The State of the UK PE Deals Market - Tim Morris, UK CEO, DC Advisory

0:04Tim Morris: Hello everyone and welcome to the Pep Talks podcast. In this episode we're back for our annual catch up with DC Advisory and their UK CEO Tim Morris and we'll be talking about the state of the UK PE deals market. It's been a turbulent six months, shaped by conflict in the Middle East, a new government and the tax questions that come with it, and some tough questions running through software and AI. Tim helps us make sense of the effect this is having on PE deal activity, and most importantly, what it means for PE-backed leaders in portfolio businesses today. I hope you enjoy.

0:42Hello, everybody. Back for the next episode of Pep Talk's Map of the Maze. Actually we're not even called Map of the Maze anymore are we?

0:50Tim Morris: Yeah, I don't know. The PowerTalks Podcast or the PetTalks Podcast. Probably something we should figure out. We're doing some rebranding. And we're here in the city in a lovely room. We're in a beautiful boardroom with 15-20 chairs around a table with our friend Tim Morris from DC Advisory. Hello Tim. Hi Sam, hi Richard. Good to see you both. Welcome. You too. We look forward to these chats because we have them twice a year, don't we tim officially twice a year a lot more regularly unofficially but officially twice a year we check in on the state of the market so you know we're just going to talk now for half an hour 40 minutes get your view on what's happening and uh what the deal transaction activities like with private equity and what the trends are and i suppose when i was thinking about this earlier this week you know if if the if our listeners backtrack through our episodes and listen to our episodes with you and with Richard over the years I mean it's just I think every time we sort of start with bloody hell you know what's the last six months major geopolitical events or more trauma and this last six months if you if we reflect back on it I mean there was in January there was no war or no conflict in the Middle East the SAS apocalypse hadn't happened yet and we still had Keir Starmer and now we have a new government.

2:14Sass apocalypse, maybe not, but it's still a very rocky sector and lots and lots of uncertainty driven through the conflict in the Middle East and our friend Donald Trump in the US. So I suppose our first question to you, Tim, is like this, it feels like this is just a new normal. Yeah, and it's just a different new normal. we were talking about that in November you're coming through are we going to be optimistic about the new year and of course we were because that's everybody's job to be and we are in a every client, every investor every management team have got their heads around that geopolitical events are always going to be happening whatever it is this is the environment we're in and you have to operate knowing there's a level of uncertainty and that's the only certainty is that there is uncertainty sas apocalypse quite specific and and ai we've talked about ai for quite a while but actually the the pace of change and impact of anthropic and chat gpt is huge and we talk about it uh an awful lot then with uh uh our clients in the pep talk your pep talks members uh but that is the new norm and we are an environment where everybody's got to work within that and work out how do they get conviction around particular situations with that uncertainty.

3:44Is that what you see and you're trying to really tap into when you're talking to private equity buyers? Are they really just trying to understand the risk associated with assets that they're looking at in this new normal of a fluctuating market and a fairly high risk market? Yeah, they've still got the issue of deploying capital. That remains a weight of capital to deploy. And what they've got to do is find areas where they've got a right to win. and businesses that have got the resilience on against geopolitics or SAS or whatever else might come up. It's just a real assessment of risk. But they start at a macro thing.

4:33One of the big things obviously is at that macro level, which sectors are being most impacted by these different risks and the software AI impact has really created. And that's a period of uncertainty that's probably coming through already you know we're starting to move through that as people have done the work on well what areas even within software what are the modes that are going to protect them so but there has been and we'll talk about it a bit more i'm sure that shift to all actually in this environment what are the most resilient areas and that definition of resilience it was software before that's less resilient at the moment so So we talked about it, the rise of the technical services.

