Business Exit Strategy: How Howard Kosky Built and Sold His Company for Millions

0:00James Burtt: What's it like the day after you sell that company for 50 odd million quid and it's not your baby anymore? It is still your baby. That's the bit. It's just it's your baby but you've got a few bob in the bank. You go through like a mini grieving process. For 30 years you've had a routine. You've had a purpose. You're out there in the ether. What the f*** are you going to do? You were our biggest competitor. You owned that space in a big big way. I've never been complacent. I've never taken a view we're doing okay that's fine. That is dangerous. In the US, if you're very successful, people applaud you.

0:30Not here. You become successful. You're very nice for it. If you've got a level of risk appetite, and if you back yourself, there's no better example of you backing yourself putting money where your mouth is. It sends a shudder down my spine. It's an incredible level of flattery when someone says, I want to buy your business. You can't help but get a bit excited because you're going, until it's signed, until that money is in your bank account, that deal's not there yet. You don't have to sell. There is nothing wrong with having a lifestyle company if it can enable you and your family to have a brilliant life.

1:06Don't change. If that's what makes you happy. Being happy I would argue is the greatest one with success. I'm happy.

1:17James Burtt: So as you can see we have got an amazing show lined up but before we get into the main content please, please, please do me a favour. I know I'm begging here but all of the podcasters and YouTubers have to do it. Please subscribe if you're watching on YouTube. And if you're listening on Apple or Spotify, click the follow button at the top right hand corner of your app, and it will mean that you'll never miss an episode of Boo and the Brand, and you'll be massively helping us out as well. Let's get into it. So you built a company over about 32 years. You worked on it, I can imagine, blood, sweat, and tears day in, day out.

1:46James Burtt: What's it like the day after you sell that company for 50 odd million quid and it's not your baby anymore? it is still your baby that's the bit it's just it's your baby but you've got a few bob in the bank and i think it's about getting your head around this is what i'm saying when you if it's when you're exiting yeah taking investment so that bit that bit's an easy bit to deal with i found that bit quite easy to deal with because as far as i'm concerned i'm still the governor i'm still running the company yes i've got i'm no longer the biggest shareholder but it's my bit It's still my business.

2:18James Burtt: Business as usual. I'm still the CEO. Yeah, yeah, yeah. The only thing is you look in your bank account and go, oh, life's a bit easier. Yeah. The hardest day is when you leave, leave. Yeah, which you have done now. I have done. That was the closest thing I can describe that to. You go through like a mini grieving process. Yeah, I've heard this from a lot of people. Because for 30 years, you've had a routine. You've had a purpose. um you know what you're doing each day this is your thing you know you you're completely submerged in your company as a founder as long as if you're properly in it it's it's you you're you're interconnected completely intertwined connected completely but the day where you no longer go to your office and you haven't got that work email address and you don't see the same faces around you and you're out there in the ether.

3:13I said, what the fuck are you going to do? And it's weird. I mean, I was fortunate. The weather was amazing. So I went and sat, found some nice bars on Regent's Canal and spent quite a few days just kicking back. Watching the world go by. Yeah. Do you know what? I didn't realize how much I needed the rest. I didn't miss. Weirdly, I thought I'd miss a lot of it. I didn't miss the listening to a lot of stuff I'd hear daily. but the purpose bit was a challenge. It's kind of what next? You don't want to go again. You don't want to do exactly the same thing again. You know, it's weird because I was offered the opportunity to buy back parts of the business.

3:52Oh, really? About three or four months later. And it didn't take me more than 30 seconds to go now.

3:58James Burtt: Really? Yeah. What was it about stepping back into that that you were so vehemently against in such a short period of time? Especially when you thought you'd miss all that sort of like daily buzz of of the act i think having had the break um and gone through that process of the ebbs and flows emotionally of well now what i kind of very old school did a list i've got one more chapter in me h what do you not want before what do you want oh what were the things that by the end of a week you go fucking hell not this again um yeah and and what i realized i i describe in life you've got two types of people you've got radiators and drains i love being around people to radiate i want to be around people that lift to see positives that are upbeat because there's a lot of life to live i love life there's a lot of life to live yet drains are noisy so when someone knocks on your door james you got five minutes mate you got five minutes it's never i've got great news that so true that you got five minutes is a little dig into the armor where you've you empathize be compassionate you obviously you care about people because you're in a people but you're in a service you're in a people-based business but there comes the point where you're just like have i got how many more five minutes have i got to listen to people moaning having an issue with something we're in the context of the world that individual might be really important and i get that which is why you empathize but the reality is in your world you're going that's not a problem but as you as your company gets bigger you get more people knocking on the door for more of those five minutes and you find yourself in a place where you spend a lot of your time just kind of managing people's own insecure emotions issues and you lose the bit that you love doing so the thought of going back in you know when I left there was 250-300 people in the business about 280 where it was you know I took pride I knew I knew the names of most people I used to love what I call walking the floor and whilst it was post-covid a lot of people had to come back in the office at least one day a week two days a week kind of thing but I just wanted to be around people that were buzzing the sort of like their eyes were white everyone was upbeat you know if you said to someone should we do this it wasn't oh it's a friday what's that fucking what yeah and so whilst whilst you know the temptation to on a commercial level to buy the business back perhaps probably at less than what i'd sold it for could be quite appealing the reality of wanting to do the same job absolutely not it was is there part of the um desire that you may have had or that i would perceive i potentially have is it to go back and rescue the thing if you can see it go back if it's not going in the direction that you would have taken and you're like oh actually this feels to me like it's going backwards because a friend of mine's done that with a big restaurant group he's bought back he's bought the whole thing back he's like i can't have this it's his dad's name above the door did you did you have that at all you're like i need to save this or is it you're so far removed from it by this point i just i can't have this for my life anymore i think when you realize how much alive you are having come out the other side of and done a deal the the thought of going back in repeating the stress levels and the strains and the the drained energy the repetition of it as well but it's just a i've got a lot of life to live yeah i want to spend every day i net positive every day i wake up i go fucking result i'm here again yeah we're working we're working yeah there's a lot of life to live i don't want to be brought down i don't want to be drained at all and as you get older you do find your social everything shrinks because you get a little bit more choosy where you spend your time because you're aware of mortality you're aware of how much time you've got fucking time flies by so the it wasn't about it's not about saving anything.

8:13What I'm very proud of is I believe at the point I left the business, it was in a really good place. It wasn't just stress sale. Investors bought into the company because it was still growing. At the point I left, it was still growing beyond that point. Great. What a wonderful legacy. I'm very proud that I can look back and go, I took the business with my colleagues to a certain point and fabulous. But I'm not one of these people that hangs or looks over my shoulder of the past i'm focusing on today tomorrow and the day after what's what's gone is gone i can't you can't you can't change that and i think the danger sometimes you see a lot of it in sport i love the business of sport it's like when a manager goes back to a player goes back to a club for the second time it's a weird one it's like the emotion is there yeah but there's always

9:03James Burtt: the expectation this was the last time yeah yeah can i repeat that success well you're on you're to a hiding for nothing yeah because unless you can excel beyond that but if you left it on a high leave it there yeah just be happy with that or if you left it on a low leave it there as well it's like relationships isn't it it didn't work the first time around ain't gonna work the second time around it's you know so to answer the question it's no it's there was no there was not no part of me that was like oh i have to go back and no new chapter yeah and that's what i said And I didn't rush to do the next thing.

9:38It was like, okay, so I knew what I didn't want to do.

9:41James Burtt: Is it an actual physical list? Have you written down, this is what I don't want? Really? I love that. I like you. I've got a pen. Got all the bits and bobs of technology. There's something about physiologically putting pen to paper that just solidifies it. If it's on the fucking iPad, every fucking device you've got, you've got to find it. Yeah. Whereas in a pad, just turn it. Turn the page. Yeah, got it. And you even know what date you wrote it. Yeah. it i think it's an age thing you know if you said to a 25 year old about a notebook what the fuck are you doing with a notebook it was like yeah he's like whatsapp why are you typing a whatsapp just voice note you know yeah but you know i literally wrote down a list of what do i and it was quite cathartic it was really yeah because you have to be honest with yourself it's pointless doing it and bullshitting yourself yeah there's no point doing that yeah right what do i because I do think I've got a chapter left of me.

10:35You know, yes, I'm late 50s, but I don't feel old. The brain is a lot. The brain is massively alive and fresh and vibrant and it's got a thirst to learn and wants to know more. But what do I not want? I definitely don't want these things. And then it was like, well, what do I want? Well, I want an office. So weirdly, even before I set up the new company, I got myself an office. Did you? Okay.

