A Growth Strategy Success Story: De Vere’s Sale of Hotel Portfolio to US Investor

It has been recently announced that De Vere, the UK hotel and leisure group, has sold a portfolio of hotels to US private equity firm KSL Capital Partners.

The deal has generated over £1bn of sale proceeds and consists of all 25 of De Vere’s existing Village Urban Resorts in addition to a further 3 resorts which are currently under construction.

The sale follows the implementation of a clear growth strategy by the group’s board and executive team, which it referred to as its “build and crystallise value” strategy.

De Vere attributed part of the success of the disposal to the support it received from Lloyds Bank from late 2011, which enabled the group to build value within its businesses resulting in a premium price on disposal.  In discussing the deal, De Vere said that the sale price “represents a vindication of our strategy and the Lloyds Bank’s confidence in the company”.

The success of De Vere’s disposal of its Village Urban Resorts is a prime example of how the implementation of a growth strategy can have a significant positive effect on a business.  It has also shown that by having a growth strategy in place, this can signal to a lender that the business has a clear vision and direction, which in turn can improve the lender’s confidence in the business and positively impact upon its ability to provide financial support.

There are a number of different types of growth strategies which businesses can adopt.  The two main types are:

  1. Organic growth strategy –  in which the business focuses on improving the productivity of the organisation through ways such as training and developing staff and increasing customer loyalty to increase the turnover and profits of the business.
  2. Acquisitive growth strategy – using this process, growth is achieved through the purchase of another, usually similar, business.

Both strategies carry different legal, financial and tax considerations and so it is important that suitable advisors are engaged to assist both during the selection process and the implementation of the chosen strategy.

For further information and legal advice regarding the implementation of growth strategies to develop your business, please contact Pauline Rigby, a partner within the Forbes Solicitors’ Business Law team, on 01254 222357 or via email.

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