Research from private wealth law firm Boodle Hatfield reveals that ultra high net worth people (UHNW) are increasingly taking the lead role in UK private equity deals.
The firm reports that there were 18 publicly disclosed high value private equity deals where UNHW individuals were listed as the lead or one of the lead investors in 2019, following 21 similar disclosed deals in 2018. UHNWs for this research were defined as individuals with investable assets of at least USD30 million.
Boodle Hatfield says that these investors are often people who have made their fortunes by establishing and building businesses themselves rather than by inheriting wealth. These UHNWs are often looking for a second opportunity to exercise their entrepreneurial skill following the sale of a previous business, rather than go into a long retirement, the firm says.
The firm adds that UHNWs often acquire businesses in industries they know well, with the aim of using their knowledge and experience to grow them more quickly and generate greater returns.
Many of these serial entrepreneurs specifically seek the challenge of buying and turning around businesses that have encountered difficulties.
It is also common for UHNW investors to purchase ‘trophy asset’ businesses that align with a personal interest, such as Swiss medical device entrepreneur Hansjörg Wyss’ purchase of the Glenturret whisky distillery, alongside luxury goods business Lalique.
Another attractive ‘trophy’ purchase for UHNWs is football clubs, with deals by private individuals for Blackpool, Huddersfield Town and Hibernian football clubs all having been completed in 2019, the firm says.
Richard Beavan, Partner at Boodle Hatfield, says: “UNHW serial entrepreneurs are increasingly playing a leading role as a source of private capital to fuel acquisitions and investment. Their combination of substantial investable capital and expertise in building businesses means many of them see direct investment as a very attractive option.”
“These sort of deals are not just good for the individuals involved. It’s much better for the economy if UHNW entrepreneurs continue investing, mentoring and growing businesses, rather than simply retiring to enjoy their wealth.”
“A UHNW entrepreneur purchase of a business in difficulty can be particularly positive for the company acquired. Having an owner with experience in the sector and a real commitment to turning the business around can give a struggling business a good chance of recovery.”