Episode 10: Unlock the secret to a successful exit

0:00Chris Maguire:Welcome to the Dealmaker Uncut podcast where we speak to some of the UK's most exciting entrepreneurs and hear their investment journeys. We'll discuss the challenges, successes and lessons they've learned along the way with expert deals commentary from Jonathan Boyers, head of Alvarez & Marcel Corporate Finance and me, Chris Maguire, Executive Editor at Business Cloud. Welcome everyone to the latest episode of the Dealmaker Uncut podcast powered by Alvarez & Marcel. My name is Chris McGuire and I'm the executive editor of Business Cloud and it's good to be back alongside my good friend and multiple award-winning dealmaker himself, Jonathan Boyers.

0:36Chris Maguire:Jonathan's been involved in deals totaling more than£5 billion during his long and illustrious career and he's a managing partner and head of Alvarez and Marcel's corporate finance practice in the UK. A good morning to you, Jonathan. Morning, Chris. It's great to be back for the next series of the podcast. We're going to be interviewing some really great people and over the next few episodes and particularly good one today a very good a lovely introduction and before we introduce our special guest a quick shout out to what media who produce the dealmaker on podcast they're the specialists in video production and video technology and we're delighted to be working with them for any new listeners to the show or viewers in the first part of the show we're going to be interviewing our very special guests and then we'll have a little break and in part two we'll be reflecting on the interview that we've just done before Jonathan leans on his 35 years of experience in the corporate finance world to answer questions from our listeners.

1:32Chris Maguire:Now there's an international feel to today's interview. Who are we speaking to today, Jonathan? Well, today, Chris, we're going to be speaking to Martin Port. Martin's one of the better known entrepreneurs from the north of England. I think probably best known for um being the founder of leads-based uh big change which he um he ultimately sold for over 300 million um but he's also interestingly got a range of other investments that he's made um i think one of the ones we'll talk about is his latest startup build concierge um but quite a lot of other investments as well so martin's in israel at the moment while we're speaking to him so yes we are we are have got an international feel to the business but welcome martin it's great to have you uh to speak to great to uh see you again jonathan and chris and obviously um have a lot of conversations with many people and uh i'm really looking forward to this conversation because uh it really um it you know it's at the heart of a lot of the time what we do, deal making.

2:41And it's great to share my past experiences with you.

2:45Chris Maguire:Martin, I'm going to kick off. You've got the longest LinkedIn profile in the world. You've literally, it stretches to about six or seven pages. You've been involved in so much stuff. I'm going to go straight to 2002 when you founded a telematic business called Masternaut. Can you just tell us what problem you were trying to fix then with Masternaut? So Masternaut started out as a pure play vehicle tracking business. I mean, we started a very good time, good timing, because it was at the time when the internet was really coming into its own in early 2000. And we basically provided tracking for businesses that had transport businesses or service type, maintenance type businesses.

3:30and we installed the tracking in vehicles. We were obviously helping the companies improve their efficiencies, their CO2, help improve their customer service. And occasionally, firms would also use it as what you call the spy in the cab in those days, where they would actually have a tracking, tracking the vehicle. They'd be able to see when the vehicle was parked up in a lay-by or where the engineer or driver was having a doze or he may have been selling a fridge to a third party with the company not knowing. So there's all sorts of stories I can tell you about tracking, but primarily it was all about efficiency, customer service and helping people become greener.

4:19Chris Maguire:When you started that business, you'd already had quite a successful career beforehand, but you're about 38, 39, I'd imagine. Masternought won countless awards. I think you acquired 3 ,500 customers. You identified the importance of software very early on. It sounds obvious now, but back then it wasn't. And you bought an app business because you could see everything was going towards apps. Am I right in thinking that you paid the princely sum of one pound to buy an app company? Yeah, there's a story behind it. Probably Jonathan's seen a few of these in his time. but it was a small business that was part of a massive business.

4:57It was a company called GE Mobile Solutions. GE stands for General Electric. And actually, in fact, I think Jonathan's former colleagues actually did the audit for GE, probably internationally. And GE had this business. It was sitting within a business called Swiss, sorry, GE Insurance. insurance and G insurance was sold to Swiss Re and this small business was left within the G multi-billion pound portfolio of businesses and they needed to sell it. Anyway, they approached me when the business was, you know, doing quite well. And I felt that the asking price was too high anyway they during that period they they went with another offer unfortunately that or fortunately for me the offer didn't complete because the other company pulled out and during that period of time and Jonathan probably seen this a few times the business people took their eye off the ball while they're selling the business and the sales start to drop so ultimately GE being a very people-focused business.

