The region's businesses should look beyond just finance if they want to secure long-term success for the West Midlands.

That was the call yesterday from one of the West Midlands' leading industrialists and entrepreneurs, David Grove.

He hit out while addressing directors, corporate financiers and advisers from across the region at a breakfast meeting held by sales finance providers Liquidity. The event was the first of two to be held in 2007, with the second to be addressed by Jon Moulton of Alchemy Partners in September.

Mr Grove, who is chairman of Grove Investments (GIL), said the region's economy was best served by deals where investors were prepared to take a longer-term view to meet the objectives of the business rather than making a quick profit.

He said: "Since 1991, at GIL, we have invested in a range of businesses where we have paid good prices, but where our calculations have been based on long term expectations of strengthening the business and the resulting enhanced shareholder value rather than making a quick profit."

In recent months, private equity has been widely criticised, partly for the short term view that often appears to be taken by such investors.

And Mr Grove sees real value to the region in the longer term view.

He said: "By working with companies that have a strong management structure and allowing managers an equity stake in the business, we have driven motivation and a desire to succeed even in the most diverse areas of business."

Mr Grove believes that the high profile, high value deals have encouraged vendors of many mid size businesses to look for ever higher prices.

"Expensive deals are not in the interests of the economy of the West Midlands, nor of managers, employees or other stakeholders," he cautioned.

"Only exiting vendors get the benefit. Purchasing businesses with over-inflated values puts additional pressure on the investors to sell the business more quickly to achieve the return to justify the outlay.

"We need to look beyond to the long term future and to shareholder value growing through investing in key areas where markets are strong and where a competitive edge can be built and secured." Mr Grove is also the chairman of Hill & Smith Holdings which has received a sustained boost to its fortunes since his involvement began in 1998, with the share price increasing from 35p to 372p over the past decade.

Innovation had been a key driving force behind the group's success, said Mr Grove.

"We focused on targeted acquisitions and investment in businesses supplying strong markets, where we already had a leadership and where there was the prospect of adding more value."

A similarly targeted approach had also been taken at GIL, setting it aside from other private investment organisations.

"Equity investment is certainly about opportunism but should also be about having the foresight to look ahead to see what the potential is for the business," he said. David Totney, chief executive of Liquidity, who chaired the meeting, said: "Entrepreneurialism in the West Midlands is succeeding but we can achieve more.

"Whether providing funding in the short or long term, understanding the objectives of a business and the nature of finance it needs is crucial, particularly in challenging sectors such as manufacturing."