Successful working partnership that achieved its goals
Jun 30 2009 by Karen Wilson, The Journal
NEL’s business investments are all made with a successful ‘exit’ in mind, something which can be achieved in various different ways.
This might be through the flotation of the company, a successful trade sale to a bigger rival or simply through the company performing well enough to repay the investment capital from its own funds.
One such company which took the latter route is Newcastle-based software developer Orchard Information Systems, which worked with NEL between 2000 and 2005, using a series of capital investments to help fund research and development for their market-leading new software solutions.
Having achieved growth of more than 25% in both 2003 and 2004, and with future profits secured on highly successful new products, Orchard had the funds to complete an agreed investment buy-out in 2005.
And it has since strengthened its position as one of the region’s foremost technology businesses, providing advanced information management solutions to the social housing sector.
Having set the company up in 1980, managing director Peter Hunt spotted an opportunity in 1990 to specialise in this market, and successfully established the company therein.
By 2000, Orchard was ready with another product, offering contact management solutions to local authorities.
He said: “We knew it would take time to develop the high-quality specialist products we wanted, so saw the need for longer-term financing.
“Venture capital looked to be the best option, but we found many VCs had very aggressive investment return demands and were less flexible than we needed.
“NEL had a more ‘hands off’ approach – they were closely involved with the business, and we benefited from having an experienced NEL representative on our non-executive board, but we were essentially allowed to get on with making the business a success.”
Barrie Hensby, chief executive at NEL, added: “Orchard’s business proposition was well-founded, with excellent products in a strong market position amongst the ‘hype’ of the dotcom boom.
“They provided us with an excellent investment opportunity, and it was very pleasing to see them fulfilling their potential to become one of the most respected firms in their field.”
Peter Hunt said: “NEL’s backing enabled us to move the business up a level – I would recommend VC as an option for growing businesses in the position we found ourselves almost 20 years ago, but would advise they choose their investor carefully.
“Achieving the right chemistry is crucial to the success of any investment. You have to feel comfortable that the organisation you choose suits your ways of working and that they have the right skills and experience to contribute to your development.
“We were pleased to find just such a partner in NEL and are very happy to have achieved what we all set out to do.”