10:58James Burtt: Because I can't work from home. Yeah. Routine of going somewhere. Yeah. So what I recognized in myself, I need to get up in the morning and go somewhere. Yeah. Not a bar. You know, it was... After the first couple of weeks. After the first few months. But it's like, I've got to go somewhere. Yeah. What area do I want to be? It's got to be dog-friendly. Normally, this is very rare. My dog Lordy, my pal, he was a dog-minder today, right? But everyone knows, the Lordy comes everywhere with me, right? So I need an office that was dog-friendly. sort of 20 25 minute walk from where i live because i don't want to drive again in terms of a commute i like the bus i don't like how anyone knows me knows me in the back of a black cab and it's not a good place to be so just a nice walk fresh air nice office nice vibe around so and and when you get to the point in life where you can make those choices be very clear what you think you don't want what you do want and almost you can manifest these are the bits i wanted and i've got my office so now i've got the office right now i'm gonna do yeah at least i've got there's a hard computer like big computer screen a laptop got my desk diary and it kind of i've got my little comfort blanket around me of the things that i like that i know are my stabilizers almost yeah this is so interesting these things mean you're in Yeah, yeah, yeah.

12:24I'm in control. Yeah. Now what do I do for a living?

12:27James Burtt: So when you go to that workspace or whatever you ended up hiring, and they go, what's the business? So you go, I don't know yet. I'll have a four-man office. I don't know what it's going to be yet. Me and the dog at the moment. Well, I had a registered company name anyway. Right. That I've had for years. So that was the name above the door, as it were. Yeah. But you had no idea. Generally, you had no idea what you were going to do. You just thought, I know that I need this stability, which is a great level of self-awareness by the way i want to go i want to walk lordy for 25 minutes i don't have to do the commute i'm going to plot myself there so day one you you and lordy do that sort of walking commute for the first time do you actually sit in the chair and go oh what should i do now then i did what i call my life admin okay so i put a few computers in there got an it guy i know from outside of work can you network up some machines can you link these this email address this url for me i need to buy a printer so i can because even the home printer it was a home printer scout i need a full-blown if i need to print 30 pages double-sided that's not the one i've got sitting in at home and so i put a tv up on the wall so i've got sky you know sky news bbc news because i'm a news junkie so i just did a lot of the things but then i did life admin because when you having had the same work email address for 30 years yeah you'd be amazed at how much of your life is still connected or working all right well i better start working out where's my gas bill go where's the council tax go you joke you joke there's a lot i bet yeah there's a lot where you suddenly get an urgent you know something or something gets cut off or you get yeah in a post we tried to contact you red letter but it's hang on a second but you do your life admin and you know a few people you know for because for a year i wasn't allowed i was on a gardening leave for a year yeah sure and it was the latter stage of that i've got the office and right now what because the summer months fine but the winter months just nice to be in an office yeah and yeah and i had a few people contact me so okay help us out this help us out with that and you kind of try and then you start to see some opportunities in the market maybe there's this maybe there's that you do a bit more digging and yeah that's you kind of still work out and i'm a massive i love niche businesses i'm a huge huge fan of things that are niche and trying to be specialists in things so rather than go for a massive addressable market i'm a huge fan of right if i think there's a gap there is anyone really owning it does anyone dominate yeah no matter how thin it is as long as there's as long as there's enough money in it yeah sure right i'm gonna own that is that still your methodology now with the stuff you're looking at interesting so when even the class i work with now when the first even a mate is what i say mate you've been a casual environment someone they've got a business and they they allude to you know the market's tough or the thing about saying where have you got a right i say where have you got a right to win forget powerpoints forget presentations where do you know hand on your heart if you went toe-to-toe with someone, you deserve to win that contract.

15:38And it's a well, it's an easy question. It's not difficult to answer. And you don't have to have the answer there and then, but work towards the answer. Yeah, because what you find is, if you're driven by money, if in business someone's driven by money, you can chase a pound or a dollar or a yen or a euro or whatever currency is, and you can potentially lose sight of what your core is going to be because you end up drifting towards what this client's asked if we can do that so you do it but you dilute what you are potentially um and with that whilst you don't think it has a long to become it's a long-term issue it's much easier to sell a business that owns a lane than that one is very wide and generalist

16:27James Burtt: right let's pause there because howard has just touched on a great point i know we're quite early in the podcast, but I want to make sure that we do not miss this point. And it is the power of having a niche or the power of owning a niche. Now, in the space that Howard has operated in, the marketing space, it's so easy. And by the way, I've fallen into this trap myself to become a generalist. You'll find those clients. I've had literally this exact situation happen. Somebody came to me for a podcast. And then off the back of that, I thought, well, you actually don't need a podcast. You need more help with your brand.

16:56James Burtt: So we did some branding work. Then they needed some logos. Then they needed some design. Then they needed some website help. then they need some social media, then they needed some sales support, then they need a CRM building out. Now, you might look at that and go, well, that's a brilliant escalation model, a great way of basically offering more services to a single client. Why would you not do that? But as you become a generalist, you lose that specificity that makes you so valuable. It's why brain surgeons get paid X, Y, Z money, and a GP, a general practitioner, will get paid X amount of money.

17:28James Burtt: The person who is the specialist in the long term will get paid more money for sure. And this is proved to be exactly the point of what Howard's talking about here. It's so easy to spread yourself. It feels comfortable to spread yourself more widely because you think you're mitigating risk. The more shots that you've got, the more chance you've got, as they would say in America, at bat, the more opportunities to hit the ball. Why would you not take that? But actually, it's the exact opposite thing within branding. When you stand for something really specific, then people know that you're the expert and they will pay you expert money for your expertise, become a generalist, and you just end up in a pool with everybody else.

18:04James Burtt: You know, how it had gone from broadcast PR to general PR to CRM marketing to paid ads. Before you know it, no one really knows who you are or what you do or who you do it for. So niching down might feel uncomfortable. I've had this situation loads I've been consulting to clients over the years. They want to go as wide as possible to capture as much of the market as they can out of fear. But you You know what? Sometimes going an inch wide and a mile deep is much more valuable over the long term. So the power of niching, consider it in your own brand of business. Let's get back to it, my friend.

18:37James Burtt: So talking of niche businesses, we're 20 odd minutes in there, this guy's dropping some wisdom, but no one actually probably, apart from your inner circle and people who weirdly know me from back in the day, because it turns out we've got a lot of old connections, we'll know what the business was. So let's, before we talk about what you're going to do now, let's cycle back a little bit so you ran a company called Marketeers for DC which is still a name but I see it it sends a shudder down my spine because at one point you were our biggest competitor for the company the first ever job their first proper job that I ever had you were the biggest competitor and try as we all might and we tried we just couldn't knock you off that perch like that inch wide and a mile deep like you owned that space in a big big way I think over the years there's lots of competitors that came in and tried to have a pop at it but no one dethroned the king of broadcast PR effectively what I thought was really interesting so Mark ZS4DC was started off life as a broadcast PR company working with the likes of Rolls-Royce and big sort of um like health health brands but you would actually within the first sort of two years of your journey you'd already done an exit floated a company been involved in that done a management buy out can you just take us back 32 years if you don't mind reflecting back that far and just tell us about the origin story of how it all started because even the beginning of it i was looking at like the link i was like this is wild tell us about how it all started yeah i mean it's been it's been a eclectic journey uh but but that's that's the energy that's life yeah that's the bit that's learning experiences but yeah i mean the i won't go from the what i did first off as a as a kid you know scrapping about to get a couple of quid here and there but the initial plan was becoming my parents wanted me to become an accountant that was okay council estate how did you get out of that environment needs an occupation um and i was half decent with numbers um that would do then that's all those boxes but in those days secure safe career for life you'll never be out of work and that kind of a job it was safe yeah like that's the only way describe it um i started studying to become an accountant numbers i was you know if you know if you know right read a balance sheet p and l's and that kind of stuff it's it's good grounding anyway yeah sure but accountancy for me i always joke that if i'd if i'd pursued it i'll be in forward open i mean try to find some creative fraudulent way of cheating the numbers it's just the creative brain would always go there's got to be a better way of yeah um but joking aside i just thought no it's not for me um how far down the line did you get with it uh did the first year oh right so you've probably got into it yeah kind of looking at the degree in the accounting of finance just not me not me um and did a few other jobs but a pal of mine just literally at that point set up a broadcast pr agency he'd come out of a financial pr agency okay and it was a guy at the time called doug moffitt it was a financial editor of lbc and they got in cahoots together to launch this agency um and he said hey do you want to come help us out i thought fuck it great it's creative it's different we had a little office inst john street it was a proper little hustle environment yeah yeah like the ceilings of the office were an arch we're bending the head but running on syndicate like producing syndicated tapes right he brought me in as a salesperson so my job go and find clients um and always had a bit of jib about me so i love radio love loves great and we built that from nothing to about 30 odd people in three and a bit years we won work like the British Gas privatisation we won that piece of work oh wow because the reputation of producing and this is the weird thing back now you've watched a James Bond film you see the Revox machines going around yeah yeah yeah quarter inch tape two inch tape so that's what we used to produce on splicing deck you know splicing oh so you were literally splicing reels yeah oh wow from old school they're being reel to reel anyone under the age of 40s go what are these two old boys talking about don't worry about it it was a time revox machine splicing tape and the rest of it and then you know do 60 copies whack him in the post so the news would be the news the following day yeah of course the following day um but cut along very story short that business grew really well fabulous time i then got married the guy that owned the company started doing a lot of things that the people in the media stream did that I didn't agree with in terms of um lifestyle choices yeah sure sure um ah it's just not me and then it's like and I had a vision of how this business should grow he was off his head half the time I can't do this I had no equity in the company right and salary was basic it was just and I remember a couple of my parents do it why don't you do your own nature just go on your own but I just got married just got a mortgage want that security from the council estate where security's got a premium it's a weird one because it's the best timing and the worst timing because what i know of myself i perform best when i'm really up against it back to the wall yeah no choice when yeah i know i bring my a game um but i didn't want to i didn't want to start with i had i'm not skin in debt literally in debt skin where every month can i make the five percent payment on the credit card kind of thing yeah you know you in those days you'd write a check knowing you'd post it on a certain date knowing it'd take three days to get there to clear but which time hopefully i'd get a few quid to meet it's not gonna bounce back yeah it's that kind of stuff yeah um and so i thought right i don't want to do this i want to it's my business but i need some backing um and so i went and met a few companies and a pal of mine would set up his business within a small private group he introduced me to the fellows on that group we'd gone really well chemistry was great commercial deal was all right um but they said to me and we got to the point of yeah we're happy to do a deal it wasn't a huge amount of money behind me but i needed the comfort of knowing that for you know for a period of time i wouldn't have to worry about am i going to get the money in to pay the bills yeah sure um but they'd said to me there's only i think at the time it was five six companies in the group the plan was to get seven in total try and get to a million EBITDA across all seven companies and do a full FTSE listing.

