Episode 11: ‘I don’t regret doing an IPO’ (despite the public scrutiny)

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, as always, is Chris McGuire, and I'm the executive editor of Business Cloud, and I'm joined by the multiple award-winning dealmaker himself, Jonathan Boyas.

0:35Chris Maguire:Jonathan's been involved in deals totaling£5 billion during his long and illustrious career, and he's a managing director and head of our Rosamart Sales corporate finance practice in the UK. Welcome, Jonathan. Thanks, Chris. Great to be here. Well, it's great to have you. It's great to have you. And before we introduce our guest, as always, we need to thank What Media, who produced the Dealmaker Uncut podcast. are the kings of video creation and we couldn't do it without them. Now this is the podcast that gets inside the deal. In the first part of today's show we're going to be interviewing our special guest.

1:06Chris Maguire:After then we'll have a little break and in part two Jonathan will be leaning on his 35 years plus of experience of working in corporate finance to answer listener questions. So without any further ado Jonathan who are we talking to today? Thanks Chris. Yeah I'm delighted that today we're speaking to Steve Oliver. Steve is best known as the co-founder of Music Magpie. He floated the business in 2021 and then has since sold it at the back end of 2024 to AO. So there's plenty of stuff to talk about with Steve. Welcome Steve. Welcome, thank you for having me on. Steve, I'll kick off if I may because Music Magpie wasn't your first rodeo as well.

1:46Chris Maguire:I want to take you back a long way to your you're the business called music zone uh for the younger members of the audience you co-founded the business in 2000 grew it to nearly a thousand staff nearly i think 100 million turnover it was absolutely flying i think at one stage the business was worth about 40 million quid and you own 30 percent of it then christmas 2006 the bank of ireland effectively pulled the plug on music zone cut your legs off really uh by calling your debts in without any notice at all and you lost a lot. So I want to talk about dark days in your life. But what learnings did you take from there, Steve?

2:20I think it is an important context for what followed in terms of the first experience into corporate finance world. But I mean, first and foremost, I guess, yes, it did end badly from a position of having done the management buyout from the founder there, Russ Granger, brilliant trader guy who was a sold records on long site market and was a sold DJ at the Hacienda but he needed me to come in and do the boring bits and ultimately as the business grew yeah we agreed to do a management buyout it was going great we were expanding very quickly but it did go wrong and you know as you've just covered it was the Christmas of 06 we were millions of pounds in the bank actually for the point of the bank pulling the plug we were profitable year to date but they could see the shift in the uh the industry so um i guess you know professional and personal heartbreak was was you know very much the the order of the day and it was very difficult we were bought um emergency fire sale by a division of hmb called fop which i think is still around now um so i guess you know teaches you you know well and truly resilience you can react in one or two ways it's fight or flight isn't it at that stage so i did go home and saw for a little bit but out of those embers music my pie was born and i guess you know key professional corporate finance lesson was choose your partners carefully especially your debt partner uh you did name them just before so i will back of ireland they were very inexperienced i think it was their first deal at the time actually uh out of their new manchester office so um yeah uh it is part of life now and a real sliding doors moment in life you founded music magpie in 2007 so you didn't

4:08Chris Maguire:wait long before you went again your co-founder was waltz gleason and you founded it from a garage in hazel grove in stockport for those people who don't know what problem were you trying to fix back then um i guess you know if you think back to 07 um the um there was a you know very significant recession um a cost of living crisis um you know there was the run on the banks coming 07 08 um so a consumer offer that was basically offering cash for your old and as we the name suggests we started with cds dvds games and books um and cash for gold had just started appearing on high street and a little bit online but one thing we'd learned at the end of music zone was that the margin in new product was very tight very small especially in the world of vat free websites and supermarkets but for used product there was definitely margin to be earned there was people who were going digital um who were looking to raise cash and more than anything probably to declutter and subsequently that ended up to be the name of our us business that did the same thing uh and aggregated the product from a consumer and allowed them to trade it in in one go um so yeah that was a huge uh learning curve for us um but essentially um you know that that was the business model that was the consumer champion that allowed people to sell stuff for cash quickly and conveniently and you you took on a private equity investor with nvm in music magpie yeah was that early on in the no we'll go back a before then actually john we took um so having had the experience I did at Music Zone um you know it was a valuable lesson Chris mentioned it earlier you know we had a business valuation about a year after the MBO where it was 40 million quid and I own nearly 30 percent of it and you know things look pretty healthy at that stage but it went wrong and therefore when we started scaling and building a business of value which Magpie was so having started in 07 in 2011 i did a cash out de-risk deal basically with ldc um so um you know we we knew ldc they were actually our pe backers from the management biotech music zone so um so we had a very good relationship with them did that deal and in 2011 allowed us to pivot the business we owned the u.s business we started to trade tech for the first time in addition to physical media.

