Page 307 - James Caan - The Real Deal

30 · Private Equity

can flourish. Assembling a team was really enjoyable, and I was in
my element.
At the same time, one of my YPO contacts called me: he knew a
company with a £160 million turnover that was having problems
expanding and could use some help. As I wasn’t yet working full
time, he thought I could give the MD a hand. The company was a
financial services firm that operated in the government receivables
sector. What this means is that they subbed companies that were
waiting to be paid by the government for services they were
providing. Say a nursing home was waiting for payment from a
local authority for providing care but there was a lag between
invoicing and payment: the receivables company would make the
payment and claim the money back from the local authority. It’s
similar to factoring, and they take a small percentage of the bill as
their fee. So if a nursing home was waiting for £1000 to come from
the authority but it would take six weeks to arrive, they could go to
the receivables company who would give them the £1000 less the 2
or 3 per cent fee immediately. For a lot of businesses, having to
wait for the cash is a higher price to pay than their modest fee.
I spent a couple of weeks with the MD getting to understand his
business and how they could grow and get round their short-term
problems. I found myself getting really quite excited about a
business where the income is pretty much guaranteed as his client
was ultimately the government: his only real problem was how to
find more clients. Sales was something I understood, and all he
needed in the short term was cash, so I offered to invest: Hamilton
Bradshaw had its first deal.
It was exactly the kind of opportunity I was looking for: other
private equity firms took too long to make decisions as they had
investment boards to report to. I just had to make my own mind
up and if I could move quickly I could get a very good price.
I liked the business precisely because I knew that so many
companies have cash issues. Ninety-nine per cent of companies

297