25:00Right. But they said to me, and the formulae for the listing is this. In other words, for every pound of profit you make, this is the number you're going to get in cash and shares. Well, fuck me. I mean, this is, yeah. So it was a very quick decision to go on with these boys because I knew I was then in control of how much money I could generate in a very short period of time, which would change my life it's not wasn't me millions day one but from skin and fuck all to having a few bob it was a big jump yeah of course um and so i just worked my ass off for that first year and true to their word they floated i had my contract here was my formulae and so the company transacting and floated and that day i got a check for certain amount of money there was i've never seen money like that and i got shares worth even more than that where there was no time um and over a period of four years the share price rocketed that piece of paper became worth millions and enabled me to buy the big family i had a six bedroom house inst albans

26:12James Burtt: at 28 years of age yeah you've won at life at that point i had the car i had the bit you know for the good and the bad of it yeah of course you know i think i was a bit of a twat for about six months because it changed my life where i was just like a kid in a candy store like fucking new money does create twats for the first time around you you learn the lesson the first time completely um and my mates told me as much as well they're still my mates now yeah but and you understand what greed is and emotion is um because you chase it's like fucking i want more this want more this and you know the good and the bad of being a listed plc is whenever the share price went up 10p 20p and the share price over did that you're seeing your you're not doing anything other than your normal job as it were but the market is trading you up the market that can trade you up however can quite as easily trade you down yeah and that's the bit you learn about being a listed company is that your personal wealth is being run by individuals beyond your control yeah so you take a bit of a chance with it but it was life-changing you know there was a i I had one out.

27:17There was a road I'd always wanted to live in, in St Albans, and there were four houses, and I just put a letter through each of the front doors. So if ever you think about selling, I'd be interested. Two came back and ended up buying one. Oh, really? I remember at the time, I didn't want to sell the big house we had. I thought, I've always wanted the whole property and just gear on it. And in those days, your bank manager could be a bit more flexible than just a chatbot nowadays. um and the house was a few quid i remember being my bank man michael need a favor what's that i said look i want to buy this house i told him i'm a cash buyer obviously shares you know i've got a bit of cash but can you just do a letter saying i am liquid i can access yeah no way it's h the good old days it was it was an example position it was us and one other right and the vendor turned around and said well if he's cut i'll do deal with him and that's and so that piece of paper from those shares in effect enabled me to buy that house yeah but i say that the

28:16James Burtt: intangible value of that goes up and you know it eventually came down yeah so it comes down four ish years later from my best research and then you sort of cleverly engineer some sort of like an mbo like a management buyout situation so you take the company back private yeah so within the plc the plc share the share price was was dropping dramatically which gave me more leverage because my part of business was profitable what happened is within that plc and right like you've seen a lot of groups and it's a it's a massive observation and learning you see across many many industries one part of the group was hemorrhaging and rather than get to the source of that and try and correct that there was pressure being applied on all the other parts of the group to compensate to balance that yeah i get it but uh if you're in the good part and being asked to work harder to doesn't sit well so in the end i knocked on the door the chief is actually right i want out we're people-based business and it was a little bit tough to start with because he had a certain number that was mickey mouse land i had another number i was going to do and we in the end we did we came to an arrangement that i did a deal i took the business um private in 2001 so when you have to do that kind of a process is there because you've now done a couple of exits and obviously most recently you've sort of sold to p and then but you took funding from p so whilst you sold you were still using their capital to accelerate and now you've fully exited is the plc back to private is that the more challenging way to do a deal uh was there more steps in it because of it be in public well corporate governance means you have to go through a certain process but the deal is done behind the you know the deal is done over a lunch or dinner right the process is semantics of it but the premise of once you get to the point where you're both going okay we don't want to work together anymore right i'm not going to shaft you as long as you don't show off me but let's do something where to the market it looks fair yeah and that's the key thing as long as both parties feel it's fair you know i know some people out there they'll do a deal where they literally pull the trousers down the other side and i get that and and often lawyers will try and be quite bullish and aggressive and you get lawyers around the table they're fucking at it trying to win points over each other of course that's how they make their money isn't it right but ultimately if you want to do your deal you do your deal and there comes the point where you go am i happy with this deal and that's the point you know it's and that's the bit about saying greed like is that a good deal yeah that works can i squeeze a bit more possibly is it worth the aggro no move on let's get a deal done move on but the p you know buying out the plc was straightforward you know there was a couple of other people that were that when we said we were i wanted out they tried to flog it to some other people that's what that's the bit where you have to get a bit shitty and it's like well if you try and sell someone else i'll take my foot off the pedal yeah and what you and selling if you if it's a service-based business sector business where it's people people aren't on the balance sheet but they're the most valuable part of our business if you're kind of intimating that those people won't go with the business there's no value is there you can scupper any other day of course indirectly so it gives you a position of control um and yeah did that deal in 2001 um the night the good thing was kept everyone on so to to every colleague they had you know everything's the same name of the front door so everything's the same it's just who owns the shares has changed yeah and who's the one responsibility to make sure payroll gets paid every month if if to to everyone else in the business it feels and looks like it's the same company because it is exactly because it is the same company what what's the difference because obviously you at one point you were helping scale somebody else's business then you started your own thing then you've sold it into a plc then you buy it back so now it's your name is above the door the whole time anyway but now you're back as the captain of the ship is there like a psychological shift or did you always just act as if it was all yours anyway always always act as if it was you know it was my you know it's my ship as it were the difference is you can't help but know once you get to certain size if your salary bills a few hundred grand a month you feel that even if you're doing well you just yeah of course because you know you take on that yeah you're responsible for people anyway but when you're the one that is you've got to make sure your first priority is everyone else gets paid in my school that's old school you know it's like no there are livelihoods relying on you making that payment so come hell or high water 25th of the month that payment's being made to everyone is that a pressure that you like uh you just get used to it yeah okay you either got the shoulders for it or not or not yeah that's what a nice way it's why some people don't grow their business yeah because they're they've got great small businesses they're happy with it it's manageable they don't want the pressure and what they perceive to be aggravation and and and of growing it because growing isn't just the front end the growing is is the you know the hard argument the harder bit is what sometimes sits behind it so market is you but you buy it back and this is now early 2000s so we're still in the kind of days where and in the broadcast PR space radio is the primary sort of driver of revenue wasn't it back back in the day and then I don't know I saw it sort of evolve over the time that I was involved in it you know digital came in and then there's these social platforms and social media came along but you were you dominated that radio space yeah what I'm really interested in is how early were you to other verticals of broadcast PR because like I say social media came in you've got the streamers coming in i remember 2008 everyone's up you know up in arms and everyone's terrified about this you know the internet's going to kill all these analog businesses how early were you to jump into other verticals well before the buyout in 2001 so you mentioned the name market is 4dc the 4dc was a bit called fourth dimension communications which was set up by a couple of pals of mine they set a business up sat within the group to do new media.

34:43At the time, the phrase was new media. New media, yeah, I remember that, yeah. And we, you know, to their credit, you know, we incubated, supported, we became one, but built streaming platforms. We did the first ever, you know, I think the first ever live stream probably 27, 28 years ago now. Wow. Yeah, in like 2000. What did you live stream? Like an event? We were supplying content to portals like Yahoo Finance, Demon Internet, FreeServe. Demon Internet, wow. We did a gig with Dorling Kindersley with a client, a publisher, and we were doing a web chat. So we owned a portal called Web Chats TV.