6:45So, yeah, I mean, obviously there's a long tale to be told with any private equity transaction, but NBM then came later in 2015. There's a vote of confidence both ways there with LDC in that they backed you the second time and you took them on as a partner the second time. That's interesting. Yeah, but maybe better the devil you know in both directions, absolutely. But yeah, I mean, they did come out of the end of Music Zone clean, in inverted commas, as it were. But very much the relationship was intact. And I think there was a great deal of trust in particular with the investment director who was involved at the time.

7:27So you'd learned the lesson that you've not made the money until you've actually turned it into some cash. Absolutely. And did that. So just tell the story about the MVM investment. Did MVM buy LDC out? Yeah, effectively. Yeah. I mean, things have been a bit of a struggle. You know, I sometimes compare it to my beloved football team, City. So, you know, and what happened with the Glazers at United, where when you're working with private equity, suddenly you have to service your loan notes and, you know, capital amortization, you know, being paid back. in addition to trying to grow the business we were trying to pivot it i mentioned earlier we were launching in the us we were also trying to launch branded fashion which we had to curtail and then tech as well so we were trying to really grow the business ambitiously at the same time as servicing private equity and ultimately that was difficult it was you know things didn't go to plan um nvm came in into the business and and yeah we did a deal in 15 uh where they put money into the business because a change an important change in the working capital cycle of the business was when we were buying tech off people suddenly the cash element was even more emotive 50 quid for a box of old cds and dvds they didn't really do it most people for the cash and they didn't mind waiting a week or two but if you're selling a 400 pound phone you want paying straight away so mvm injected some working capital into the business and took over from ldc so because it's interesting the the business pivoted quite significantly away from the old product into the new product didn't it was that about the same time that mvm yeah it was pivoting around that time in fact i think it was around 15 16 where suddenly it was 51 of the turnover was coming from consumer tech so we were suddenly a tech business doing media rather than the other way around i mean sitting here today 10 years later media is still 25 of the business it's an important part of the business um but actually the future of the business was always going to be consumer tech interesting so you you've next then looked at an ipo um i'd have seen you as an entrepreneur in nature and you successfully managed to work with two p hoses yeah um can you describe and i think on the on the ipr i think um and the end made a 12 times money multiple is that is that right yeah um could you just um talk about the decision to go down the ipo route and i'm i'm really interested to hear about the changes that you experience once under the scrutiny of the public markets compared to the private markets yeah uh i mean obviously it was a very big decision we did explore a number of options between public and private um so yeah fast forward into the pandemic and like many online digital businesses i hated the phrase at the time because winners and losers suggest that losers have done something wrong and they hadn't they were just in the wrong sector at the wrong time we were the opposite of that we were in a good place and it felt like the world had gone digital and gone permanently into digital so there was a raft of you know around that time Deliveroo went there was a various other online techie businesses who looked to the public market and it was access to funds to further expand the business but I mean let's not pretend that the valuation that we could achieve publicly on the public market wasn't a significant factor in there it was i think we could have got close to it with another private equity transaction on a very small personal level um i was fascinated and interested i've done private equity for 10-15 years by that stage and i was really interested in the public market as a concept and learning a new world um but also it did allow not just me as a shell but it was a significant you know liquidity event for you mentioned nvm it was a great return for them which i was delighted about they've been brilliant to work with um andy leach is a personal friend now as you know john and um he's one of the best around and you know it was a great result for for them for colleagues who were part of you know ebts and there was a number of colleagues that were able to take funds home um and you know it felt the right move at the right time you know I went and took advice.

