Pub sale specialist calls time on downturn: Mary Wilson visits the counter culture of the drinks trade

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PUB DEALS such as last week's pounds 736m agreement between Scottish & Newcastle and Grand Metropolitan make the headlines. But behind the scenes are several specialised companies that deal with the sale and purchase of the UK's more than 78,000 licensed premises.

The Business Sales Group, one of the top companies, is celebrating its tenth year in the business and Tom Gill, its managing director, hopes that the next decade will be less rocky than the last.

The problem with specialising too much is that when you reach saturation point in your market there is nothing else to do except to diversify - and that is when mistakes are made.

Mr Gill nearly came a cropper in 1991 when he did just that: he bought Taylor National, a nursing and residential care home agency, just as the market went into a nose-dive.

'We have learnt a lot from that episode,' Mr Gill says. 'I still would like to diversify again; but I will make sure that I know more about it first.'

Mr Gill, who started out as an accountant, used to advise on buying and selling restaurants.

'There was no-one around at that time to give advice on acquiring premises or how to put the correct value on them. Then I met a chap who wanted to buy some pubs and needed to find out how much he should pay etc. After three years of doing this on an ad hoc basis, The Business Sales Group was born.'

So why is dealing with victualling premises quite that specialised? 'You have to be able to value a pub correctly, and each one can differ hugely around the country, depending on its prices, clientele, turnover and protections,' Mr Gill says. 'A non-specialist might not appreciate what the maximum value is.

'And the market is changing all the time. Although the olde worlde country pub will always have its place, many of the independent brewers are looking to larger, lighter premises which concentrate on service and choice.'

The Monopolies and Mergers Commission's report on pubs in 1991 did little to increase the Business Sales Group's business - and last week's sale of GrandMet's Chef and Brewer pubs would have been too grand. But the development did produce a little welcome trade, since it increased the number of pubs going into the market.

'Most of the business was done through the boardrooms, exchanging a pub with an independent brewer for a mixture of cash and supplies,' Mr Gill says.

However, the development also depressed prices at a time when they were dropping anyway. 'It certainly had a negative effect on the private owner, because so many were suddenly dumped into the market by the big brewers,' he adds.

Mr Gill reckons pub ownership used to change, on average, every four-and-a-half years. 'The greatest reason for selling,' he says, 'is marriage break-up.' But with values depressed, over the last couple of years most landlords have just hung on. This, combined with the decision to buy the nursing home agency, caused the company's turnover to drop dramatically in 1991 from pounds 2.25m to pounds 1.6m.

The current turnover is pounds 2.5m, based on about 300 transactions. But, with four of its five large independent clients being floated successfully last year, Mr Gill has high hopes the company is over the worst.

'The market has grown', he says. 'We had a number of clients who just went away or went bust, but these are beginning to come back as more independent groups start to expand and there are several new entrants in the market place.'

(Photograph omitted)