A modern fairy story; Hedra, VT, Mouchel, Babcock…etc

Once upon a time, a small consulting firm called Hedra did a lot of work for the UK Government and got to be quite big.  Then one day a large French firm came along and said to Hedra’s owners, ” zoot alors, nous sommes  Mouchel, we design, build and maintain things and we know rien de management consulting,  but we like the idea of having smart British people in suits join our compnay, so here’s lots of money  for your firm”.

But after another couple of years, a nice UK company called VT Group, that used to build ships but sold that business to a really huge company called BAE Systems, (because they thought building things was old fashioned and wanted to become an ‘outsourced service provider’) decided they really liked French people so said they wanted to buy Mouchel.  “Go away VT people” said Mouchel.  “Your offer insults us.  We spit at your pathetic 260p per share.  Your mother is a hamster and your father smells of elderberries”.*

So VT was very cross about this, and thought about shouting back at Mouchel, but decided they would be nice people instead and said, “OK, let’s call it 294p if that’ll make you happier”.

But just as they did that, another big firm called Babcock, who everyone had heard of but no-one really knew what they did, came along and said in a big deep voice, “Ho ho ho, we’re going to eat YOU up, VT Group” and tried to buy them!  No-one could quite see why, as VT had spent ages getting out of the business of making things which seemed to be what Babcock did.  And VT was very cross and said “So what shall we do now”?   Just then, an old lady in a long black cloak rang the door bell, and delivered a very old lamp containing seven magic beans...(to be continued.)

The moral of the story is this; firms are beginning to position themselves for a new world of Government spending constraints.  All of these organisations have the government as a very major customer; and all are wondering I suspect whether post election is going to bring hard times or great new opportunities.  Acquisitions and mergers will they hope give them the critical mass to survive; especially if times get tougher.  Expect more of this in the months ahead.

* copyright Monty Python

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