11:54Obviously, I'm very close with John Roberts now at AO, and I know he did the same when they were considering Puzzlet World. Go and talk to lots of people. Interestingly, most of them said, do not do it, Steve. It's tough, it's hard, you're in the scrutiny, etc. And by gosh, yeah, it's very, very different. It's a completely different world. You go from, by definition of those two words, a private business that is conducted around your table with a small number of people, with an investment director and chair that are very intellectually invested in your business, to a world where you have public institutions who are your shareholders and are backing you, and you speak to every six months for about 15 minutes on a video line.

12:38and the first 30 seconds of that call is hi steve have you hit your numbers this quarter or this half if the next word out of your mouth is no you are dead to them you're in trouble um and you know unfortunately because the world was you know a difficult place macroeconomically we'd had Brexit we'd had Covid uh we had Putin we had Ukraine cost of living crisis there was lots of macroeconomic things that were going on at the time unfortunately we didn't hit our numbers and it was you know a very difficult time you know it was a real uh lesson for for us early on i i hear this you know some people go for an ipo because they like the public profile and they like to be in the limelight but i do hear this from a lot of people that um that you can be subject to the variations of things that are not not really under your control you know a city lose on a saturday the share price might move a bit yeah because of you know the there's just a whole load of non non um non-related things yeah absolutely i think you know singularly i said there was a couple of things that you know my wife was mentioned on on a public forum because you know she'd been a minor shareholder with how we'd structured it and you know there was reference to to kath and that you know that gets very emotive and personal at that stage it's like you know i'm a very private person if you knew anything about Kafka, you know, really quite private, et cetera, wants to keep a hold of.

14:08So how dare you mention, you know, who was the Oscar incident of the year where somebody jumps on stage and takes My Life's Name out of your mouth. You know, I get it. It becomes emotive.

14:20Chris Maguire:You're not going to do a Will Smith on us now, are you? That was the chap. Thank you. I knew you'd get the cultural reference. But, yeah, it's that word private and now public, and they are very short-termist and they don't intellectually invest in your business at all. They're in it for the numbers. I was going to ask you a couple of questions. I've done a lot of stories about Matt Moulding at THG and I've never properly interviewed him. Thankfully, he does these great posts on LinkedIn, which are great for me. And he's complained a lot about the markets, the way they're manipulated, the way the hedge funds, you know, manipulate the price, et cetera, et cetera.

14:56Chris Maguire:And I always think, and I looked at Music Magpie for quite a long time, is that you would produce a decent set of results. You're doing a lot of stuff around recycling and about being green, environmentally friendly, et cetera, et cetera. But your share price would drop and you were literally like your football manager, people looking at your results and that's all they're judging you by. And that must be really difficult, you know. So if you could do it all again and you could do an IPO all again, would you? So a lot of people say that, you know, would you do an IPO again? and I always qualify and say, if the question is, if you took me back five years and then told me what's going to happen, would I do it again?

15:34I'd have to say yes. It was interesting. It did teach me a new world. We did have a huge liquidity event. It didn't go well in terms of share price. You are right. I mean, Matt's favorite phrase that I love and resonates very much with you. It's like having your homework marked every night. You cannot help yourself from looking at your share price and what people are saying about you on the forums, et cetera. um would i ever do one again in the future with any other business i was involved with very very unlikely i would never lead one it was hard to be in that public scrutiny so yeah and john you were right before you know things happen that just feel like they're totally out of your control and you know the share price as we all know the markets go down as well as up