35:21But basically you had a webcam on a 256K modem and the blue bar thankfully would run. But you had to get your spokesperson in the studio to move. So the frame moved. Otherwise people think it's just a static. Right, yeah. but we were streaming content via the internet to portals back in 2000 wow wee and and did you

35:48James Burtt: have the confidence to jump into that stuff because you got the solidity if that's even a word of the broadcast backbone of the company which is the the meat and potatoes of what you guys did it's where the money was made so the broker you know the radio part try and test it dominant market player good margin good growth but i think one of the things i'm very proud of is we've never the business was never i've never been complacent i've never taken a view we're doing okay that's fine that's that is dangerous um and i think one of the reasons why we maintained the position of that company as a market leader for so many years is we every day every week sounds a bit crazy we must be able to find a better way of doing this we must be able to improve there must be a better technology we can develop how can we continually evolve and as long as you've got and so the reality is 4dc was an evolution of we supply content to media owners live broadcast content we haven't specialized in radio because there is mass channel distribution with tv which everyone assume would be the natural step after radio at the time tv outlets in the uk and england wasn't that many yeah so so the risk of not delivering coverage was high whereas radio we could always guarantee we're going to get coverage for a client so without boring you that there was a commercial decision why have we gone into new media digital content before going into tv more channels more routes to market more more guarantees of being able to deliver success to client and then when i did the buyout in 2001 we bought marketeers who built fourth dimension locations and you know it's like dentists of bad teeth it was branding experts well fuck it what do we call it was put marketeers and 40c together the worst email address you know how that m-a-r-k-e-t-t-i-e-r-s numerical 4dc i mean it's the worst email address as well but that's that was the name um so yeah so we kind of always pioneered in broadcast um but to answer your initial question that the core business is how do we supply content into editorial earned media environments on behalf of organizations and brand and the key bit always was as long as in every deal you're brokering does this work for the audience do they feel it's real and authentic yeah does it work for the media and it's not overly bad yeah and does it work for the brand they can come across it yeah as long as you get that triangle bank it's going to work every time every time so so for those people who are maybe a bit younger there's probably a whole generation of people who don't understand what their earned media thing was all about because surely you just pay an influencer and the influencer puts it on their channel whatever but obviously back in the day old school pr and earned media was genuinely about creating enough editorial content value that somebody like say wants to put it on their station and so whether it's a we used to do like competition giveaways or you'd stick a spokesperson in an ISDN studio you talk about you know brake safety if you were working with BMW and you'd give the latest stats of how safe the roads in Reading were or whatever so you can sort of get your hook from a from a PR perspective in do you think that there's still some of those traits of making great editorial content do they still apply today even though it's easier to just pay to play now than it was back in back in our day yeah because I think my take on it is authenticity will always win and there is a skill in newscraft I think it's a skill because it's funny we live in a world influencer marketing what is it back in the day Chris Evans Virgin probably one of the biggest influencers it's influencer marketing yeah it's just that you didn't pay Chris Evans direct In fact, you didn't pay Chris Evans at all.

39:50But the reality is, as a brand, if you think what you're doing is you're buying access to someone as an individual, as a media distribution channel, you're leveraging their brand equity. So if Chris Evans had turned around and said, I went to see so-and-so last night in concert, it'd be an amazing evening, the listener believes them. Yeah, of course. That's it. Because there's authenticity. If Chris Evans says it's brilliant, it's going to be brilliant. he's got no why would he lie to us yeah we trust him he's our friend so the thing where i think influencer marketing has risk at the moment is for someone to build themselves to the point where the brand sees that person as a very strong influencer it's because they've probably been very authentic non-paid for natural content you know they're doing their thing the risk potentially is where those influencers take when they take a pound, a dollar, dirham, euro, yen, et cetera, on behalf of a brand, how authentic is that?

40:54Because it's interesting, if you look at influencer marketing, as an outsider of what I know of it, I don't work in a day-to-day, but yes, you're buying reach, but does anyone question, how do you measure the engagement levels versus reach as a distribution channel. So if you're measuring an influencer against a traditional media channel, get it. It's like DOH, radio, TV, our reach is X. Okay, but how do you measure the effectiveness? What's the impact coming back? Have you seen a spike in sales? And that's the reality of what brands are going to start to measure. So even with earned media, I would argue moving forward, the important thing with earned media is being able to measure its impact and effectiveness.

41:35because earned media of its on its own has a place but it'll never be viewed as valuable as if you could measure its actual impact on the thing you're trying to impact behaviorally

41:49James Burtt: which i suppose is the sort of the benefit of the digital world we now live in because obviously you can actually track you can attribute you know impact whereas back in the day i remember we used to sell pr services and it was like you know brand perception and it was unreached but actually if you look at, you know, PR was always one of those things that was very hard to quantify. So I guess it's become a bit easier now. But to your point, when everyone's paying to play and everybody knows about that, does that affect the authenticity? You know, I was watching someone the other day, he's got a great following and they're doing a, you know, an ad for like home cleaning products.

42:22James Burtt: Okay, I get it because he's, you know, does like family-based content. I'm thinking, am I as a consumer, I like the content, I think it's funny and it's well executed still. Does that make me go and buy that kitchen spray no i like it it's reached me it's impacted me the impressions there i've the dwell times there but they're not taking a quid out of my pocket but the important thing is imagine if they could just measure the fact you've remembered it yes yeah yeah so that's the bit yeah performance marketing you you know there's there's lots of metrics where you can see i put effort into that bit of content there that's the comment but the bit i'm interested in is the fact you didn't buy it but it sat there yeah how finding a way and a mechanism that has got into you so the next time you do have a need for the product it's a brand of consideration that's a lot of what earn that's the space where also it's how do you try and measure the impact the competition for the brand pound is massive it's huge you know if you're if you're and it's you know i think it's one of the reasons why a lot traditional media agencies are struggling is because they their traditional modeling of how they run it's just a bit out of date you know if you influence the marketing is booming okay at what point does it go well not it's had its day but it needs to kind of level out a bit and sit alongside yeah i thought it's observing how how different brands are using their currency to buy whether it be earned or paid is fascinating at the moment because it's not it's not necessarily gonna be a template that works for every brand but it's you know but the world is evolving the world is changing um which is why i think but if you if you look at the market you know i think you had benji leslie on a little while yeah we did yeah with connect management like we're influencer marketing he owns a lane yeah he could sell his business tomorrow yeah he'll probably be aware he could sell his business tomorrow because this is what i do and i do it brilliantly yeah whereas you look at a lot of traditional media businesses they cover so many different radio tv out of home who wants to buy that yeah where's your point of difference where someone got i need that and i think i think the brand is becoming more comfortable having a series as specialist providers than trying to sit all under one roof for a cost efficiency.

44:57Because again, the reality of a lot of big media agencies, X percent of your currency goes on management fees of all the big, of all the teams across all the agencies. How much goes on the delivery?

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45:38James Burtt: We're talking a lot in this part of the conversation about sort of the digital innovations that you guys made, but something that I had completely forgotten about, and this i've got into broadcast PR literally 20 years ago this year so it's my two decade anniversary but i remember one of the biggest innovations that market is for dc had back in the day which was a right pain to get around was the fact that you owned and had bought a magazine that sat on the desk of every single radio station every single isdn studio we used to go to every provider of radio, whether you went to Wise Buddha or one of those other like paid for studios, it was always that magazine was sat on the flipping table with an editorial.

46:26James Burtt: I think you have like a little editorial from you at the beginning. There's some adverts in it for DC quite a few times throughout the magazine. I used to sit there flicking for it, just quickly turn over if a client was sort of looking at what you were looking at. How did you, where did that come from because you're a kid from the council estate where your mum and dad just want safety and security go and be an accountant you decide that's not for you where does the acumen to go do you know what i've got a broadcast pr agency i'm gonna buy that magazine because that sits on the desk of every radio dj out there where does that come from you've got nature nurturing you in your dna and i think if you've got a level of risk appetite and you are if you back yourself and you stress test mentally is this the right thing to do well fuck it there's no there's no better example of you backing yourself putting money where your mouth is and when we started the business i wanted people to know i'm not i'm not here just to play i want to i want to own this but you know i i'm determined like the company people also i just i used to talk about the companies as an enabler this is a vehicle that i'm going to use to change my life for the better in so many regards where it'd be my mates coming to work with me being able to look after my folks what it is right balls in here we go let's do this and at the time there was a magazine called q sheet run by a guy called kerry juby an ex-capital dj lived down the hastings bless him um but that magazine was it it and because carrie was old school radio and it was his magazine and it was you know it made a couple of quid but the brand was fucking everywhere yeah right well i can either grow organically which i can do and i've got the aggression in me and i've got a pace and urgency and the restlessness but what else can i do to accelerate that growth fuck it i'll buy it if he's up for it i'll buy it i'm knocking on his door and carrie was a great lad you know he'd retired he'd come off there lived in hastings you know 45 days a day he drank like a fish you know lovely blood old school radio went to see him and you kind of make a call and i go you know you sit there and go what's his lifestyle like what's he about how much of my drink he's got what number do i think would float his boat and i went and this was this is a lot this is decades ago i remember going to meet him and i was like the little young buck cheeky little fucker that come into the industry he's like the guy that's been there a long time i offered him a quarter million pound i said care i want to buy the magazine and i thought right and fuck about like 10 grand 20 grand i'll give you a quarter i mean i knew i'd have to go and get the money yeah and i was confident i could do the raise i went right quarter million pounds by the magazine i said and i'll take the staff keep you on for a period of time no earn out in other words it was of an age where could he could he give a fuck about an earn out probably not would he work it probably not but would you want him to probably not but i wanted a magazine wanted the staff because i knew nothing about how old are you at this point you must be early 20s aren't you late 20s mid late 20s late 20s that is some ballsy moves to go down and go i'm gonna buy it for this amount of money isn't it worked out well you say ballsy i believed in myself about myself um but these are the bits people don't see it's fascinating you know in business people see the wins of course they see the end results but they don't why you put your money where your fucking mouth is then yeah you write the check for a quarter million pound and work out like you go get the money for this right let's pause there because i think howard has touched on something brilliant do you just want your brand to grow or are you actually willing to invest in that growth?