5:17All the white-collar consulting investors are now focused on blue-collar technical services. Yeah, I already got that four or five years ago when you think about post-COVID and the SaaS bounce in valuations. And a lot of the SaaS assets were acquired at that time for incredible multiples. And they're the ones perhaps now that are sitting with a valuation valuation that's not going to match the multiple that was paid for it for those that have you know in secondaries that's that is exactly that or tertiary is exactly that but there has been a a leveling out of that valuation it was a big steep drops of over 20 and and the question was is that going to continue to drop further so the 40 in certain certain verticals in certain areas that's that is now doesn't take long for things to level out people say okay i kind of and i can now make new decisions whether where the sellers are prepared to sell at that level yeah that's an issue but if you if you've been a super fast growth and you can still make a good return at that lower value there are there are deals to be done and whether that will be primary or secondary but having a lot less primary deals um in this period i think that's largely down to technology where if you think about the growth primary deals big area of that was tech and that's reflected in tech being 25 % sorry primary deals been 25 % down year on year

6:43Tim Morris: yeah should we take a look at the stats over the last quarter for those of the listeners don't know we do a deal data digest we used to do it monthly but we've moved to every quarter now just because month on month not too much was really changing but looking at it let's look at the last three quarters so Q4 25 Q1 26 and the most recent quarter as you say MBOs Q4 25 40 Q1 26 38 and then a drop in the most recent quarter down to 12 a bit of an uptick in SBOs this quarter so 17 Q4 15 Q1 and then 20 Q2 and then another sort of standout stat here is the amount of growth deals so only eight in Q4 25 15 in Q1 26 then a big increase to 25 in Q2 26 so we've got some conclusions about why we think that happened in our deal data digest but it'll be good to hear yeah yeah and these are asked these this is our data and I suppose we should frame it we're looking at deals of enterprise value of sort of I mean really small five six million quid of enterprise value afterwards so a lot of those development minority deals are really quite small not in your realm of DC advisory sort of work.

7:55Yeah albeit I think we talk about it has been particularly minority deals there have been a bridge to sort of a transaction so there have been some minority investment deals that were filling the gap where somebody can't deliver the full value and somebody's coming in to buy a part rather than a larger majority so that's relevant so it's not just that these are small growth deals happening it is a theme on the secondaries yeah actually there's i mean it's pretty much driven by what we just talked about the the rise of the technical services the secondaries is most sectors are flat healthcare is uh is actually down so only sector down uh but in industrial products and services and infrastructure services and those related assets are both up 20 and 29 so is there any reason for health care being down or is that i mean it's been a very popular sector hasn't it in the last few years it has and and whilst there have been some deals around like we we sold medical to health partners oh did you do that we did we did uh so uh yeah warburg's brought health partners and then uh and then we there were two deals in warbo's been busy they've been very busy yeah so as you know the technical services side we sold a network plus to uh to to warbo so one of the biggest infraservices deals uh and one of the biggest deals in the in the uk this year so but coming back to the point around health care occupational health there was palm there was uh medical so you get these pockets of activity but more generally with with some of the uncertainty around uh health investment uk nhs etc there's just been less activity there are small particularly on this or private private

9:48Tim Morris: equity perspective is there an element of de-risking here for pe so the sbo's these are businesses that already have a track record under pe they've been through a diligence process compared to the mbo's where they don't have that and it's a bit more of an unknown quantity is Is there a potential that that's causing a shift as well? It could be. The deal that we were talking earlier, the deals that are happening and happening quickly and at strong prices are the businesses that have got brilliant data, great preparation, lots of information that supports the equity story, and a long track record that you can really see that happen.

10:24On the primary deals, the information is often... Patchy. Patchy, less quality. And people, when you're being asked to take views, I was talking to some investors only yesterday. You used to take a lot more views as an investor than you can do with investment committees today. Just tell us what you mean by that. That's interesting. So, for instance, what's your five-year track record of growth by product, by customer? If you can't give that level of information, and IT will say, well, we can't make the right decisions for investment. it used to be that well we've got a couple of years we can we can interpret what's what's happened before that'll be good enough whereas now the ic's now i i if we haven't got the data i'm not just i'm not just taking your commercial judgment on what's happened we're just not we're just not investing until and unless that data comes forward keep keep tracking it because we don't think anybody else is going to take a view either.

11:30Yeah, instinct's not enough. Yeah. And that's because of the backdrop of a risky market, isn't it? Yeah. They've got to deliver the results now, the private equity firms, because they're under pressure of liquidity, delivering liquidity back to LPs, which we've talked about a lot in the past. So I think the secondary probably is an element of strong assets, good performance in those assets, they come to market, there's a queue around your door saying, right, let's have it, let's get into it, because there's a lower level of risk associated to them. They've been well-managed, tons of data advised by you guys.