16:19Chris Maguire:one question i wanted just to get a little insight for the benefit of our viewers and our listeners is that, you know, you know, Musial Magpie is very northern based. You are the epitome of a northern lad. You're from the area. Or I was you. Yeah, no. I'm an adopted northerner. You're a fully paid up member of the north as well. Is that, you know, you've got values. You used a phrase, you know, it's nice to be important. It's more important to be nice, et cetera, et cetera. When you're dealing with the city and you're dealing with these institutional investors as well, who maybe don't share your values, that a can't be easy to listen to and b not to say anything what's that like speaking to people who really don't care as long as you hit the numbers yeah difficult is is the answer i mean you know you're right i think life is all about people and me too i did psychology at university many many years ago because i enjoyed interaction understanding you know comms and you know dealing with people they they when i do stop what i'm doing eventually i i will miss people more than anything else and none of us like disingenuous people and you know you understand that their motivation i get it because it's their job it's how they're motivated financially and otherwise but it is difficult when somebody appears you're pouring your heart out it's your it's my fourth baby this business and you're talking emotively and i turned up once to a meeting with a what about the third or fourth biggest shareholder who asked me how our passport machines in waitrose were going and i sat there my very rarely for my most stump for words but my mouth moved and nothing came out and actually what he meant was the kiosk that we've deployed in asda to buy mobile phones but in his memory it was something to do with passport machines because he saw a photo of one that was next to a photo me machine you know in a supermarket so but that was his you know i'm not necessarily criticizing for that he's got you know 15 minutes every six months to think about us You'd hope you wouldn't get that from a private equity investor.

18:25That's it, John. They are invested in you. Can I ask, did you think about arranging to take the business private with private equity? Yeah. So again, you know, I mean, having done the public transaction, obviously the market cap did drop very significantly. I mean, actually, just for my own sanity, I did a lead table of our peer group of the businesses that floated around that time. and actually we were sort of, you know, the 12th or 13th, the Man United position in the Premier League these days.

18:57Chris Maguire:See, I knew. I was just waiting how long it would come and it's coming at 18 minutes. 18 minutes. Who had that in the sweepstakes? So, yeah, you know, we weren't the worst performing, but no, things are done badly. So, yeah, we started thinking about what's next, you know, going and talking and having some social conversations with people and thinking about, yeah, very much taking, because, you know, I didn't think I would say this necessarily, but I missed private world and having people back around the table who understood the business and would invest in it in every way um so yes uh we did we also looked at some trade options um it did get leaked out publicly that bt had a little look at us it was only a little look uh because it got leaked fairly early on in that process but um you know obviously we ended up uh doing the deal with there you go yeah come on to that in two ticks the one of the things that i i've seen with take private type deals involving private equity very often that a business looks undervalued and a and a deal is agreed with a p housing outline with the premium of 30 40 percent and it all looks right and then lo and behold a week or two before the deal happens the share price moves and suddenly the the deal doesn't look recommendable again and yeah price did you experienced any of that or not really no john it was fairly frankly it was it was very low so it was it was uh you know flickering around in the single digits of pence uh you know bear in mind we'd float at a valuation of 208 uh million uh nearly two pounds price and it was single digits of pence at this stage now this was a business that was still what's chris said earlier thank you for saying it chris we were still making north of six million quid ebitda um you know we we weren't financially distressed in any way um but um no we um you know we we met with with ao it felt right from a very early stage you know the deal was all about finding a long-term home for the business and the people in it and how long were you were you in that sort of mindset and conversation with them in total that public to private process uh took about nine months um something of that order I think the BT got leaked in the December 23, and we ended up doing the 2.7 announcement of the AO deal the following September.

21:21So, yeah, it was a long old time, but I'm used to doing deals by this stage. I've done a few, and yeah, in a sense, quite enjoyed that process of, again, going and talking to a few trade people, a few private equity people.

21:39Chris Maguire:There's a couple of questions I was going to ask, and I'm glad you mentioned that about the fact that Music Magpire was a really solid business. I have a personal bugbear when people write really negative stories to the media about businesses and they allude to the fact they're basket cases and actually say, well, have a look at the bottom line, have a look at what their profit is because you're just basing it on the share price that's gone from this to this. And, you know, there's, you talk about, what's the phrase you use about your colleagues, magpires? Magpires, yeah. Yeah, magpires, yeah, you know.

