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CIMA where business + finance meet

Post deal profits up from £120-£300m I think CIMA people are very interested in business itself: the excitement of how to run a commercial organisation; understanding the market and the competition and responding to it in a dynamic way.

David Tyler, FCMA former finance director at Great Universal Stores The takeover of UK catalogue retailer Argos in 1998 was instrumental in turning around the fortunes of home shopping giant Great Universal Stores (GUS). The £1.7bn deal went ahead after extensive analysis of the UK retail sector carried out by then finance director David Tyler FCMA and a team of finance professionals, many of them, like Tyler himself, CIMA qualified. While GUS was cash rich, its board was concerned that its home shopping businesses were in decline. The management team was looking for a new business to help secure growth. Tyler comments, ‘CIMA people were particularly suited to this task; they are orientated to look to the future and to see how financial information and an understanding of the business from a financial point of view can help management make decisions about the future. Exactly the skill set that was needed at the time.’ Tyler and his team investigated potential targets utilising many management accounting tools and techniques. Their focus was on assessing strategic strengths and weaknesses of target companies as well as the obvious hard financial metrics. When Argos emerged as the frontrunner, GUS made two approaches, both of which were rebuffed.

In 1998, GUS launched a hostile takeover bid, leading to a major public battle that it eventually won. Tyler says the deal would not have gone ahead without the sound pretransaction analysis that the team carried out. ‘The board of GUS would not have taken the bold decisions that it took to acquire this business and go after it in this battle if it had not had a reasonable amount of confidence in the assessment of the business that we carried out,’ he says. In Argos, GUS acquired a ‘growth engine’ – a company more in tune with consumer trends than GUS’s legacy businesses. Thanks to the management accounting skills of the team, costs such as buying, IT and finance were consolidated and an overhauled Argos and GUS management team helped grow profits at Argos from £120m to £300m over five years, significantly boosting the group’s bottom line. ‘I think CIMA people are very interested in business itself: the excitement of how to run a commercial organisation; understanding the market and the competition and responding to it in a dynamic way,’ Tyler says.

CIMA value: Argos takeover Evaluating Argos’s business prior to a £1.7bn takeover. Post-deal profits at Argos upped from £120m to £300m. T. +44 (0)20 8849 2251 E. cima.contact@cimaglobal.com

www.cimaglobal.com

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