6:16They wanted to put the business into a safe pair of hands because they were caring about their employees. With the business plateaued or the sales were on the decrease, they came back to me and said, would you be interested in taking the business on to being all the employees? The business was based in Skitter, not far from Leeds. and I said luckily actually before I went back to them I had a former GE business development person working with me as a consultant I he explained that GE if he said to GE I'll buy the business and I'll give you I'll take no warranties so you know maybe just for tax but everything else no warranties and you'll take on the people you probably get it for a pound and also maybe get and i got with this business 400 000 pounds in cash so actually i paid a pound but i actually really got 400 pounds and a business for for free pretty much in fact the pound was handed to me by a friend who was actually working at slaughter and maize office in london who came down to see me when we were completing the deal and he i said to him we got a pound i've got to pay a pound for this business he's he lent me a pound so martin you you set up masternore when you were 40 so you'd already had some career you know some careers or a good career before then so and then you subsequently sold that business not not not too long after and created quite a bit of wealth uh from that i'm interested in what was driving you to set up that business at that sort of age and and then i'd be interested in just hearing the story of that value creation up to the ultimate exit as well.

8:07So I was working for another company before Masternor, and it was a trendsetter in vehicle tracking. Ironically, again, it was partly owned by GE. It was a leads-based tracking business. I was the marketing director, and like many entrepreneurs, they see an opportunity and feel like the business that they're in maybe wasn't going in the direction that they would like, and they thought, oh, I can do it better. And that's exactly what I did and set up in 2002. I also felt that tracking being a hardware-based technology was going to become heavily commoditized. So I wanted to get more into software.

8:56so the idea of starting Mastonor as a pure play vehicle tracking business and then developing it into more of a software business by buying which will probably come on to various businesses, software businesses you know that was really how I got into it and how I developed it and then obviously then let's say culminating into a sale um a partial set in 2009 and a final sale in 2011 and um and so was the when you set the business up was the driver to create something or was it about making about creating value wealth and value i'm just interested in the drivers behind the driver was to always for me to um create a solution that my customers will absolutely love and, you know, smother them with a great product and great customer service.

10:00But ultimately, I took shareholders in the business. So I owned on day one, 40%. My shareholders own 60%. And the ultimate aim was to obviously give them a return. and it was a bit of a, we've got, and we'll come on to it during the session today, but there's quite a lot of competition in my family. My sister, my wife's sister and brother-in-law, my wife's siblings, they're very competitive and each of them have built and sold three or four businesses each. So it was, for me, I didn't want to be the poor relation. We didn't want to be the poor relation. So we wanted to make some success. And I think having outside shareholders, passive shareholders, that put money in on day one and wants to return maybe in year five, seven, nine, that also gives you an eye on the price.

11:10And so that then gave you the platform to move on to the next company.

11:16Chris Maguire:Yeah, I mean, I just want to come in with a question here, Martin, and I'll also ask Jonathan as well. I think the way you set that business up is quite interesting, but you went in on day one with only 40 % equity. I speak to a lot of business owners who want to retain 100 % equity from day one. And I mean, I don't know, Jonathan, in terms of what is the perfect choice? It varies. So I've got lots of clients who founded businesses and then they bootstrap them and they'll do everything to retain as much, if not all the equity as they can. And I suppose often that is the right strategy. I think you should value the equity really carefully.

11:53But then equally, you know, if you need, you know, it's often easier to build businesses as part of a team and people need to be motivated. sometimes getting shareholders alongside you who are running the business, who are motivated is the right way to get the team aligned sometimes you just need funding and you'll have to give equity to get the funding and in those circumstances it's all around making sure you know who's in control Actually, this is the way it works typically, what I found and maybe Jonathan, that the first business you've got no previous success. So you have to, you know, you sell more equity because you need to raise a certain amount of money and you've got a certain valuation you can achieve.

12:45So the first business was a million pounds valuation and I sold, you know, 60%. The second business, after the first success of Mastonor, big change. I raised one point just over a million pounds at a three million valuation and obviously that was a big success. And now the third business I've raised probably from outside shareholders over two million at a 35 million valuation. So as you build a track record or a background in success more and more people they're not looking really at the valuation they're looking at the the you know the um the you know will you be a success are you were better you were becoming a favorite rather than a long shot and i think that's the case and the valuation is really worked out you work it back from maybe where we're going to be in five seven years and say well if we can give a 10 times return potentially in you know five five seven years fantastic whereas like big change at three million valuation my investors got a 17 and nine times return so um it's that's

14:08Chris Maguire:personally how i feel it it works martin i'm gonna gonna go straight to big change now so you founded the business in 2013 to revolutionize mobile workforce management i know this is the deal maker uncut podcast but when you started that business in 2013 were you thinking about a scale and an exit five ten fifteen years down the line yeah i was a hundred million that was that was on day one that was my um enterprise value that i was trying to achieve so when i remember when um and we'll come on to it a bit later, but when Grey Hill first made contact three years before we... They're a US-based private equity company, aren't they?