22:10Chris Maguire:So you go into your office in Stockport and every member of your team is a member of your extended family and that's how they look at it. No, that's how they look at it. So I always got frustrated when, and I get frustrated when people, journalists, just write off companies when they shouldn't. So that's the first thing. In terms of, you're a straight talking guy. When you see that conversation you're having with BT, you know, you're having conversations with BT potentially about a potential takeover. and then you open up the paper and then the sky news or whoever has has leaked the story because somebody's leaked it to them as well what's that like because you know someone's got an agenda and someone's leaked it for a reason what's that like well your first reaction is um yeah something rhyming with clucking bell and what who's done that and where where's that happened and you know and to this day i i still don't know maybe it was one of the other parties that we're in discussion with i just don't know but actually what was an extraordinary feeling is and again it was all part of you know public rules and takeover panel that you suddenly have to learn at that point you not only have to confirm or deny that interest that you are in a conversation with somebody you have to disclose every party that you're in conversation with um because you have to agree a list of six parties that you're in conversation with no more than that at any point in time ironically enough to avoid leaks but if one of them comes out you have to disclose all of them so it feels like you're trying to play a game of poker and talk about your business and do a deal when everybody's seen your cards because they know exactly who you're talking to so you know our advisors at the time when that was it became obvious it was going to leak in the sunday telegraph literally on the saturday had to phone every party we're in conversation with and say this is about to come out in the press do you want to be named or basically you have to give them the opportunity to pull out if they don't want to be named so we lost other potential conversations who didn't want to be named one of the beauties of speaking to jonathan is jonathan's a really affable guy you've probably seen and you say to jonathan say jonathan how's things going at the moment you know you're busy yeah you're really busy loads of interest etc etc etc never gives you a sniff of who and that's because he is he is you know a man of reputation and integrity as well not the same for everybody um i just want to ask one question before jonathan comes back in as well you're you did to deal with ao for 10 million um your your uh motivation was to look after your staff that was the key okay you're still the ceo of music magpie um you're good mates with john Roberts you mentioned him earlier the founder of AO himself like yourself is a northern leader um what's it like going into work when it's not your business anymore when fundamentally you're an entrepreneur yeah I mean it is very different I've reflected on that this is the first time in 25 years that I've been going into work as the CEO but not owning any of the business and it is different you know life is a roller coaster and certainly life as a business owner as all of your listeners I'm sure in that situation will know is an absolute roller coaster and I guess how I reflect on it is that perhaps it doesn't work over audio but if you imagine the you know the trajectory of a roller coaster on the down bits you have down days so I have a sales report on my phone every day I look at that at lunchtime and it tells me it extrapolates roughly to what I'm going to do at the end of the day so I know what kind of sales day we're having mentally I will then extrapolate that day to the year and sale if we do that every day now actually on a scale of minus 100 to 100 if you're having a bad day sales it's oh we're going to be in trouble we're going to go bust can't pay the wages luckily i didn't have too many of those days at the other end of the spectrum it's like oh my gosh we're having an amazing day we're going to be worth two billion quid again this is amazing um so you know you lead that roller coaster life i guess my main reflection now as you know part of a very successful uh excellent bigger group is my life is more of a if not a mill pond and i still very much care about the business and its performance because i've got professional pride apart from anything else but you don't ride that roller coaster in the same way it's a because you know that you can just ride those waves out bad and good um and you We are now part of a wider group strategy, which I'm very positive about and excited to be part of.

26:39So you've also invested in a mobile barbering service called Appercut. Do you want to tell us a little bit about that? Yeah, I mean, I guess like a lot of entrepreneurs, I see the life as an entrepreneur is all about finding solutions. There's too many people in life who grumble about the world. and I think entrepreneurs have to find the solutions that answer those grumbles before they happen. And I've always been frustrated that the only time I ever had in life to go and get my hair cut was on a Saturday morning when guess what, everybody else does. Chris, you need a haircut, mate. I'll send one of our chatter.