50:19James Burtt: It's all well and good wanting the business to be bigger, wanting to get more leads, wanting to get more sales, but actually do you wholeheartedly believe in that business enough to actually put your money where your mouth is? In the example here, Cushy, he had to spend a lot of money. We're talking about 25, 30 years ago at this point in time, and it still sounds like a lot of money in 2026. So it must have been an exorbitant feeling amount of money back in those days. But he knew that that was the thing that was going to get his foot through the door. That was the acquisition, or that was going to be the route to market that's ultimately going to get the growth that he desired.

50:54James Burtt: And he backed it and believes in it enough to actually, as we said a minute ago, to put his money where his mouth is. Now, it's a great question to ask yourself, what is holding your business back right now? What's holding the business growth back right now? Is it that you just, you know, clients are not getting it? Is it that you're not getting in front of enough people? And then conversely, ask yourself, well, actually, what is the route to landing more clients? What is the route to landing more revenue? What is the route to acquiring more customer? What is your customer acquisition model? And if you could have 100 grand to put into that thing, would it actually deliver you the results that you think?

51:27James Burtt: Or are you kind of telling yourself a lie? Now, if it would deliver you the results that you think, based on putting some more money into the machine and getting more results out, then question, how can you get that money? and are you willing to put your own hand in your pocket to generate the result it's all well and good to want the growth in your business but are you truly truly so wholeheartedly in belief of the thing that you're doing that you would be willing to fund that growth out of your own pocket or the revenue of that company great question to ask yourself right let's get back to it that's the bit that i think some people don't always see so when they see the the big number at the end and how we you know they coast it you don't see the early years of putting the money in and it's fascinating now because even now with the clients i work with when the first question is asked if it's a privately owned and the majority probably owned owner found the companies all right would you give up a year's dividend and put that cash back in the business and i look they'll see the whites of the eyes right i'm out done yeah is that your decision you made at that point whether you can actually really okay interesting yeah because you've got it's words are cheap yeah of course h yeah absolutely yeah i'm i want to invest in my business to get the best exit i can all right well done a bit of work spent a bit of time all right i think you have to spend about three four hundred five hundred grand in the company to get to the point where you'll get the number you want as an exit

53:00a lot of people when it comes to that moment because they've run their business as a lifestyle business it's not it's not criticism because for 20 years i ran marketeers as a lifestyle as a lifestyle business and good living went on holidays you know putting a cup of staining weight having too many lunches and beers and the rest of it it's not a bad gig in a lifestyle company that runs your life yeah if you want a good great but then if you want the check if you want that moment where you get a check sometimes you need unless you get really lucky you lift under the bonnet and go right what on what am i willing to do am i willing to go back into doing proper hard hours and hard yards again because again you find a lot you find a lot of people where they've had their business seven ten years tiny bit of fatigue it's a bit routine yeah they've taken you know they've got a nice management team in place and they're kind of it's running their life in a way they're happy that's brilliant but if you want to sell it for a certain number do you want to go back in are you willing not to go back in as in put your claws all over the people that are currently doing a good job for you but but you're the magic the chances are if it was your business and your dna is through that company you're the magic are you willing to be visible not to detriment others but to give it again and sometimes having to do that resale of seven ten years is not easy but there's that alongside okay will you put cash in if you really want to do this because again what a lot of people forget when you come to the sale moment of selling your business or this this capital moment your legal fees and m &a sale side fees are going to be a few bull yeah you know if you if you want to sell for a certain number let's say it's 10 upwards 10 mil upwards you're in for a few hundred grand yeah give me three give me 300 grand in fees fuck off but you need to set this part of the ecosystem yeah of course but you could argue but if i asked you to put half a million quid in now but it'll give you an extra five million quid in a few years time i would argue i'll give you half a million quid every day of the week if i have an extra five million back but for a lot of people the concept of is is half a million or whatever the number is it could be if you're wherever the number is when it's their annual divvy they take yeah like you're not gonna be able to do these things not me have these toys each year i'm not quite ready i'd want to but psychologically i'm not quite there yet whereas my drive at a certain point i've had three i've had fortunate i've had a few deals along the way and each time i'm going right h you fucking up for this or not yes right here we go in fully in balls out you your life changes instead of you know instead of having every evening to yourself no instead of every weekend self no no because the reality is i'm going on tools yeah i'm back in i'm you know so that little bit over there that you shouldn't have to worry about no I'm now looking at everything because if I can make marginal gains and improvements and these bits the total uplift will be phenomenal because a lot of owner founders forget how good

56:16James Burtt: they are because they're a bit tired the flip side of that is you get a lot of owner founders where it's over-reliant on them because one of the other weaknesses you see a lot of owner founders can't delegate with trust well that tells me you've got the wrong people in place but you've had people in place where they've become your mates they're your friends in other words they're not just work colleagues anymore they're your number two your number three your number four whatever it is but and you've got these people around you and you're thinking Do I trust that individual to run to do that bit?

56:50I want to trust them to do that bit. But if I need to affect the business positive and uplift, how do I broach the conversation which is, right, I need improvement or... It's not an easy conversation to have. And this is a lot of the stuff that I think a lot of founders... Normally talks about the emotional intelligence involved in growing a business for exit. it everyone thought oh we need to grow the p &l need to grow top line grow bottom line that is semantics of part of the formulae of the of the equation it will give you a number but that's not how you sell that is not the bit that gets the business to a point so to go back to your bit about q sheet i knew to accelerate my business quicker m &a i did even in a few years leading up to my most recent exit we bought we bought a business a radio news production company because i knew i could monetize it more than i was paying for it but also i knew it would accelerate an adjustable market i wanted access into and it kind of it resolved a niggling problem i had in the group so i bought the business got on the phone to these people met for a couple of times for lunch you do it's like a courting process it's not an initial phone call i'd like to buy your company you is a bit of schmoozy bit it goes on make sure the chemistry is right get them on then by the way because if you do ring someone in your industry or around your industry so you've got time for a lunch bit bite to eat just like pick your brains about a couple of bits there's probably an expectation their end there's something more than having a nice lunch but it's part of the courting process you're not going to go in straight away day one go right i want you to do this but if you think you can make it work because you want those people to remain within the business.

58:40You don't want to buy that company, the management leave, then suddenly, fuck, I'm going to have to run that company as well. You can be the steward of it. You can help direct it. But I want to make that management team better. I want to give them freedom to express. In other words, I see potential in that company. If we can help support them to accelerate their growth, we benefit also. That was our philosophy. But it cost a few quid. and i remember saying my business partner right found a target company mate this is what it's gonna do to us to look and luckily he trusted me implicitly yeah we were very different characters he's very conservative was a bit more maverick so he'd ask me the right questions to make sure i wasn't about to go and do something stupid but he could see it because he knew the motivation to do this was that thing happening over there and because we were both aligned on what we wanted over there he knew every decision i made was towards that right let's go do that deal and it did make it had a material impact on our business financially i was reading an article i thought

59:45James Burtt: this was really interesting because you say about lifestyle business but you know it was the dominant player in its field lifestyle businesses mean different things to different people but you know you're quite a sizable company owned a owned a niche um and it was doing very well what was the catalyst to you looking at it and going right we're doing about a million quid from what i can find from this article you're doing about a million quid in clear profit you know you've got a nice life offices in different countries blah blah blah what was the catalyst you going no i've i need to get back in because you you are upper end of the lifestyle business thing so what what was it kind of like oh it's time for me to to get out so i need to professionalize this to leave because you didn't actually leave did you you had a capital moment which was bringing money in and you didn't step out initially so i've asked you about 17 questions there unpick it and give it back to me however you want to from there sure there's a couple of bits one everyone focuses on marketeers the broadcast business yeah i think where we were very clever is we looked at different horizontals where in our supply chain as a business because within marketeers within broadcast pr there was a limit to the market i would argue yeah right i'm not gonna make my fortune through that good lifestyle but we're gonna hit a ceiling at some point i don't want that i need a business where i can constantly see you know opportunities to do better so we start so we within that business we would end up we were relying on uh research being given to us to then turn into content well can we buy the research part of the supply chain can we start that so we started a research company this is quite a few years back and it was doing okay but then i met someone who this phenomenal lady was right was the sales director of research business in a very similar industry i kept my eye on her for a little while she was phenomenal she's a force of nature she still is um she came i sort of met her at an awards do started chatting to her said look I'd love you to come and work with me, but instead of working for me, let's start a business together where you have equity in it.

