The squeezed middle is still looking for growth

AT THE top end of the SME market and in the mid-market private businesses have a different set of issues to start-ups and large companies.

Yet those issues are often overlooked as many advisory firms, funders and investors focus on firms at the top and bottom of the food chain. In political phraseology we are talking about a ‘squeezed middle’.

But the more enlightened professional services businesses – such as accountancy and advisory firm KPMG and law firm Mills & Reeve – realise that many of our most ambitious and dynamic companies fall into this middle ground and it was to discuss their ambitions and frustration that they came together with a number of such companies at KPMG’s One Snowhill headquarters in central Birmingham.

The assembled group first of all considered options for growth.

Charles de Rohan from Birmingham-based biotech company The Binding Site said: “As with any business you look at what you are good at and see whether there is growth potential there.

“It does depend on the market you are in. The marketplace for us continues to expand in terms of the diseases we are looking at. It is a question of continuing to grow that and looking for adjacencies.”

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In terms of growing through acquisition, de Rohan said: “There is a lot going on. The appetite for some risk has come back. Some private equity firms are outbidding the corporates.”

Craig Wright of Burton-based Wright Industries – which has invested in a number of manufacturing businesses said that, to date, their growth has been organic.

“But it is advisable to look at other companies as a means of growth,” he said.

Deborah Leary OBE, who set up and runs forensic service group Forensic Pathways from central Birmingham, said: “We’ve gone for organic growth. We have debated about taking it to another level but the technologies we have got have started to fly and we want to look at these before we expand.

“We have got an open mind on things such as seeking a listing but within three months we could be in a very different position.”

Andy Lyndon of private equity firm LDC revealed his firm has 30 Midlands businesses in its portfolio.

“We look for a strong organic play and if we can enhance that through buy and build then fine but it shouldn’t just be acquisition-driven growth,” he said.

Continue reading on page 13 of our Driving Private Business supplement

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