27:19So, you know, it is busy. You have that moment of opening the door and there's six people in there reading the Daily Mail from three days ago and it's like, man, you don't get the guy. you want terrible if you don't if you if you need a haircut on it's saturday and you miss the saturday and it's going to be another week yeah you've got time to stop looking at me with it yeah um so um yeah so i thought you know there's a solution there's a problem that the the world has and then we actually hit the pandemic and obviously barbers like everything else on high street short and you know we're all getting our kids to do and wives and uh they never let us do theirs did they i don't know quite how that works but um so i just thought you know that there's there's something that i think you know the world has gone mobile you know if you think about delivery bringing you know bits of grocery around to your house my office and stockport sits above the sainsbury's express where the till brings all day every day for average order delivery orders of six quid where people are paying two pound fifty to have it delivered so will somebody pay a little bit more to have a service at home where they want when they want by who they want and they'll pay a little bit of a premium for that and yes they will so yeah um met michael who runs the uppercut business michael law's isn't it yeah yeah uh he's a fantastic entrepreneur of the future i know you've uh known a little bit chris um he's full of energy he's got a great old-fashioned attitude of you know he works really hard he believes passionately he's got jordan working alongside within the techie bit they bootstrap that business and they more than anything they work really really hard so and i think you know and actually the plans for that business are that the first application using the technology that the guys have built is mobile barbering for men but actually it can do a whole range of in-demand domestic services so it could be cleaning gardening babysitting in the future etc so um you know watch this space but we'll be looking to rebrand that business in in the near future yeah like the sound of that and uh you're also passionate about um a homelessness charity uh called egg yeah which stands for engage grow go yeah and it's helped get i think at least 130 homeless people back into employment yeah um do you want to tell us that that sounds interesting yeah again i guess a bit like you know how i just described with a business proposition you know sadly we all see you know it's very high on Andy Burnham's list and he feels very emotive about it and I guess and this is in absolute no way critical of Andy Burnham's Bed for the Night or somebody like the Wellspring in Stockport who do invaluable work their models are generally more short-term where they're giving a blanket or a meal or a soup or whatever it's about a handout and actually you know with egg as the name suggests what we want to do is a homelessness model where we engage with the client we work with them with a volunteer mentor and a caseworker who can break that cycle and permanently intervene so yes we have got 130 into work in just over two years we've got over 220 i think it is now back into permanent housing it's not always just the poor folk who are you know lying next to stopport station etc so obviously you know it is a very very challenging lifestyle a lot of them this is my word um it's it's johnny who was running egg for us um they are chaotic they have addiction issues a number of them it isn't for everybody um for that reason um our service but if we can catch people maybe towards the top of that you know vicious circle um we've helped people who you know were driving for amazon but got sacked because they were caught sleeping in the van because they couldn't afford the first month's rent you know that feels like an easy one to break the chain off um and and you know help them with that first month so they you know they can get into employment and housing so yeah it's very rewarding um you know i am quite the socialist these days and very much believe in you know there isn't enough support and help for the least privileged people in our society and i think it's up to the rest of us decent folk to step up to the plate and help them.

31:28Sounds like a great cause. Yeah, it's growing nicely. We've got some National Lottery funding in there alongside a couple of high net worths alongside myself. We've got four colleagues in Stockport and hopefully we can grow the reach of it across Manchester to work alongside other homelessness charities.

31:47Chris Maguire:I've got to end with this question if I may. I'm very much going to start with this question as well. If I was painting the picture of Steve Oliver I would say massive family man, married to his wife, Kath, for many, many, many years. 30, I was all lost. 30, congratulations. That's amazing. 30, three daughters. And the last year has been tough here because, you know, your beloved Man City have struggled, not won any trophies. In fact, you're picking up a cup, which is something Man City failed to do last year. Oh, dear, oh dear. You know, but that disappointment that has been in your life for a year has been offset by the fact that you've become a granddad.