14:53Chris Maguire:We'll talk about them in a minute. Yeah, so we actually sat down for lunch with Drew, who's one of the main partners there, and actually he said to me, I said to him, he said to me, you're interested in selling a share of the business. I said, we're too early. You know, we need to really grow and increase the ARR, the annual recurring revenue, because I've got a figure in mind of 100 million. And that's it. And he got back in his big black Mercedes car from in Leeds. And he drove back to London to get a plane back to America. But that was that, you know, that I had that vision in my mind all the time.

15:42And I think it was also going back to this, my wife, brother and sister, that they'd started selling businesses at 100 million. And I thought, you know, we can't be left. It's a good habit. It's a good habit. Can we just talk about Great Hill? Great Hill are a US private equity investor. I'm interested in the choice of investor and what drove you to choose them. Did they come to you? Did you go to them? Just a lot of people, when they're choosing, they've got a business and they're going to bring an investor on board. That is a massive decision for people. Some people are really worried about getting references or knowing the people they're working with.

16:29But could you talk about how you got to that decision? So obviously, over three, I met Greg three years before doing a deal. I met a lot of private equity, you know, people from inside partners in America, people from the UK. When you win awards, many awards, you're sitting, tend to sit on tables full of PE, partners in PE firms. so um but great great great hill um had basically every time they looked at um a mobile um service management software business you know job management software business they they said they called us up and said we'd like to sit on the call looking at this business we'd like to know what you think of it uh i mean it was very like uh it's sometimes quite it was quite interesting how they operate in a very open way.

17:27But they just really connected with us. And, you know, Drew Lokes and Chris Stewart and the team there, they're really engaged. And I think that they built that kind of friendship relationship. You know, we always knew the figure we wanted. The kind of companies that they had and have invested in were like incredible businesses like Zoom Info, Wayfair, you know, Reward Gateway in the UK, you know, really strong businesses. So we felt very, very confident. But at the end of the day, it was a mixture of people and price. Sounds like you built a good partnership with those investors. That's right.

18:20Yeah, very good.

18:21Chris Maguire:I mean, they'd been tracking you for three years, but I also think you had interest from 100 private equity investors as well. So you were clearly a man and a business in demand as well. I know Great Hill Partners, they offered you the most money. I think they invested 75 million in 2021, which valued the firm at 100 million, which was the figure that you had in your mind from day one as well. Now, clearly, you chose them and the money was a big factor. But was that the only reason you went with them? I think in the back of my mind, I always wanted to go with them. Um, but, um, you know, because I, I felt like the chemistry was good.

19:00Uh, they're very, uh, very focused. They were very, they're very entrepreneurial. Um, they're kind of the very, they're operational, but not like over, um, completely in your face and all the time. And, uh, they kind of, you know, were wanting to let us get on and run the business. but I think that ultimately we had over 100 private equities interested in the business. We had a number of offers and even at the point when we went exclusive with Great Hill, another big American PE that had a strong London office made an offer for us, which we obviously we made Great Hill aware that this other company was interested in that made us an offer but obviously we carried on with the Great Hill deal but I think I think we you know in hindsight obviously hindsight's a great thing but we made an incredible choice and I hope please God when building Bill's concierge which we'll come to or Bill Concierge will hopefully end up in Great Hill's hands again, but only in a competitive situation.

20:27So you use the competitive tension of a strong alternative bid to make sure you got the deal that you wanted with the partner that you wanted. Exactly, yeah. I think I would absolutely, unless it's what you call a fantastic deal that just absolutely blows market values out of the park. I'd always take, even then, I would take a corporate finance specialist to help you in the negotiation. I mean, I didn't realize the amount of work that people like yourself do, Jonathan. I mean, it's just incredible. I mean, there's so many different steps in the process and working with top partners, top corporate finance people.

