happening in good companies and new internal funds from Invest NI in the pipeline, the advisory community needs to do more to encourage confidence.

"We have been busy at Tughans over the past 12 to 18 months but there isn't that same chunky deal flow that there once was," he adds.

"However, both venture capital funds and private equity houses have money and are looking for good opportunities. It is about how we promote and how we sell ourselves and our businesses and the management teams here."

It's a statement that Tom Smyth agrees with. He is now spending two or three days a week in Northern Ireland looking at potential investments.

"We think there are great opportunities here to invest in businesses that are forward looking, that have exportable skills and services and products that make it a great market to invest in," he said.

"We partner with SMEs and entrepreneurs who we feel we can offer operational support as well as financial backing. We are a family investment group and we look to invest in SMEs, which in Northenr Ireland are typically owner managed family businesses, so we've found our message has been positively received by the business community," he adds.

"The more time we spend in Northern Ireland the more we realise there are a number of companies in niche sectors like manufacturing, engineering, aerospace that could take on the world."

 

 

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