AEA Technology plc was privatised from UK Atomic Energy Authority in 1996 as the last privatisation of the Conservative government. The underlying objective for the senior managers in UKAEA had been that the ‘commercial’ part of the business should be set up as a single independent entity. They did not want the various divisions and departments being sold through trade sales to a range of existing companies, and they succeeded in that aim. The resulting organisation included a very wide range of technologies spun off from the civil nuclear programme. These served an equally wide range of markets. It included a few businesses which provided engineering and technology services to the nuclear industry.
Following privatisation, however, a number of new factors came into play. On the one hand, investors were enthusiastic about a software-based business, CFDS, which led to a push to grow it through acquisitions. At the same time they were uncomfortable with the nuclear services businesses. They thought these might expose them to contractual risks involving nuclear decommissioning which were impossible to quantify. The business did not grow as fast as had been hoped. The civil-service-style final-salary pension scheme which had been set up was soon in deficit. Cash was tight. In these circumstances, we decided to sell nuclear and other ‘non-core’ businesses. This would generate cash which could be used to fund acquisitions as a way to square the circle.
Privatisation had left AEA Technology with largely civil-service terms and conditions of employment. This meant that employing experienced people to deliver the acquisition and divestment projects was unaffordable. After successfully completing the first nuclear service divestment I was asked to lead the programme.
Over the course of some 6 years, I was responsible for some 30 deals. I developed AEA’s approach to acquisition and divestment projects. This included counterparty search, initiation and negotiation, due diligence, project management, and separation or integration. I had a core team of only 3, and had to use influence to coordinate virtual teams across the business.
On smaller transactions I trained up others to do the bulk of the work while I retained overall accountability. I negotiated most of the acquisitions involved in building a niche rail consultancy that grew to a turnover of almost £100m. I led the simultaneous divestments of two nuclear services businesses with a combined workforce of about 1000 people. I managed the separation on divestment of a bundle of 9 separate businesses. Despite the UK offices of these mostly shared sites, systems, records, etc with retained businesses, virtually no issues arose. As well as working in the UK, I completed transactions in France, Germany, Netherlands, USA, Canada, Hong Kong/China and Japan. Transactions were inherently high-profile within the company. Delivering some was also critical to the company’s future, as they helped to avoid a profits warning or even insolvency.
Keys to success
- Clearly-defined objectives and clear negotiating authority
- Good communications with stakeholders
- Engaging with unions as early as possible
- Keeping promises to build trust
- Understanding from the outset what could adversely affect divestment value.
- Planning the sequence of flow of information on these topics to bidders from the outset so as to minimise any value impact
- Good processes which could be effectively delegated without losing control of key decisions
- Attention to complex details as well as the big picture
- Planning carefully across all areas, but being willing to change the plan as circumstances changed