1:01:58So it's yours. We'll be the majority player, but I need you to feel it's your business because the reward you'll get from this will be phenomenal if it goes the right way. And we did that deal. And so what's interesting is where you make your fame and where you make your fortune are not necessarily one and the same thing. And the data company actually, over a number of years, started to become the more profitable part of the group. and it had its own thing had its own brand because what i didn't want was everyone i think well fucking h is if we're subbing in h's business he's got this and this and this and this under one company name so we were very strategic in keeping these entities under separate names but owned by us as the same as my parent so we built five in the end we had five verticals five separate companies all interconnected in in terms of the stakeholder who would buy them but the cash came into one business so so that was the thing where i saw and suddenly you we realized we're going for a million two three and this is and quickly because we started to focus on where we're making money rather than the stuff that we just enjoyed it's like you're making a few quid life's good right but to answer the bit about what made me decide like having been in business 30 years you can see where politics can make a difference on your wealth or and outside factors geopolitical movements when you get into a certain point actually interest rate move does make a difference you know if there's a conflict in the world does make you know 2008 recession fuck me that was like we had some tough moments right and i got sort of mid-50s we'd come out we had a good covid commercially as it were come out of covid a mid-50s, I thought, right, we are doing well.

1:03:46But I could also see a potential change in government coming. And that mean tax changes. And I just thought, if I get my timing wrong, I'm fucked.

1:03:57James Burtt: In a first world problem. Yeah, yeah, yeah. And it's relative. And I just thought, right, done. I've got to take my moment. Because there's a couple of other deals that didn't happen because of timing. and you realize the timing is a very important it is a very important part in terms of getting a deal away um and so our numbers were we're accelerating at quite a rate i could see a change of government government come in i thought fuck this but i had a vision for growth and at the time the thing that was going to hold us back was talent acquisition good people are normally on a three months notice period and i held to it because they're good but if you want the top people around it's a minimum three months notice yeah sometimes six or twelve so you've got a three month courting process or if not six months they're in on a three or six month notice so it could take you a year from your initial chat with someone you really want to join the business from them joining i didn't i didn't have a year i couldn't afford to start the process of talent acquisition where it could take me a year two years to get these people on board and miss my market moment right fuck it i need the money and i had a certain we had a certain level of cash reserves which was decent but at the same time no i've got a vision i want proper mna in other words rather than buy people i want to buy the companies yeah by the people within those companies because although it's cheaper to buy talent it's not about price point here i'm aggressive for my for this vision yeah and it's at that point i decide right i need backing which is why it wasn't about a trade deal it wasn't about a family office deal i need an investor i need pe and because we were a certain size we could attract pe right so i went to a good pal of mine who was m &a sell side i've been chained for six months price a lot i've got an idea i've got a vision for the business this i want to grow here i think we're worth this today but with the right acquisition i had an out target list of companies i wanted to buy so to the potential investor in us i could say look because rather because you what you also learn when you go through the process an investor isn't buying you what you are today they're an investor what they want is a management team who are buoyed excited aggressive the smaller they go right i want your money because that's what i want to buy today that's you got have you got the appetite to back that if they have we can do business and that's what we did wasn't quite as small a conversation as that it was just longer but that's my target list yeah and we did we started a bit so they bought in at a certain price for the value of the group and straight away we started on an m &a trail and the vision was right and then in five years we get to that and then we we out but i was you know at 55 i think right i've got a number of years left in me but instead of tinkering with growth no fuck it i I want the market.

1:06:53And that's where it goes back to the Q-shit days. Right. Shoulders back, chest out. Here we go, H. You know, get ready. And you're going in like this. Because you can't go on that level of growth passive. You're the owner-founder. Your impact on everyone within your company is more than you potentially realize. If you're on an amazing day, they feel it. and it lifts them. If we're having a shit day, and you can't mask it, and they feel you slightly off, if you're even running at 70 % that day, people around you will feel it. It takes them down. So when you're going to go for it, this is what I'm saying.

1:07:36I'm just like, charge your batteries. You've got to touch the other day. I'm right. You up for this, H? And, you know, only child tooks myself, my imaginary friend. Yeah, we can go for this. Right, let's have it. And that's what you do. And dare I say it, even when you come to sell a company, you need that energy if you try and sell a business when you're a bit flat you might be able to sell it but you'll get fucked over yeah yeah 100 when you when you're

1:08:00James Burtt: going through then the sort of the process of like this is what my m &a target's gonna look like so instead of like say doing an exit to leave you are bringing in capital to to grow in scale do you and or the sort of buying in party do you know if you're doing this as like a wrap-up model so you're going to buy all these different composite parts you're going to effectively buy the supply chain make it more profitable do you have in your mind who your next target buyer is for this group when it gets to a certain size you go into it knowing who's buying this thing yeah you've got a rough idea and do they because you model it accordingly yeah you know this is this is the bit like when you want to sell a company no matter what stage who was going to buy and this is the bit that i think people often they're slightly remiss they think the number of times people say to me we're not big enough to sell i had a meeting last week with someone where they got a nice business and they've got an ned inside the business and talking about growing and you know to his age you've got time for a coffee i met him a few months six eight months ago initially not came out of coffee he says look you know i want to keep the dialogue going with you still you know i'm thinking about trying to get the business ready for sale i want a moment um but we're just not big enough you know i think what i need to do first of all is just grow the profits i said you're fucked i said it's not about the profits mate i said your business isn't attractive your business isn't future-proofed if i were you get your business future-proof so someone can see you've got a runway for another five seven ten years then worry about the profitability because at the moment you're going to worry about your profitability and i'm not a buyer of your business because i the way you're currently running this and trading this business you could be gone in five years it'll be harder to make your problem you'll have to work twice as hard to even make the same level of profit but the reality is an invest unless unless someone's buying you for capability but i'm telling your capabilities out of date you need to modernize the business where's your currency now where do you want to be owner like in lane at the moment you you're not famous for any well you were famous for something and here's this thing it was they're famous in a particular sector of something but a sector's the sector he hasn't modernized within the sector so what he's done he's branched out over here to come over a generalist to try and to try and uplift his profits gone wide not deep you were world famous at that you were world class at that modernize and continue to own that market but get with where the market's at whereas what you're trying to do is take a capability that i think is out of date and broaden it into other areas it's the worst strategy in the world because actually this thing is if you can that market share you had was where your value was and this was the bit he and he got it by the end of it your value is not your profitability that is the mathematics will sit around a number your your attractiveness and value to the buyer is that company is future proof in the next x number of years they're investing in the technology required to remain current if not be ahead they've got client relationships that people would die for so why the fuck would you dilute away from that to chase a pound because you think an extra pound makes you more valuable no because people go well if i can get to a million eb i can be worth x i'd rather you do 600 grand and be world class in that because you can work on mechanisms if you do your right deal and get this business show the right way you could earn your money day one and day three day five day you don't have you're not going to get 100 day one anyway so why don't you focus on the total value of your deal rather than just what you get day one what if someone can come along and put a few million quid into the technology you want in your business and know that you get bit off the table today and in three and five years you get bigger slices as well because the business is worth even more then that is a better deal for you than trying to sweat it now to make an extra cut of 100 grand a year in profit and to then struggle to sell the company.

1:12:19James Burtt: Right, let's take a little break there because I think Howard's touched on another fantastic point. And that is, are you building a business that somebody actually wants to buy? Now, I think the general consensus with business purchasing or mergers and acquisitions is that fundamentally, you've got to get as much profitability into the business because that's what somebody's going to buy. But actually, as Howard's talked about here a couple of times, it's not always just that that people are looking for. What is the growth potential? What can they add in that gives them infinite or a massive return on their money quite quickly?

1:12:49James Burtt: It's not always about, you know, cutting back every single cost within an acquisition. We've talked about this on previous episodes, for example, with some of our guests who've exited companies, you know, at a certain point in certain models, maybe it is that you cut back all of the expenses to make it as profitable so that you've got a good EBITDA so that you can get as high a multiple as possible when you're doing the exit. But again, equally, what Howard's sharing here is you've got to build the thing that somebody wants to buy. And that's not just about profitability. There's many different levers that somebody might want to utilize to grow the value of the company that isn't just based on the profitability or the money that's coming into that company.

1:13:23James Burtt: A great question that you can ask yourself, and this might be an uncomfortable one, but I think it's a great one to look at, is would you buy this business if you were in the position of the potential purchaser? That's a really hard one to get your head around, but would you? You know, is there enough intrinsic value in the thing that you're building? Take yourself and take your ego out of it for a minute here. Would you honestly now, ask yourself honestly, would you purchase this business? If the answer is no, then you need to start making some changes because ultimately, if you can't see enough value that you'd want to buy this business, then chances are the people that you might want to sell this to are going to think exactly the same thing.