12:12Yeah, and then there are those where we've been talking about, are you going to see, the very best assets continue to trade really well, it's a bifurcated market. passage of time you still have to do good prep but not that this almost almost the best assets are also trading where take out the sack the sass part of it because of the just the demand for assets beyond technology demand to keep doing deals probably been able to get some more deals that are slightly lower quality but good enough information those are starting i think that impacts the numbers as to why there is it and I think that's encouraging so businesses that might not have traded in a less sexy sector have had and will continue to have a window whilst technology rebalances itself.

13:08Is there a difference in behavior between large cap funds and sort of lower mid-market funds when looking at assets? Well, interestingly, a couple of recent deals, the mid-cap are starting to act like large-cap on the best assets, i.e. I'm going to do all my work. I am going all in. I'm going to do a lot of pre-work. and if it's in a process, I am going to try and pre-empt that process and I'm going to take views. So I'm aware of a deal. We weren't actually involved, so I won't name it, but I'm very clear. They'd only had 11 % of the legal diligence covered, but they'd worked out actually what was the real risk here and their way of winning was to work four days into round two in order to get a deal done.

14:03again these are the best quality assets but even that wasn't that was just an asset that was very actively sought so you are seeing the mid cap realize if I'm going to win deals I need to act in the way the large cap does which is invest more upfront and then be prepared to accelerate which we talked earlier about the data if they've got all the data in the commercial judgment then the other risk areas that those are risk areas that ICs will if you're on IC so having IC members on the deal to take that view is the way to address that imperfect information yeah that's that's probably a good piece of advice isn't it for management team CEOs going to market working with advisors it's just you know ask that question of who we're dealing with in the private equity firm is there ic approval for this how close are they to it are we going to have to go up the food chain two or three you know runs before we get approval from the private equity firm to bid because if you've got that it's it's not that serious it's a really important part how we think about advice is there's a theory of well have you got decision makers active uh how what how close are you to decision makers well there's nothing better than having one of the key decision makers actually active throughout the deal and we've seen that you were saying earlier before we started recording like you know they were your most recent transaction like the most important people on the course yes and not not just hello and yeah I said the questions they're actually active throughout so had a real depth of understanding of why why the risk profile of the deal was what it was yeah and built that relationship of management it's also management's judgment of actually this is what it's like to work with them they they do understand our business and they want to engage it's that's not rocket science but it's not everybody is not doing that all of the time it's a lot of funds in the mid-market that just haven't deployed at all like 12 months 18 months and we won't name names but a thin piece of research on the digest do you have any view there what's what's happening in those funds without specifically going into individuals you've got funds that are in that i'm actually fundraising but i'm not being as public about how much capital i've i need in order to and when i can start doing those deals there's funds that are risk risk off but really it's not just that they're risk off it's they just haven't necessarily got the the support to deliver there's funds like in the tech very tech heavy investors who have just been trying to work out what it is that they should be doing and when and being prepared to sit on the sidelines for for six months Trying to get their head around what does the apocalypse really mean to them.

17:12Partly because they're spending a lot of time on their portfolios to understand, okay, what's the impact on my portfolio? So there's a big attention shift to what does this really mean for all the investments we've already made, yet alone making the next investment. Yeah, okay. Should we talk through, I mean, that's a bit more on SaaS,

17:37but we've talked about the really positive situations. I suppose it would be interesting to listeners who are not necessarily in the most positive positions, just how do those other macro events affect deal flow, the Iran conflict. At the time that came about, February, March, April, did you see deals just being pulled ready to go to market? Yeah. No, we're not going to go to market anymore. There was a... If you could work through what is the impact likely to be on this particular business, we had a few businesses that we made the decision actually. Good news is we think that you can see why these are resilient and proved to be, from infrastructure services with regulatory cycles through to fire and security, which is compliance-driven, which is another large tick deal.

