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Buy-out Track 100
21/02/2007. Source:Fasttrack.
 The Sunday Times Deloitte Buy-out Track 100 league table sheds new light on the private equity industry's investments. The profit growth of investee companies is analysed, rather than the usual focus on deal completion or the private equity investors' internal rate of return.
The new league table ranks Britain's 100 private equity-backed mid-market companies with the fastest-growing profits (EBITDA) over two years to their latest accounts.
Overview of the 100 private equity-backed stars on the league table
The 100 companies on the league table have combined profits of £1.2bn, employ 95,695 staff and have created more than 18,000 jobs over the past two years. Growth rates range from 138% to 14% a year. Nearly half (45) of the private equity-backed companies on the table have EBITDA of more than £10m.
A third (34) of the companies were bought by private equity houses in 2006, and four changed ownership in the first six weeks of this year.
Half (52) of the companies are the result of primary deals, including 6 public-to-privates. Nearly half (48) of the companies are the result of secondary (41) or tertiary (7) deals.
Sectors: Consumer and business services dominate the league table
Number of companies in each industry
Consumer-oriented businesses head the list of sectors with 22 entrants. Niche consumer brands include Jimmy Choo (No 21), which has grown profits 56% a year to £4.1m in 2005, and was recently bought from Lion Capital by Towerbrook; and Fat Face (No 14) with 67% annual profit growth to £16.9m in 2006, backed by Advent International.
Business services are also well represented with a total of 20 companies on the table. Bezier (No 62) designs and makes in-store product displays for clients such as Boots and Asda. It is backed by MidOcean Partners, and has grown profits 28% a year to £9.4m in 2006. Titan Airways (No 16) provides airfreight services to clients including Royal Mail, and is one of the oldest deals on the table, as a result of an investment by 3i in 1995. The company has grown profits 65% a year to £8.9m in 2006.
The table also features 14 life sciences and healthcare firms, including Oxfordshire-based Alliance Medical (No 50), owned by Bridgepoint, which operates a fleet of 130 mobile and stationary MRI and PET scanners, and which has grown profits 36% a year to £27.6m in 2006. Affinity Healthcare operates two psychiatric hospitals in Cheshire and County Durham, and was bought by Duke Street Capital in 2004. It has grown profits 105% a year to an annualised £6.1m in 2005.
Alchemy Partners, Barclays Private Equity and Close Brothers Private Equity each have four investee companies on the league table.
The 10 Biggest
Companies with profits of more than £50m are featured in a separate table of The Sunday Times Buyout Track 10 Biggest private equity-owned companies with the fastest-growing profits.
This 10 Biggest table features Saga, the Folkestone-based provider of services to the over-50s, which is owned by Charterhouse. It has grown its profits 20% a year to £135.9m in 2006, and is currently rumoured to be seeking a sale or a flotation. Also included is The Tussauds Group, headquartered in Surrey and owned by Dubai International Capital, which runs the London Eye, Warwick Castle and the six Madame Tussauds wax museums worldwide. Its profits grew 27% a year to £70.6m in 2005.
How the research was compiled
The league table is compiled by Fast Track, the Oxford-based independent research and networking events company that has compiled league tables in The Sunday Times for the past 10 years. Fast Track's league tables rank Britain's top-performing private companies, ranging from the fastest-growing to the biggest.
Fast Track is planning to extend its research on private equity-backed companies across Europe; and is looking to recruit an experienced director of research and researchers to help conduct this extensive project.
The research for Buyout Track 100 involved looking at some 2,000 private equity deals to come up with our final 100 companies that met our strict criteria for inclusion (see criteria below). We interviewed senior directors from 95 of the final 100 firms over the telephone, and conducted research visits to 52 of the final 100. All but 11 companies signed off on their financials featured on the league table.
There are a number of limitations to the research. It is based on historical two-year profit growth up to companies' latest accounts, and therefore carries the caveat that the companies' performance will have changed. The most recent financial information for 42 of the companies on the league table relates to their financial year ending 2006, and the remaining 58 are based on 2005 accounts.
The ranking principle of the league table - compound annual growth rate (CAGR) - favours companies that had relatively smaller profits of just over £1m in their accounts three years ago.
In compiling the research, we had to contend with many challenges and may have omitted some companies, particularly as a result of newcos being set up, and buyouts of divisions for which we could not get access to accounts for the previous three years. We also could not include companies that started from a loss in the base year, or companies that have been sold and are no longer backed by private equity.
Finally, even if a company is turning in an impressive double-digit hike in profits it could still be underperforming if it is not meeting the targets forecast in the pricing of the original deal. The price a firm is bought and sold for is clearly more important for investors than interim performance.
The full research findings revealing the No.1 companies on both the mid-market and the 10 Biggest league tables were published in a special 16-page colour supplement with The Sunday Times business section and on www.fasttrack.co.uk.
This research was carried out by Fast Track between 1 June 2006 and 15 January 2007. The majority of companies were interviewed by telephone and/or visited by the research team. More via www.fasttrack.co.uk
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