Our phones have been ringing since January with retail owners looking for directors to take over the leadership of struggling retail companies. Most of these are private equity investors.
They believe there are still opportunities to be had in retail – either to improve the performance of their existing businesses or to buy distressed businesses and turn them around.
The retail sector has never had such a talented pool of immediately available directors to do this task as it has now.
Ten years ago, many of the sector’s leading lights began spotting the opportunities to be had in private equity.
Since Allan Leighton famously “went plural” at the age of 46, there have been an abundance of serial deal-makers in retail. From John Lovering and Rob Templeman with Homebase and Debenhams, through to the likes of David Brock, the former MFI director who has led private equity investments in Phase Eight, Card Warehouse and Jane Norman. And Terry Norris, former head of Ritz video, who has headed The Works, Sportizus and Hawkin’s Bazaar.
The appeal of going into a private equity-backed business is enormous, offering increased autonomy, the chance to pursue an ambitious strategy for fast growth and, of course, the opportunity to build wealth. But it can take up to two years to find a deal – be it a management or institutional led buy-out.
While they are looking, directors can be persuaded to take on other challenges, such as helping turn around a struggling business.
Retail owners are looking for directors who have dealt with businesses in crisis. They want a leader who can be objective and is not afraid to act quickly, who can make cuts and change direction if needed.
These are tough, high-calibre men and women who are unlikely to have come out of a large, slow conglomerate.
I know of people running a slide rule over more than 30 retail businesses in distress. Candidates that are going into these companies, often initially on a day-rate basis as an interim, will have a window of about four to six weeks to decide if the business can make it. Typically half will not.
For the other half, this could turn into the long-term private equity opportunity that the director was initially seeking.
Sally Moulsdale, retail specialist, Directorbank
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