18:34those businesses you could see through it but businesses it wasn't as clear and maybe susceptible to interest rate particular interest rate variability because it was unknown what was like to happen with the interest rates other than they were going up so we proceeded with a lot but there were a few that you say well you just need to wait and part of that we had a deal where one of our very hot bidders very close to the end just said our IC is it we're through on the economics of your deal however they've decided we're pausing and not investing until we understand what Iran's gonna how it's gonna play out and they were they have still paused they were two weeks away from they were being very competitive but that was just a it's a full we're risk off and they paused for probably six weeks they didn't wait until the end of the war but they waited to work out what what it might look like and because they've also figured out there isn't necessarily an obvious ending to that given what we keep saying so they come back now that it's a deal back the deal happened so i won't say which one it was but it happened with a different investor who had taken a view that no this you're right we think this is resilient for all the reasons you've just said yeah and great news for them and we had we had three other parties but they'd been making very strong running and so the deal team were really disappointed because they thought they were getting a yes at ic it was their final ic trying to trying to get it done but the IC members one of whom was on the deal was very active in the deal just explained we'd just fully risk off and it's just that window it's a very right at the end of the deal there's nothing you can do you've lost it thankfully for us we had other options and we delivered a great outcome for the client and it's that it's that investor that's missed out rather than our management team and our client yeah there's something in that isn't there it's like it can feel cataclysmic but actually you know if it's a good business there's probably another buyer you know it's a competitive process that's that we're talking earlier we've we've had a whole range of there is no sort of standard process everything's curated and bespoken the risk of a pre-empt is uh and a bilateral is that in that situation we we believed all the way up until that point that that investor would have done that deal if we'd only had that party and they were risked off that would have left that okay as a question and when you lose momentum you can lose a deal for more than 4 or 5 weeks that can be 4 or 5 months

21:34Tim Morris: What's your advice to management when it does go on for longer like that? If there's something that happens that really undermines the deal how do you deal with that? Keep focusing on delivering the day job, the numbers which creates your option because the one thing you want to be able to do is if it's a decision that actually we're all collectively pausing the most important thing is to be able to look back in however many weeks or months and say yeah we've continued to deliver and that only reinforces your position and also keep your team motivated because at that point in a transaction everybody's getting a bit fatigued and you need to keep focus on the business and the deal will come back.

22:23What changes are you expecting or has there been an impact due to our political turbulence? New man in Downing Street. It's unclear. what other than everybody talking about we've got a more left-wing government more taxes to come more taxes to come and he's very focused on talking about reducing the the cost of living how do we afford there's just so much uncertainty around what that looks like the utilities is he going to be able to afford to nationalize or there's so many questions that actually people say well just know that the UK is not necessarily going to be a better place than it has been.

23:14But we said the same thing when you had trustonomics, you had the levels of uncertainty are not stopping transactions. Yeah. If you're in consumer, again, there's nothing new there. Consumer's been a difficult place for a while. That's just continuing rather than increasing uncertainty other in particular areas like we still see leisure activity because people need to have some kind of experiential positive experience as opposed to buying physical products in order to make themselves a bit happier, everyone wants to like I'm feeling, go on holiday, spend some money enjoy yourself and don't worry too much about whether Count Binface is going to beat Nigel Farage or whether Andy Burnham's going to put up CGT in March.

24:10Do you think a CGT change would have an impact on the number of businesses coming into PE ownership? Probably in the short term, with a window still open, you are going to see a rush of founders. I did mention that deliberately because we are. It's not tidal wave, but those that have been thinking about it, again, but we have this every... Yeah, this happens every two or three of us. but it's real we've got two new situations where we need to complete by the end of March and we'll have this conversation again for the primary deals is your information ready and we know the answer so there's going to be in that I think it will be Q1 next year there will be a lot of activity which is CGT driven because it's not is it likely it's it's highly likely many other levers they can pull but i then that would have a knock-on effect in that you're going to see a sort of uptick of transactions driven by that but then there will be a cliff edge when there where you know like founders just won't sell like what is the point of selling if i'm giving handing 50 you know to to the uk government in which case people will wait for a change of government you can structure you know people might do some tax structuring in order to get the wealth managers yeah the wealth managers and tax advisors do will do well and if that's a good good active sector in itself wealth management at the moment but also after that people will take a few weren't they on or if it was my business and i thought there may be a a change in government in two years because it probably by then two years time I probably would wait if it was my if I thought that was such an important if everything else was equal you shouldn't let the tax tail wag the commercial dog but if you've got that time and you're not in a hurry you would wait we ask you this question pretty much every time we do this podcast what's the percentage of deals that you are working on through no obviously those that are completing are all completing through your skill and navigation of the market but I think it was you or maybe it was Richard who said maybe 30 % of what we're taking on isn't getting done and that's just because of the state of the market that was a year what's it like now?