32:22Chris Maguire:And just the mere mention of your grandson's name, and it just turns your day around as well. If you're at a stage in your life now where it's different to what it was 10 years ago, for natural reasons, for obvious reasons as well, and I think people look upon you, you wouldn't get the Lifetime Achievement Awards. You're not on that level yet. You've still got many more years to go, I think. But when you're talking to young entrepreneurs like Michael Laws and you're talking to up-and-coming, dynamic, thrusting entrepreneurs as well, what would your advice be to them? um i think it always if you know i'm giving one single piece i mentioned it before and it's what i like about michael and i've invested in other businesses where you know i've tried to actually uh also bias those investments towards female founded businesses and i know that's a separate conversation topic which i won't go down but i think they get a really difficult deal in life so two percent of vc funding goes to female founded businesses yeah it's an outrage absolutely so you know try try and uh you know skew things positively in that direction but just looking for people who've got the right attitude who realize that you know it is hard you have to do those hard yards you know people i do a little bit of a presentation now i did it from the stockport economic alliance we've got which i chair and we have an acorn alliance and i did a presentation on perseverance it's an alistair campbell word actually for perseverance and resilience um and it's all about the perception of what people think a business owner an entrepreneur the life that they lead the leonardo dicaprio you know uh with cash and you know sitting in a bar and raising champagne glasses versus the reality of there's there's a guy in a green t-shirt gif isn't there who's having a panic attack into a bag and the pablo escobar stood in a field just stood looking at nothing like you do it's that it's the reality of being an entrepreneur and a business owner versus the perception and you have to have that right attitude of i'm going to work at this and you know you mentioned football so i will this is my 45th year of being a city season ticket holder it's fair to say i did me hardy hard with city i've been through thin and thinner and what i always say to kath is like city i came good eventually just took me a while um so you know it is the long game and you know it might not work out first time you know i we started this conversation with by talking about a difficult start where ultimately it went wrong but you have to learn the lessons and take that forward work hard treat people with respect and trust them and i think that's one of the biggest lessons as well surround i know it's a bit of a cliche surround yourself by the with the best talent and the best people who you enjoy going to work with every day because a lot of them you know a A lot of my Magpie colleagues now are personal friends for that very reason.

35:13I've been blessed with people. So surround yourself with great people because actually you'll spend more time with them than you will your wife or your husband or your partner. So that is how I would decant it into one piece of advice.

35:29Chris Maguire:Steve, we're going to go for a quick break. When we come back, Jonathan and I will be discussing our interview. We can be completely honest as well because you won't be in the room anymore. And we'll be answering questions from the audience.

35:50Chris Maguire:welcome back to the second half of the dealmaker uncut podcast we've just interviewed steve oliver founder and ceo of music magpie jonathan what do you think of steve and how did the interview went well i really enjoyed that interview um there's a few things strike me about steve's he mentioned it himself but uh resilience so like many entrepreneurs the first the first business didn't work didn't work out um he moved on and um music magpie went really well there's an interesting point we talked about when it pivoted he's innovative um the business backed um a sector in dvds which obviously was becoming obsolete and it pivoted into mobile phones and technology which again that entrepreneurial spirit that steve i know is steve's got um running through him um they were they were they were able to pivot the business and then um the the discussion about the ipo and the difference between public markets and being um involved with a private equity backer um i think that was really interesting and and not the first time i've heard the sort of um the sort of feedback that he talked about feeling a loss like he you know things were happening to the value of the business that weren't necessarily within his control um so that was all really interesting and then uh it's a i suppose it's a nice a nice ending that it's been acquired by a business that where with run by somebody that he's familiar with and so it's an interesting story i sort of wonder whether we've probably not seen the end of steve's career yet so I'd like to see what happens next but just a really interesting entrepreneurial story he's still a very young man of course I think one of my favorite stories about Steve is I used to host a Christmas quiz for Ruth Shearn and Steve would always turn up normally with a couple of ringers like Chris Barry as well and they'd win it every year and I've never seen a mild-mannered guy take a quiz so seriously he has got to win what I found fascinating about the interview was the fact that we spoke about the IPO that he did and he got a lot of scrutiny and he didn't necessarily sit easily on his shoulders.

38:00Chris Maguire:Would he do it again? Probably. Because there are good bits to it, like he mentioned. Yeah, the valuation. But also there's a level of scrutiny that for a private guy like Steve, he didn't necessarily like. But yeah, great guy, a great business person. So this next section is called Ask Jonathan when we got some questions from listeners that they want answers to. So the first question is, Jonathan, can you explain what a cash-out PE deal is and the pros and cons? Yeah, so what you're referring to there, cash-out private equity deal, one of the options when an entrepreneur is thinking of selling his business, selling his or her business, is a sale to a trade buyer, which is often more of an outright sale.

