As online auction group Grays Australia prepares to merge with ecommerce platform DealsDirect, a number of former Grays employees are seeking to carve out their own patch in the asset valuation and sale market.
Backed by US valuation and liquidation giant Tiger Capital Group, local startup the Tiger Asset Group is hoping to change the way Australian companies and liquidators sell assets and, in turn, secure higher returns to creditors of companies going bust.
But a war of words has emerged between the two companies, with Mark Bayliss, chief executive of Grays Australia and soon to be chief executive of the newly created Grays eCommerce Group, telling SmartCompany he believes there are some “sour grapes” on behalf of the former Grays staff behind the Tiger venture.
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In response, Tiger Asset Group chief executive Damian McCarthy, who headed up Grays industrial division between 2004 and 2011, says there is “no bad blood” between himself and Bayliss and the Tiger team wishes Grays well in its new venture with DealsDirect.
Bayliss says there will be “limited overlap” between the two companies’ activities, with insolvency a “very small” part of the Grays model, accounting for 15% of the company’s activities.
“They are playing in the insolvency space, we don’t tend to get involved in retail insolvency,” says Bayliss.
Nevertheless, Bayliss says the ex-Grays employees are being “opportunistic” and “a bit cheeky” setting up in opposition to Grays.
“The people who need to be worried are not Grays, but the insolvency practitioners,” he says. “It’s about taking business from them.”
However, McCarthy told SmartCompany his venture is “absolutely” competing with Grays: “But there’s no sour grapes.”
McCarthy rejected any suggestion his team, which also includes ex-Grays employees Steven Lewis and Sue O’Reilly and technical adviser Stewart McGrath, has timed their launch with news of the Grays and DealsDirect announcement.
“Talk about their transaction has been going on for a long time,” says McCarthy. “We’ve organised ourselves and raised funding, and we’ve been out seeing clients this week.”
“We wouldn’t want to be involved in that transaction,” he says. “If you look at the publicly available information, DealsDirect is not a company that is going forward.”
McCarthy says the 15% figure offered by Bayliss relates to formal insolvency activity, “but a whole lot of important work happens behind the scenes [at Grays]”.
But he says there are some clear differences between Tiger and Grays, with capital backing being the standout.
“We have a capital solution,” says McCarthy, who says the restructuring market has changed substantially in the past three years and there is now greater demand from companies and banks for assistance from a firm like Tiger which has deep pockets.
“We’re not trying to upset Grays, we have our own money in this venture and an exciting partner in Tiger US,” says McCarthy. “We want to do something different and we bring a lot of capital and our clients are demanding that.”
McCarthy says Tiger is also hoping to help companies who are not necessarily on the brink of collapse.
“We want to come in a lot higher up the food chain and offer early stage solutions to help avoid the fire sale,” he says.