26:47it's less than 30 % it's lower than 30 % some of that's a bit of luck because you need a bit of luck it's still a notable proportion and those that aren't being done are around that generally so tech and expectations has been one area other than that it's about business performance and business is not delivering what they said they were going to do in an extended period if you have an extended period which is why it's really important to only be in the market for a very short period of time such that you don't have the ability to demonstrate performance coming off because it doesn't take a lot yeah you know we talked about it in the last session it only takes for a business to be underperforming for a couple of months by you know a single digit percentage on revenue and margin for people to raise eyebrows and start to question fundamentally, okay, I need more time, I'm not sure, is there a big problem here?

27:57Those are the reasons why things slip or don't necessarily happen. I'm just thinking about our management teams and CEOs listening to this and thinking about it might be a year, two years away from a transaction. so we've talked about the importance of data we talk about that all the time that's you know we'll bang that drum again but you've got to have everything sliced and ready to be analyzed in a cube and you know it needs to be manipulated really easily by lots of people and it needs to back up your story for growth doesn't it but what what's the sort of percent for those who may be coming into pe ownership for the first time listening to this what sort of percentage growth do they need to be delivering on an annualised basis to be safe under PE ownership and deliver a good return?

28:52The growth numbers increased because of the cost of debt being higher than it used to be so you need to be in sort of double digits if you're not in double digits yeah you've got a challenge. I think 10 to 15 percent yeah you've got if you're in 15 percent to 20 percent yeah you're going to do really well yeah because the leverage is fine yeah your growth rate if it's sustainable you're going to get there probably in three to four years agreed if it's bumping along at five to eleven percent good year is 11 the next year is five that's very risky for PE at the moment isn't it it is unless there's sort of very specific reasons why you've got a flat period because of a particular contract.

29:35On a general basis, yeah, you need to be hitting 10 plus. Yeah. And those deals that you've done and have done really well, how did the management team set themselves up? Because they're quite large transactions, weren't they? And you mentioned earlier the importance of, like, you've got to deliver your numbers. There's a range there from 100 to a billion in the deals we've done in this period. but the same things apply for all of all of those sizes which is have we talk about what does having good data mean it actually means having granular information that you can explain trends and you can support your equity thesis really clearly what are my value drivers what are my levers what are my value levers and this is how i've implemented them and this is the impact in i can demonstrate and then this is what our plan is and you can see generally we're doing more of the same we've done this before it's not uh or if it's we're going into a new country this is our plants really well thought through this is what we've done we've generally have to if your strategy for the next five years is international you have to have done something to make it happen so it's about that preparation it's also about team there's a real big focus on have you got the depth of team not just the CEO and the CFO who do a lot of that initial interaction people will really want to get under the skin of the team that you've got below that how good are they?

31:11How many layers do they go down then? A billion the layers are going two, three deep probably three deep a hundred million probably going two deep and that's probably the key difference there yeah and then again are the particular roles that are really important to the delivery of your particular plan so if it's a buy and build how good's your m &a team how good's your integration and they want to know that and and drill into that that team and and and really for them their own view of yeah that's a good fit for purpose often it's not a diligence of can they do it it's actually i'm on a value creation plan i'm creating the investors creating that value creation plan which is we think we can help by upgrading these areas of your business which will help increase the likelihood of hitting the plan or achieving it earlier the best investors and the best conversations the best deals where we're seeing that the approach is not i'm here to kick the tires and check what you're what you're telling me is right it's what can i understand and what can i add and how can i help and those are conversations that ceos your members enjoy the most because it's they're positive conversations about believing the future even if within all that they're couched really some key diligence that they haven't yet gone over that conversation having conversations about value creation if you're a ceo is a much much more enjoyable conversation yeah we're gonna go yeah how much

32:46Tim Morris: are you seeing ai adoption feed into that in terms of growing the business obviously everyone's talking about at the moment but as a fundamental value creation lever and also being able to demonstrate that to PE is it having a different making a difference so I'll start with my technical services argument which is there are businesses which you could part of the the investment thesis is this will not be AI disrupted so that part of the market has been active because it's really easy I can see there's efficiencies that's going to come in the way we deliver but my business model is not being impacted that's why it's a key reason why the the level of activity in those in those sectors should we just run through those sectors as well so blue collar technical services whether it's ventilation hvac compliant tick testing and pleasure testing inspection compliance and and that's a broad spectrum now of activity which includes hvac maintenance you've got your infrastructure services so in the old school used to be basic hole diggers but actually there's a lot more complexity parking parking part of that charging electricity anything that's in the energy transitioned thematic so which is power and water yeah data center relate m e related to data centers so those macro sectors but the product the service you're delivering into is a physical person delivered service where you can't just replace them with a robot.

