When I was young I once put my head through the stair bannisters and couldn’t get it out. What followed was an agonising and humiliating experience culminating in my having to be rescued by those that knew better than me not to do such a silly thing.
The lesson that I learned was not to do it again. And to this day I have never been in the slightest bit tempted to venture my nut anywhere that railings or bannisters could manage to get the better of me or my pride.
Sadly, not everyone learns by their mistakes it seems. Indeed the news today that BC Partners have ventured to purchase Foxtons (the London estate agent, apparently) for a second time, rather proves so.
In 2007 Foxtons’ then owner, Jon Hunt, sold control of his business to BC Partners for £320 million with exquisite commercial timing. Because this deal fast became historically notable due to the fact that the property market collapsed just minutes after the ink was dry on the contract, the resulting unserviceable tower block of debt being largely written off by the banks that financed the deal. As has become customary of things credit crunch since, those banks ended up owning a large slice of the business that they funded. Accidentally.
But despite mass losses and an indebtedness that a small African country would favour any day, Foxtons has performed well of late. It’s latest profits (2010) show a sector busting £35.4 million and it now has 32 offices adorned with mini driving suitsters.
So with the cognitive recall of a pond full of goldfish, BC Partners has now purchased the stakes previously retained by Bank of America and Mizuho. With 2000 UK estate agency branch offices having closed their doors since 2008, domestic economic uncertainty and European sovereign defaults in prospect, it is surely once again a very foolish brave move.
I hope that their latest foray works out this time yet it’s a wonder that the banks so obviously view the credit worthiness of a defaulting private equity firm with rather more optimism than they do the struggling consumer. Interesting that…
Beware those bannisters.