21:19They really earn what they charge. Good value for money, that's what I always say. Great value for money. Can we talk about the sale of Great Hill to Simpro? um you you you once you know you'd you built that business with um with Great Hill and then you ultimately sold it to to Simpro for over 300 million I understand well the question that I'm interested in is how how you were feeling when you were approaching that sale obviously once you took Great Hill on board the business was always going to be sold um and you could probably foresee the time frame but i'm interested in how you how you felt in the run-up to the sale and what what was going through your mind by then you must have been in your what what what age would you be just to try to get because you've then gone on from that sale into a career that is is more is more is broader but you've still been very active and so i'm just curious in understanding what was going through your mind yeah i was 62 years old and it was october the completed october last year before they changed in CGT.

22:32But I have to say, I had an amazing, I was chairman at the time of the sale, and I had an amazing CEO, Richard Worley, an amazing team. And I was in a very, very good position because I had Great Hill leading on the deal with the support of Richard and the team. and I was very much, I think this is a big, I would say this to anybody going into a deal partnering PE, I'd make sure you're joined at the hip because when you're joined at the hip, you're absolutely aligned on everything and what they do is what you do and I think that's where I think the partnership really works. So I just left Great Hill to do what they're very good at.

23:28Obviously, we were a prize. You know, we were unique in the market. We're the market leader. And Simpro, which is a great company, obviously they're owned by K1, which is from Los Angeles, another great private equity. um you know they um they were obviously very keen on acquiring us they'd done a lot of research they knew they knew about the business but ultimately having great hill take the lead was massive and they did they run the pretty much run the process themselves but but what essentially happened was that your you know your business that you had been the pivotal the driving force behind growing was then sold for quite a quite you know very significant amount of money but um but then the business had been sold and i just you know i wonder whether you felt any remorse about the the change of circumstances or whether you just enjoyed it no i i knew what they wanted to do what their strategy was for the business i knew that they would um uh you know really sweat the asset and get the most out of business.

24:48I knew that they would work on growth. I mean, they're at something like the rule of 58 at the moment, Jonathan. I don't know whether you can explain to the audience how the rule of 58 is against the rule of 40, but it's 50 % more. I mean, it's incredible. You know, like 200 million AR, 200 million ARR, 60 million EBITDA, and they're just great at such a fast pace and they're just so happy with the acquisition. And now I'm part of Topco, so I'm going to see the benefits of all that when there's another sale in the near future. And do you still spend time on the business? Are you still involved?

25:34I'm completely passive with big change. I've been occasionally interacting with some of the customers, you know if they need to reach out to me and ask me to you know introduce them to so and so in the business or um you know i'm commenting on linkedin and you know you know congratulating team members on success or customers on success using big chain but other than that you know just leave them to get on with it they know what they're doing and they're doing a great job um i'm gonna take you

26:08Chris Maguire:um could take it back and you mentioned there i think you still own two percent so uh when there that exit done that sale you'll you'll benefit from that we'll take you back to 2023 as one of the we've known each other for a number of years but i remember we went to the northern tech awards at the royal armories in leeds and i messaged you and you said hey let's have a meeting before and i think we met at pizza express um and actually that would have been sometime before then because fast forward to December the 4th, 2023. You're not a tall man, you're five foot seven, but you were a big man, you know, and he subsequently told me you'd tip the scales at 20th day, which I couldn't believe, to be honest with you, but big personality.

26:47Chris Maguire:And then at the, and then 2023, boom, you get hit by a heart attack. Okay. And it changes your life very nearly ended your life. And I think a lot of entrepreneurs, they think of themselves as bulletproof. And then something pulls a rope from under the carpets and it changed everything. Just tell us what happened to you, because your wife really, it was only her quick reactions that saved your life really, wasn't it? Just before I do, I'll just tell you, it wasn't pizza that was my favourite indulgence. It was a steak that was normally sold as 300g steak, entrecourt, but I used to order a 600g steak and I used to order it with a fried egg on top.

27:25And there's a few pictures on either LinkedIn or Facebook of me eating this steak. and that was typical of me having two meals instead of one. But anyway, I was involved with a bakery and I think I used to eat all the goods as well and I managed to get to 20 Stone and this bakery used to make beautiful cream cheese and smoked salmon sandwich, you know, bagel, cream cheese and smoked salmon. Anyway, in December 2023, at 5.30 one morning, I woke up within a hot sweat and felt really unwell it took an hour and a half for the ambulance to arrive and I remember when it did arrive the paramedics were amazing but I remember my wife saying to the paramedics has he had a heart attack and they said he's actually having a heart attack while we're speaking anyway they rushed me down to the Leeds Hospital um lgi and within half an hour i had a stent one stent they found a lot of cream cheese and smoked salmon in the stent in the in the artery but anyway i got the stents in uh within an hour i think i was on linkedin uh with a picture of me and the two paramedics that saved me um and that completely changed my whole outlook on pretty much everything um you know completely started to focus on me focus on exercise you know i managed to get myself a cardiolo cardio cardiology uh cardi cardio uh fitness trainer which was a he was amazing easy to say that