34:21Whereas the white collar has been a challenge because the accounting deals that were so prevalent have slowed as people are just trying to understand what that margin impact is going to be and the business model impact is of AI in professional services. So the white collar consulting generally has been as slow as a consequence of that. And obviously, we talked a lot already about software where the business models are being appraised. I want to go back to that transaction. So I'm just thinking about management teams. You know, those billion dollar enterprise value deals plus the 100 million enterprise value deals.

35:07you've got to hit the numbers that's what we're saying but it takes we know and you because you tell us it's taking 12 months you know eight to 12 months to sell a business now if you're really going to get ready i mean from the point of your engagement to the point of actually transacting you know this is not a sort of 12-week process this is like you better get ready you better get the story right you better get the house in order um and you better do some work initially on warming up the market but if you're a ceo and a cfo doing all of that work it's actually quite difficult to keep an eye on the performance of the business isn't it so what's your advice just around like how do you how do you set yourselves up as a team to make sure the numbers get hit ideally over delivered a really important point it doesn't just happen because you work harder every day as a CEO and a CFO.

35:58You have to make sure that you've invested in your team and you've got a... At the largest end, you can make investment decisions more significant. In that case, it was about investing earlier in the COO who effectively ran the day-to-day of the business whilst the CEO was leading the deal. Now, the CEO obviously is still keeping an eye on everything, but he can't manage it in the same way. You can't lead the day-to-day in the same way. You can lead the business, but you can't lead the operations of the business. And having that capability across all of the key functional areas, the CFO making sure they've got a really strong number two, who can, again, make sure all of the day-to-day and all of the prep gets done whilst the CFO is supporting the CEO in bringing everything together.

36:52So you've got to have a really clear plan. Who's going to do what? Who's managing the day-to-day? Who's involved in what in the transaction? So making it very clear that you're not going to meet that COO because we're not distracting that COO by the process. That's something that's for later down the line with the investor conversations. Yeah. I just think that's just super critical. And we see that all of the time in terms of businesses just, you know, succeeding to the exit versus those that are struggling if there's strength and depth in the management team. And that doesn't necessarily mean you have to go and hire a COO, you know, in smaller businesses.

37:34But you better equip those people in the number two roles, like the CFO role. And that equipping might be making sure that they've got the team underneath them that's stronger than it. rather than it being just good enough it's got to be absolutely that takes like two years you know you've really got to be developing those people up to that point and those people once you've done the deal you're really thinking yeah they they're not far off being the number one you know in another three year two another couple of years they could have my job and that gives you lots of optionality as the ceo and a cfo and then also it aids the whole process of management due diligence and actually they've got a really strong team here it's classic succession planning but with it being well invested early enough to make a difference in the preparation and then the delivery yeah i thought you're going to go somewhere on the conversation about the length of time it takes and there and hitting your numbers challenge the world how do you set your numbers such that you that's a good point you miss them one of the things key things there is we don't go out with detailed numbers until very late you can talk about the shape and build a build enough appetite and conviction without being prescriptive on detail detail so just i'm really interested in that so what do you mean you know so you've got buyers lining up three or four bidders one pre-empting and you haven't given the detail of the numbers yet i I mean, what have you?