38:48Or an alternative is often a deal with private equity. And when they're not quite ready to sell the business in outright, there's one option where a private equity house will buy into the business. The shareholders will take off, often up to about half the value of the business off the table. And they'll often raise money to fund growth, maybe acquisitions or something like that. and they move on to a new phase of the life of the company with a private equity investor on board, having effectively raised cash. Those entrepreneurs are often having de-risked their personal situation. They're often more ambitious about what they can do with the business.

39:31They can be a little bit bolder with the decision-making, particularly if they've got a war chest to do something with. And so those sorts of deals are really common these days. I suppose the cons, if you like, are that you are bringing on another investor into the business. If you're a private company, you will then have another shareholder to work with. They will often require certain controls over the business. And a lot of entrepreneurs are not used to working with the sorts of controls that a private equity investor would need. I think the answer to that is to make sure that enough cash has been taken off the table in order to make the deal worthwhile to do.

40:17And just make sure that you choose carefully who your new business partner would be in the form of the new private equity house. There's personal chemistry involved in that. There's the house style. But if you've got a good advisor, you should be able to choose carefully and get the right investor on board.

40:36Chris Maguire:Second question, I know this personally in my role at Business Cloud. Are you seeing more AI in the deal-making industry? I suppose that could be from a deal-making perspective, you know, from your side, or it could be in terms of companies, are potential buyers looking for AI in businesses? Yeah, I suppose. I mean, almost every business has technology involved in it these days. And so almost every business has got to think about how AI will change their business proposition. And so all over the place, we're seeing AI is impacting business plans and the strategy to evolve businesses. From a corporate finance point of view, obviously, our industry is also affected by AI.

41:21The areas that we are focusing on A &M most is how we use AI to develop document production. So we now have a tool that we can, you know, we produce information memoranda that can take four or five weeks to produce. And we've, you know, we've looked at deals where we've produced it at an IM in the old way. And then we now have a technology that we can produce it in half an hour using the input material, the same input material. So we expect that document production now will be speeded up very significantly by the use of AI. Also, I mean, our people are using AI every day, almost every hour, I would say, in terms of things like researching buyers, looking at comparable transactions.

42:15I think it's already all through our business. And there's a few areas that we're specifically focusing on how to use it. But AI has already changed our business.

42:28Chris Maguire:You know, with AI, it makes suggestions to you and it said Chris McGuire, editor, and it used a picture of Chris McGuire, the footballer with tattoos down both his arms to illustrate me as well. So that's where, you know, AI is good. But obviously, there's some fire tuning to go on. Last question, and it said deal volume is down for the first half of 2025, but deal values are up. Is now a good time to sell my business? Are you expecting to see a lot of deal activity between now and the end of the year? So there's loads of pitch activity happening either before the summer, over the summer, and we're expecting to be invited to a lot more pitches as soon as we get into September as well.

43:09so there are lots of sellers are thinking that next year is going to be um a stronger year you know another interest rate cut this week um recently um and i think that it's not been the the strongest m &a market now for a couple two or three years um i think lots of people are expecting improvements there's still uncertainty in the market and um you know i don't think next year is going to be a flyaway year. If you've got a good business, you'll still get a really well-attended auction. There's really high quality, fast-growing businesses, still attract loads of people, loads of investors, loads of acquirers.

43:51But you can still get deals away if you're careful and thoughtful about how you prepare a business and how you run the process. Pretty confident next year will be an improvement.

44:03Chris Maguire:Well, that's good to know. And that's all for this episode of the Dealmaker Uncut podcast, powered by Alvarez and myself. Final shout out to What Media and the star of the show, to Jonathan Boyers. Thanks, Chris. I just waited till he had a drink of water before I said thank you to Jonathan Boyers. Don't forget to subscribe to the podcast. Tell your friends and family. Follow us on social media. Give us a rating as well because that really helps with the algorithms. So that's all from me, Chris McGuire at the Dealmaker Uncut. Thank you for tuning in to the Dealmaker Uncut podcast. We hope you enjoyed today's conversation and found it insightful.

44:34Chris Maguire:If you like what you heard, be sure to subscribe and tell your friends. We'll catch you in the next episode of the Dealmaker Uncut podcast.