1:14:02James Burtt: Getting a business ready for sale is not all about profitability and is not all about increasing in the bottom line revenue necessarily every single time, but it is about starting to think about what does the end look like? Would you really buy the things that you are building? If so, you're on a good path. And if not, you might want to make some tweaks. Do you know that model works? Because that's almost accidentally how you've done it over the years. You had a little bit off the table 32 years ago when you floated it, and then you had another few deals. And it's like playing a computer game.

1:14:34James Burtt: You've had pause points or stop points you can like save how far you've gone then you can't drop below a certain point it's from that and also the deals that haven't happened you know you see the deals that there's trust me there's there's a lot of conversations that went nowhere because it was fucked yeah but also i just in the world i'm in now the companies i speak to every day the buyers i speak that you see what you see the appetite of a buyer you see what buyers want to buy and the skill in selling is understanding what a buyer wants to buy. And, you know, if you think about an investor, I said to you, I tend to, I like PE.

1:15:09Trade's okay. I'm not against it or family office. But if you've got a founder who's really excited about their business, if you can get the right backer to put money and support you on your continued growth, fantastic. Fantastic. But it's, you've got to get ahead into space. It's like I say to people, if you've got a property, to sell that property a developer an investor in property doesn't buy a turnkey house that's impeccable and ready already done because where they're going to make their headroom they can't so why you might have the most you built the most amazing house but an investor's not going to buy it because there's no room for them to grow you maximize the value of it if you want to sell to an investor yeah i said rather than you spend a lot of money getting your house in a shape if you want to sell to an investor don't spend the money that's going to become dead money sell it as is because you're going to sell it to someone who can see if they put their money into it they're going to be able to get some headroom out of it that's what an investor wants it's the same in business why would i buy a business that's perfect as an investor yeah there's a there's market for it if it's a bold if strategic i get all the you know there's lots of reasons why it could work if you're strategic fit if you're going to buddy if you're buying or if you're an add-on onto a platform but if you want growth if you want to you know if you want to attract the right type of investor potentially you need to make sure the investor can see where they've got headroom otherwise why would i would i invest in your business if i think you're maximizing your profits already which is why when people say oh we're not we're not making enough money yet well no that's that's the time to sell potential or the time to start to package yourself because at the time you think you're making the right amount of money psychologically we're really near the top of how profitable we could be well that's well any buyer wants to get headroom out of this deal and if you think you're close to your headroom unless they can see how they're going to make more money on you why would they buy it it's a reverse psychology where you think because you're focused on ebitda and multiple and you think well the market's paying x times but if i get my profit up here i'm worth even more yeah yeah ask how many buyers have you met and ask them what they want or are you basing that on what you just read and think that oh someone sold it six times ten times twenty times i read somewhere the average multiple deal in the uk is like three times that surprised a lot of people wouldn't it yeah but you sit someone's like oh you know i'm looking for eight seven eight times based on what yeah and by the way you get chipped massively in the deal if you're not in good nick either so you so you think you're worth that once someone's done their dd on you you're having your trousers pulled down the dd

1:18:07James Burtt: process is that something that is as terrible as everybody makes it out to be uh we had i had someone who sat in that chair where you are right now and he said it was the worst year of his life the due diligence year was the worst year of his entire life no it doesn't have no so this is where i'll counter it yeah okay it's the worst year of your life if you don't expect it not prepared for it yeah sure right where we bear in mind when our first rodeo we had what they call we did our own vendor due diligence on ourselves so we knew because again as long as you as long as you use a reputable firm the paper it's it's worth the paper it's written on yeah the buyer might do top up dd but actually it's not a bad exercise doing your business anyway if you're not going to sell your company the worst case scenario of doing vd render do this yourself is you find areas you need to improve yeah sure well you want to know anyway surely if you're because the deal may not happen so surely the upside is if you if you get an external provider to come in and look at your business through a commercial market lens and go actually we thought about this this is where you can and as long as you listen and you're willing to take it on board it's very positive because you can improve your business if if you go into a sale process without the lens of due diligence coming into you it'll be tough because literally it's like having a periscope up your ass commercially they will go looking around because my lens on it but the slight cynic in me is a lot of due diligence isn't done to validate the price for the buyer so if a dd provider charges two 300 grand due dd their value to the buyer is to be able to save the buyer maybe a million quid yeah chip away that price yeah that's why we so the benefit in spending two 300 grand with us as a dd provider is we've saved you a few mil on the purchase price i'm yet to see dd come in and go we've done our dd fuck me you're underpaying for the business yeah congrats you got the deal of the decade well done right yeah so as long as you understand that's what dd is there to do prep for it but the the hard bit is not the digging around it's you've got to run your business with no other than the few people you bring inside within your organization it's business as usual yeah so the hard bit of that dd process is you've got your business to run you can't afford to drop your numbers at any point because you don't want a buyer to be looking at you and you shit the bed yeah the buyer's looking at you you want them to see great business grow doing well great clients great work great great great so you got all your energy making sure that everyone's behaving that the market's there it's great at the same time your second job which now become your more important job is these people over here asking you a million questions yeah and when i say digging digging like if you know if you haven't got your accounts function set up ready for it you know you'll get to the point where they'll look at you no matter how many staff you got every contract has every member of staff got an up-to-date employment contract i don't know but they'll they'll find that they'll ask those questions yeah the data room requests so who in your business have you got that's going to be able to screen you from dd but at the same time i would argue you can't afford to let the dd happen without you being involved because part of your job in selling your companies every day you're selling it so when you've got someone from the due diligence team in the locked away office in your building where everyone's going who's that who are those kind of suits and boots sitting in the corner right there well i don't know just auditors are in again and they'll contact the clients by the way we're just doing an audit on behalf of our client like i mean it's so it can be so obvious in so many ways if you've been for that process it's supposed to be very clandestine and see like you know But the reality is your job, dare I say it, you've already sold the vision to the buyer where you've got exclusivity on terms.

1:22:25They've done due diligence coming in. Your job, those people are really important because you need the diligence team and the advisors to report back to the buyer, this is a great business. And every box is ticked. Yeah, a lot of people, the diligence team are sat there in a corner locked up. It's the enemy. Yeah. yeah you need to put these these people these are your best pals take them to lunch bring them a coffee they won't have lunch with you absolutely they may share a digestive biscuit with you over a very bland cup of coffee that's it mocha cup of whatever it is nowadays but again when you're set that that year of pro it's not enough to be a year let's say it's let's say the diligence is three four months it's the dd part of it but it's intense because they're going to ask questions where you suddenly realize all the information sits in me.

1:23:18James Burtt: Fuck. That's a weakness. You know, over-reliance on founder, that's another half a million come off the price. Yeah, it's chipped away at that. Yeah. Which is why prepping for the sale process is so important because you go into it just a bit blind. Unless you've done it before, you're a bit blind to what to expect, which is why you may be brilliant. so the chap who was sitting here previously said it was horrific, have probably got the most amazing business. Yeah. And they are brilliant at running that business. That doesn't mean they're experienced at running a sale process, which is a whole different skill set.

1:23:55So understanding what to expect from the process is crucial because otherwise the mental distraction is horrific because you're having to front yourself every day to your teams your people your clients and we are full steam ahead the dd will expect you to be baking your number slightly don't because they'll find it and all that's going to happen even if the buyer expects your numbers to come off post-transaction why is this you know you to i get it but the reality is they're they're almost going to expect it well maybe surprising them and saying no we don't accrue any income it's real okay that's good business and they report actually there is no accrued income in there is little nuances that if the diligence go back to buyer and report and say actually no it's clean it helps you but it's it's not it's understanding again what the buyer is looking for once i what the buyer's looking for the buyer and their stakeholders to diligence providers lawyers to count there is a whole ecosystem that will have their footprint all over you

1:25:08James Burtt: you seem very enthused about this side of business that you're you're now on this this side of the fence you're currently sitting on so this is the thing that you're now post exit you've then got the office that you and lordy didn't really know what you're going to do 25 minutes down the road but the thing that spun off is exited founders you're actually supporting people in this exit process now because and it's because it's not the full m &a sell side but the fascinating bit is clients are now saying can you sell us as well yeah that's that's another but the bit i'm excited about is actually i can see where i can be a value to people because i love helping i like helping people if i can help you make more money fantastic you know i've made a few quick i get it yeah and it's not about helping a little bit but no you've got a great business you deserve you deserve to get full value for your company but i can tell you through no fault of anybody just a bit of naivety if you go into the sale process too early you're going to get chipped and fucked a little bit whereas actually great news is you're not broken it's just showing you right here's six there might be six seven pillars that a buyer is going to look at i can we can see through a very clear lens straight away where you've got areas where if you can just improve these bits or focus here it's going to make that process a hell of a lot easier make you easier to sell means also when you appoint m &a sales side instead of sitting on a retainer with them for 12 18 months where they can't sell you because you're so it's financially beneficial to you but more important as important as that it means when you come to the point where someone goes james i love your business i want to buy your business you can have confidence knowing it's likely to transact because the number of deals that don't include and transact and are a head fuck because someone it's the it's an incredible level of flattery when someone says i'm going to buy your business and if the number is anywhere near what you want you get you can't help but get a bit excited because you're going like this is coming real this is real it's real it's real until it's signed until that money is in your bank account that deal's not there yet and what can happen is having had it fail a few times as well as having it gone through a few times emotionally you've got to be strong and resilient for this yeah because here here's a check here's the money here's the cash there you go feel it touch it the brain goes the house the kids school fees this yeah parents care home nowadays where you know things cost you've worked your butt off for years and there's a moment someone's about to go we recognize that value in it but imagine getting right to line and it falls down at the 11th hour.