39:08Maybe not that far. You've got to really engage and warm up the right parties early enough for them to then spend time and effort and money on the market and the commercial work. At that point, they've only really had information that's saying, this is what we did do last year. In fact, you know you've done that. And directionally, we might be, we're going to be 60 plus. And you know that you're 60 plus or you're 70 plus. or 80 plus you know that that plus is actually probably more like you you're thinking 65 plus plus yeah so you're that's enough for them to yeah to know that the scale of growth that you know you're going to deliver the details that you'll get that detail and then when you have that next interaction you start to it really engage in releasing from the first set of information it's narrowing that that range down it's okay so we we're on track and our run rates north of that good news let's give you some good news so they've correlated it to this is a business in the 60 to 70 yeah okay great actually they're at 65 and there's some run you know some upside in the run rate you're trying to build that narrative up now obviously if it's if you're at 3 million going to to 4 million it's it's harder it's the same principle you you've got to manage expectations and release information in a way that you're building conviction and giving good news and when you give the real detail it's just the detail supporting the story yeah it's tough on the other side of the fence isn't it for the private equity firms it's not an easy in the debt we're sort of getting a few grey hairs now we're getting on a bit but back in the sort of uh noughties uh early early tens i mean private equity was just fabulous uh cheap debt reasonable growth um fantastic markets whereas actually now for them is it's really quite tough it's a tough industry it's a more competitive it's maturity it's a maturity that's what happens uh those in the in this in the industry have got to work harder to deliver the same returns they're going to work smarter and you one one poor performing fund can kill you as opposed to well but look at the last one it was great this fund is okay but don't worry the next one will be great that that one fund under performance means you might not raise again and that's that's the real challenge for the PE industry is making sure that they they don't find themselves in in that place and then the individuals, their whole economics are more challenging.

42:00I'm going to invest 10 years of my career with the belief that I'll start to get carry at the end of those 10 years when you're at that sort of middling junior level. But they're seeing, oh, that might not transpire. So you've got more movement actually within the industry, which creates winners and losers. And the winners and losers within the industry are starting to become clearer. Yeah, I think when we translate that back to management teams, it's sort of understanding the difficulties of a lower growth, mature PE market. You've got to, if you're coming into this, you've got to be delivering that value creation.

42:44Value creation, sort of practice, simplification, what are the three levers that we're going to pull in a short period of time that are really going to make the difference to EBITDA performance and get us to an exit. And you should just be obsessing about that 15, 10 to 20 % annualized growth and plus and how you're going to deliver it. I just wonder, I'm rambling there a little bit because there's a thought process going on. I just wonder, how closely are they DDing the go-to-market sales functions and pipelines now very closely it's a that's we're talking about data it is how does it how does it the funnel how does your funnel work what's your conversion rate how it's one of the critical commercial diligence questions and it's not just how closely does the sales it's not just sort of outsourced to OC &C or BCG yeah it's it's actually the deal teams are getting granular on crunching crunching the numbers on how your sales funnel works, how concentrated it is by a particular...

43:57How closely do they look at the individual then, the sales leader, the chief revenue officer, the commercial director, whatever the job title is? Are they getting them in? Are they interrogating them? You talk about who they need to spend time with, how deep they're going into the team, the CRO and the sales function, how it operates, how effective it is, what's the reward structure, how aligned is it? when you have you have you change your reward structure which has led to that that improvement in your sales or when you've got a dip was that really getting granular on how you do what you do not just and who's doing it how good are they as well as just what's the output it is yeah we didn't it didn't used to be at that level you talk about sort of the industry sophistication yeah and you think to do that that takes time and energy so it's come back to your protecting the business you've got to be well set up for it we think that I mean obviously that role delivers the organic growth but that role now in terms of quality has to be fabulous and we see this it probably hasn't had the emphasis on quality that has you know some of the other like the CFO role for example yeah I think it's a fair point the obsession with the CFO role rightly so for the last 20 years of course the CRO sales director, commercial director hasn't been that obsession but now it's come in it is and to Richard's point around AI it's also kind of how AI savvy are the whole of the leadership team not just I've got an AI person focused on this because it's impacting every area of a business Yeah, and you should be using AI to go to market.

45:46Yeah.

45:49Tim Morris: Are we done? I think so, yeah. We said half an hour and it's been 45 minutes. That's fine. Just rambled. We could carry on talking for the rest of the day. Once we get going too. We love it. But thank you for joining us. We'll see you in November. We'll be in our new office by November. This is the last meeting we'll have, Sam. So I'll be on holiday on Saturday. And when I come back, we'll be at 99 Gresham Street. You're going to be around the corner. our new exciting we're gonna leave this old boardroom into a new jazzy nice and modern next generation absolutely i look forward to it thanks tim thanks Richard thanks Sam