More Support Required For Aberdeen's Growing Firms
More could be done to support Aberdeen's growing businesses and help stimulate growth, according to a number of industry experts. This news follows yesterday's Business Insider "Deal and Dealmakers" breakfast hosted at The Ardoe House Hotel, Aberdeen, which a team of Eden Scott consultants attended. The room filled quickly with over 400 professionals from the oil and gas, financial services, law, banking and accountancy industries - with an aim to understand the ability and feasibility surrounding buying and selling businesses within Aberdeen.
Given the nature of the energy sector, Aberdeen has been a hub for deal making and hand-shaking for some time now. With the buoyant oil and gas industry, it is widely understood that people and other businesses want to gain traction and invest into this dynamic market.
Alasdair Northrop, editor of Business Insider, provided insight of the recent numbers behind deal making, explaining that every year over 120 deals are made between companies.
How Are Deals Conducted?
A select few companies have established their presence in the market by being able to support and advise successful firms on mergers and acquisitions. One of the most established companies within the Aberdeen market, that specialise in the M&A field, is Simmons & Company International. Managing director at Simmons & Co., Mike Beveridge, discussed the history of deals in the Aberdeen market as well as giving the attendees an overview of the biggest deals in their history.
A crucial point made by Beveridge highlighted that in the current climate it is great to be a seller, however it is a tough time to be a buyer. With extra conditions being implemented by banks after the economic crisis it is much harder to present a strong case to the bank.
Significantly, Beveridge emphasised tax implications that business buyers encounter and he suggested the UK government look to change that as soon as possible to improve the markets across the UK. The bottom line is that it really is a business sellers market, a trend present in Aberdeen, and shares many parallels with the local housing market.
This view was supported by other guest speakers, Doug Crawford (Partner in Dundas and Wilson), Tom Faichnie (Partner in Campbell Dallas LLP), Tom Dinozzi (Group Head, M&A in Wood Group) and Mark Kerr (Director in LDC). They discussed their views on the oil and gas market, and the importance of deal making in this industry.
but also rightly it was pointed out that with increasing number of deals other factors also need to improve. The perfect market conditions may never exist in full, but the sector has come a long way, and will continue to do so as technologies improve to maximise the North Sea's full potential.
What Needs to be Improved in Aberdeen?
One of the main topics on everybody’s mind is infrastructure and the ever-present subject of the "skills shortage". Infrastructure was highlighted as having a pivotal role in enhancing growth and supporting economic development - this was also claimed to be a main attraction for many candidates.
The strong growth we have experienced, as a sector, has put the city's infrastructure under significant pressure. To be able to fill the bridge the skills gap there needs to be a continued open mind from hiring managers to see the potential in other industries and bringing the skills into the oil and gas field.
At Eden Scott we are already seeing this with a number of staff from the armed forces (through the likes of The Careers Transition Partnership) and local police service making the jump into a more lucrative career in oil & gas. Figures issued on March 5 2014 by Police Scotland revealed that Aberdeen City has a total of 522 community and response officers, with a further 18 working in the roads division. More than ever, there is a revolving door of core skills and talent that could easily integrate into oil and gas.
Many private equity investment companies as well as limited liability partnerships do not want to make deals in Aberdeen due to well-documented problems in infrastructure and roads. The main concern for them is the ability to get the return of their investment in the three year plan. The trend is being bucked somewhat with new developments in Kingswells, Westhill's continued swell, and recent developments in Dyce, but with the creation of the Aberdeen Western Peripheral Route and a better road system still not on the immediate horizon - companies' hands are somewhat tied for the foreseeable future.
The industry requires radical changes in the way things are done and each of us feel obliged to help make the change. Like the domino effect - the smallest change may have the biggest impact.