1:28:02The emotional vision is required to recover. I don't mean six months. Tomorrow. Tomorrow, yeah. You've got to then turn up tomorrow and be as positive because otherwise the people around you are going to go,

1:28:16James Burtt: what's happened to them? Yeah. Why are they flat? For the last eight months, he's been like, they've been up in positive, million miles an hour, going for it, charging. what's happened now some people might be aware because you may not keep it in how easy to bad those weird suits are not in the corner now those two things linked but having been through it it is tough because and I use the analogy it's a dreadful analogy but it's a you'll get this completely real webuyanycar.com just bear with me for a second right you've got a full fiesta or whatever the car is marge you think we should sell the car okay so you you're thinking about selling not sure okay you put the reg in eight grand here's where the psychological play comes in you go eight grand maybe a bit less but it's no aggro which is what they tell you in the yeah yeah right here you go they don't come to you, you're going to get in your car and you're going to drive to that supermarket car park to a little hut where someone's going to stand there.

1:29:31With a clipboard. Right. But already, you've probably made a decision, how am I going to get back? Margie's going to follow me. I'll get a cab back. We'll stop it. But you've already started mentally planning. You've sold yourself on the concept.

1:29:46James Burtt: Post-transaction. Yeah, yeah. Right. So you get there. Clipboard walks around. oh i've got a scuff on the bumper and alloys there i'll give you six three and you're going because you you are in sale mode yeah you've been sold you've sold yourself you're done you're yes you you've you you're mentally you've spent the money you're you're in or because you started to work out with the eight grand put towards the next car or deposit here or but because you don't see the transaction in pure isolation it's what that transaction will then enable and the other things that come off of it so you think the worst bit is actually six and you end up agreeing at seven so you've got him up from six three the the website offer you eight to start with so you're grand down but you sell the car you're happy-ish because you've transacted you come you can still do the things you want to do but you might have to clip it a little bit in terms of where you're going to or the next thing you're going to be buying that's one part of the deal i'm selling a company's race i must say similar you understand the psychology of the journey but what if you get there and you're telling me and you get to seven and they just got laughing and go nah don't want to buy your car it's a kick in the nuts but how do you what my car's not good enough like i've agreed to sell my car to you that is a very how dare you i've agreed to sell my car to you and you're telling me you don't want it now i'm then gonna have to go back home in the car marge wasn't expecting me to turn up in a driveway again in the same car what happened well it's a very that's what's a bad analogy no i get it though what i'm trying to explain is the well in the following day you've got to get in the car again even though mentally you might have already thought about the next car you're buying does the fiesta feel a bit inferior yeah you don't quite like it as much anymore do you because you've already sold it yeah mentally and you've all but it's not just having you already sold it you've already bought the next one yeah you know so it's it's yeah it's it's an emotion the emotion i think the emotional part is a lot harder than the physical part the process is the process and you can prep for that you you know you can surround yourself with the right people to do that bit.

1:32:10The bit where I think there is a lack of support and coaching, potentially, and I say coaching in the lightest sense, which is why I found that the founder mentality works, is I've been through that. I get it. I understand that three in the morning moment, you've suddenly woken up with a million things going around your head because you're really close and you're sweating it. Traditional advisory world, the playbook doesn't prep you for the emotional journey. The playbook preps you for the process, not the emotional piece of the pre and the post it's it's very very yeah is that for me is a bit where there's no one really has got a handle on how you help someone in that into an hour huh into an hour to you guys we do yeah we do do yeah we do a fair bit of that by association of the process but then you know it's it's just a peer-to-peer if you've been through it the number you know You know, conversations with someone where they've got a business partner or a shareholder and they're not, you know, one's resenting the other one a little bit.

1:33:15Well, how do you deal with that? How do you deal with the fact that, you know, already starting to prep for the fact you're going to get a check, the people around you aren't going to get the same size check. They got the arse. They don't realize you're the one that did the hard yards at the start. It's the emotional part. because if you've got a business partner, let's say there's a few of you, you're probably really good pals. Yeah. Really good friends. Yeah. Your families know each other, the rest of it. Greed is an emotion is heavy. You know, you've got someone, the family of this person saying, well, you deserve as much as that person and da, da, da, da.

1:33:54There's no playbook that talks to you about that. There's no playbook that says, how do you plan now, potentially for that moment coming down the tracks in a period of time how do you how do you get ready for that how do you look after those staff that may have no equity but a key not just in moving forward but if they've got to be brought if they need to be brought inside on the deal before you transact how do you make sure they are doing it with a smile willingly how do you look after them do you give them something out your part? Nothing. It's loads of things to consider. Whereas the people in the process, the institutional advisors in the process are just focused on maximizing your deal.

1:34:37How you're going to look after emotionally other people, no one's going to say to you, so how are you going to deal with your business partner that's got no equity? How are you going to deal with a colleague that's worked with you, colleagues that have worked with you for 10, 15 years that have oomph of a percent, you're about to walk away with that and they're left with a job and that that for a lot of founders is as much of an emotional piece for them as the process because you become very attached to your work colleagues the ones that are around you that are very senior no one's really going to talk to you about that we do a lot of that not as the commercial role of the business but just empathizing because we've been through it Yeah.

1:35:22It's, you know, it's weird in different countries. In the US, if you're very successful, people applaud you. Yeah, of course. This country.

1:35:31James Burtt: Not here. You become successful. Fuck me. You're really nice for it. It's from, listen, it's a first world problem. Yeah, of course. But it's also why your social group, once you become slightly successful in business, can migrate a bit. Because you get some people that can't handle You're doing okay. It doesn't mean you have to be, you're not, you're an arsehole. They just, people are just jealous of what you can achieve and what you have achieved and the bits you've got. That's life. That's life. As the famous Frank Sinatra said, I could quite happily sit here for another four or five hours.

1:36:11James Burtt: I think having had this conversation, I was so interested about the early days and stuff, but obviously the lessons that you've got, I've got so much value in them to people are going to go through the process if there is anybody who's listening to this of which you know 80 % of the audience are small-scale entrepreneurial businesses based in the UK if they need that support with the exit process where can they find out if they just want to connect with you and find out and dig a bit more into that ample business brain of yours where can they get in touch with you mate the LinkedIn exitedfounders.co.uk is the URL but the bit I'd say to someone first for a lot of entrepreneurs, firstly, congratulations.

1:36:51I don't think it can be very lonely. If you're a founder of a business, it's a very lonely place to be. And not enough people will be around you every day saying, well done. I'm a huge advocate of congratulating people that have themselves taken the step just to launch their own business. Because that takes some doing right and it's pressure but you get flack with it and there's a lot of there's a lot of downsides and but the opportunities are massive so first of all i'd say well done to anyone that's taken that step secondly you don't have to sell there is nothing wrong with having a lifestyle company that if it can enable you and your family or extended friends whatever it is to have a brilliant life don't change if that's what makes you happy great advice yeah Yeah.

1:37:44Right. Because being happy, I would argue, is the greatest form of success. Are you happy in every day?

1:37:55James Burtt: 100%. I'm happy. Don't risk that. Don't risk it. Because money isn't necessarily happening. There's a big difference. Money is an enabler. It's a commodity. But if you're a makeup of individual, where you've got your own business, you can control by turning your own volume up and down on how much effort you want to make what you put into your day and week and how much you earn fucking well done i'm being serious yeah 100 yeah because that that is fabulous that is fabulous but for the five percent of people if that in the uk that then go on to want to exit a business because it's as low as four percent is what the percentage of people that actually sell their business is 4%.

1:38:43But if you are in that 4 % and you do want to sell, build to sell. Don't just build a business. Model it for a buyer. You'll get there quicker and you'll get more value. The weakness I see is people build, build, build, build, build to want to sell. without recognizing what the buyer actually wants to buy it's not all about your profitability that's purely part of the mechanics in numerical function there's always a way to structure a deal that can give you what you want it's not about the ev of the business day one so that that will be my guidance if you do sit there and go at some point i want to capitalize have a capital moment on my business.

1:39:38It's never too early to start planning it. Doesn't mean whether you don't have to use people like us. You can do it. But start thinking who would want to buy this business? Why would they want to buy it? And where's the value going to sit? Rather than focus purely on profit, which is where the majority of people think the value sits. Howard, thank you for your time. What an absolute pleasure. Thank you for being on. It's been an absolute pleasure, James. Thank you, mate.

1:40:03James Burtt: Thank you so much for watching this episode of Building the Brand. And genuinely hope you absolutely love this episode. If you want to click here, there's another great video that you can watch. Or this one here. Oh, I've picked it just for you. It's an absolute banger. Click that one right now. Go on. And I'll see you on the next one.