29:12Chris Maguire:cardiology trainer so you got the cardiology trainer you lost six stone in weight um i mean you're about 14 stone now aren't you 14 stone and i've still got at least another stone stone and a half to lose um so i was in the gym this morning i was on the running walking machine um i'm i'm walking now two hours two hours a night as well so um yeah i'm living the dream yeah so the i mean that sounds like a terrifying story the the your your heart attack happened before you'd so before the sale of um a big change is that that's right isn't it so i suppose that might have made it made the sale a bit more um a bit more welcome if you like i didn't i i i'd already had uh you know a very big result the first time around with big change when we did the first deal with great hill uh the business was going you know incredibly well um again hitting hitting and surpassing all the targets.

30:15So that wasn't, I think, my biggest, biggest, it wasn't on my mind at all. I think it was just a question of really, I think I was involved in some communal matters that probably, because I do quite a lot of, I'm involved in, you know, some philanthropy and community work. And I think that probably was more stressful than anything. So along along with eating too many bagels and 600 gram steak so anyway listen you know um some people say you know uh you know having a heart attack must have been terrible and i say it was the best thing that ever happened to me because it probably given me another 20 30 years should we move on to what you've done since then because you you've actually um been really active we could talk about build concierge next that's probably the the latest exciting project although you have got quite a few other investments as well haven't you uh i have got other investments i'm also uh mentoring my son uh josh who's started a business called uh handshake which is um uh going to be an incredible solution for deal makers just like you jonathan health organizations find nurture and generate amazing leads, you know, to help their pipeline.

31:44And then I'm also investing in a few businesses that pan intelligence, electron green storyboard, unrated people, but back to build concierges got an amazing team. And I see myself really as more of a kind of a coach to the leaders. So, you know, my legacy is to create great leaders now. You know, I'm not into the micro detail. I'm into supporting them, coaching them, you know, sitting on the important meetings and really more into the design of the product and design of the business and designing where we're going rather than, you know, actually doing the day-to-day work.

32:31Chris Maguire:Well, Martin, I'll just take you back one step in terms of what I'm always fascinated. Jonathan's always fascinated in the deal and meeting people. I'm always fascinated in the idea behind the business. You were doing a renovation or you were getting a renovation done of your house. It was a bit of a disaster. And that's what's born the idea for Bill Concierge. So what does Bill Concierge do based on your horrific experiences of your own renovation? OK, well, that was the original idea. the original idea was to out of having bad experiences from trades people was to create a virtual trades company, the Uber for service maintenance and building for homeowners, consumers and we built all the software around this business and developed it and started to trade and after two or three months we had there was so much friction between passing the jobs on to the subcontractors and trying to control diaries, we realized this was a business that wasn't scalable.

33:36So during that period, we had some of these subcontractors come and visit us, and they said to us, well, you know that technology you've got that you've developed for your business, we'd love to implement it in our business. And then we decided, once we stopped the original idea, to actually set ourselves up as a business-to-business software business, SaaS business. And that's how the idea, the pivot of the new Bill Concierge was born. And now we're providing software for trades companies. I call it the cream on the cake of the big chain system or the Simpro system or other softwares. Our system helps companies fully automate their business and provide AI intelligence around it.

34:28So one thing I'd like to ask you, Martin, is just when you've made a number of investments in different businesses almost as an angel investor. And I'm really curious what you look for when you're making an investment. So I think the first thing is the business and the business idea and also kind of where the business is in its trajectory. And typically businesses that I've got involved in have been businesses that have kind of plateaued and they need some more support. And typically I get involved as a non-exec director or an advisor, board observer. and then I look for a great idea, great business underlying.

35:13They've got a strong product, strong customer base, but they just tend to plateau and then good back office management team, good management team. And that's typically what I look for. um so and typically the businesses that i've invested in um you know they uh that i can see where all the business benefits are to the consumer or commercial businesses okay so you know you're now a you know you're a pretty successful deal maker and you know you've bought businesses and sold businesses um i i suppose i'm curious what advice you might have for people who who are in that, looking at doing deals as a principal.