The chance to question BBC chairman Michael Grade over lunch is an opportunity anyone with an interest in the media industry would relish. So senior managers from various businesses were glad to accept an invitation to quiz the former Channel 4 chief executive at one of August Equity's Deal Clubs.
One person to question Grade - who as controller of BBC One launched EastEnders but controversially dropped Doctor Who - was Jimmy Mulville. A former BBC radio producer, Mulville is now managing director of independent television production house Hat Trick Productions, a company thathas benefited from private equity backing from August Equity. Its BBC successes include Have I Got News For You and The Kumars at Number 42.
"Michael Grade set out his thoughts about the future of the BBC and a group of very bright, well-informed people challenged him. It was great fun and gave me, as an independent producer, a wider perspective on the media sector," says Mulville.
Mulville believes getting access to big hitters such as Grade is a major benefit of Hat Trick's ongoing relationship with August Equity. Indeed, networking lunches or breakfasts can be invaluable events for any senior manager, whatever their industry. They can be especially useful to those that are unclear as to exactly how a private equity firm can help to take their business forward.
Executives may be some years away from needing funding, but the chance to talk to potential investors and people such as Mulville, who have already negotiated a private equity deal, can be extremely productive. It can help them decide who to talk to and also when to approach them.
In the private equity world, many deals come to fruition two or three years after investors first meet senior management. The theory goes that only when meetings take place without a transaction being at the forefront of everyone's minds can both sides take sufficient time to learn about each other's businesses. For a corporate relationship to flourish there must be a mutual understanding of the needs and the pressures faced.
August Equity investment director, Sam Watkinson, is a firm believer in effective relationship management. "We will spend years getting to know senior managers socially so they understand what we can offer their company. Hopefully, when the time comes for them to be looking for funding, their advisers will allow us an opportunity to work on the deal," he says. "It is then up to us to show we can deliver."
In May, Richard Clough - co-founder of Healthcare Homes Group, one of August Equity's portfolio investments, and the former chief executive of Care UK - spoke at August Equity's healthcare Deal Club, co-hosted by the Corporate Finance Faculty of the Institute of Chartered Accountants in England & Wales. He talked about his experiences building and financing healthcare ventures and private equity's approach to a sector that is coming under increasing public, political and commercial scrutiny.
"Relationships with other businesses in the sector and with private equity firms must be right for all concerned, so research and networking is extremely important," says Clough. "Before we negotiated a funding deal we spoke to many people, including the banks, to find out who we could trust and who they felt would really understand our business."
While informal lunches work on one level, particularly when deciding if two parties can work together, traditional corporate entertaining, now a £500mplus industry, still has a role to play. Bob Cotton, chief executive of the British Hospitality Association, says events such as a cricket test match at Lords can reap rewards for investors and senior managers.
"These events are very important for deal making, but you need the right venue," says Cotton. "Horse racing and cricket are ideal because people are together for many hours and can learn more about each other's businesses. Wimbledon may not work so well because audience noise has to be kept to a minimum."
Watkinson remembers one specific instance when a trip to the cricket paid dividends. "Last September, I was due to have a meeting with the CEO of a software business on the Monday morning of the last Ashes test. I had two spare tickets, so asked him if he would like to reschedule our meeting to the Oval! We had an unbelievable day - and we are now working on a management buy-out of the business," he says.
Whatever the industry, strong business relationships are fundamental to winning deals and securing the best terms for everyone involved. After more than 40 years in the media industry, it is one of the reasons a veteran like Michael Grade is still happy to face his peers from time to time.
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