The succession gap
The United Kingdom has a great many businesses whose owner is in their sixties. The work is essential, the clients have been there for years, the accounts are steady, and the person who built it has earned the right to choose what happens next. What there often is not, is a successor.
Children have their own careers. The management team is capable but cannot raise the money. A trade buyer wants the client list and would rather not take the people. A private equity buyer wants growth the business was never built to produce, on a five year clock it was never designed to run to. So the owner carries on for another year, and then another, and the business quietly gets harder to sell each time.
Nothing is wrong with the business. What is missing is a next owner. That gap is the whole of our purpose, and it is why we are set up the way we are: one decision maker, no investment committee, and an owner who intends to run the thing afterwards, rather than rent it for five years and move it on to the next tenant.
This page sets out what that actually means in practice, what we look for, and what we will not promise you.
What a sale to us involves
01
Your exit is yours to design
Some owners want to be gone in three months. Others want two more years with the parts they have come to dread taken off them. The deal has to work for you first and foremost, and we are flexible in ways other buyers often are not about how your role is shaped after the transaction.
02
We buy the whole business
A full transfer of ownership rather than a minority stake. Consideration is usually a mix of cash at completion and a deferred or earn out element, which is normal in deals this size and is how the gap between what a seller expects and what a buyer can underwrite gets bridged. The price and the structure, including that mix, are agreed in principle between us before lawyers and accountants get involved.
03
The team is most of what we are buying
A business whose staff leave in the first year is worth a fraction of what it was the day before completion. We have no incentive to break it and every incentive to keep it working. We will not promise you that nothing changes, because no honest buyer can, but changes get made by someone who runs the business up close and works alongside the people those changes affect.
04
Clients keep the relationships they have
Clients in these businesses rarely buy a brand. They buy the person who picks up the phone, knows their history, and sorts things out when they go wrong. Anything that disturbs that is a risk to the thing we just paid for.
05
We run it, we do not hand it on
We are in the business from completion, working with the team until it is running well under new ownership. There is no deal team to hand you to, because there is no deal team.
06
We are straight about the money
We raise funds for each acquisition individually rather than investing from a committed fund. That means each deal is matched to investors suited to that business and to the plan for it, rather than squeezed into a mandate agreed years earlier, and there is no fund clock running in the background. You will know precisely where our funding stands before you are asked for exclusivity.
Whether this fits
We would rather tell you quickly that we are the wrong buyer than take up three months of your year finding out.
This tends to fit
- Recurring or repeat income, and clients who have been with you for years
- Work that is essential to the client, and often overseen by a regulator or professional body
- A team that can run the day to day, even if you are still the final word on everything
- An owner planning to retire or step back within the next few years
- Process heavy work that has never benefited from assistance from technology
This tends not to fit
- Solely project and one off work, with no recurring revenue alongside it
- Businesses looking for minority growth capital rather than a majority or full sale
- Situations where price is the only thing that matters, or a business being sold through a competitive auction
The question worth asking any buyer is not what they will pay. It is what they will still be doing in the business in three years.
Common questions
What happens to my team after the sale?
The business keeps trading and the team keeps building. Robin is in the business from completion, so where changes are needed they get made by someone who has met the people they affect and who has to work alongside them afterwards. We will not promise you that nothing changes, because no honest buyer can.
Do I have to stay on?
No. Some owners want a clean handover and some want to stay and keep building. Both work, and agreeing a transition on your terms matters to us as much as price, if not more. We are flexible and accommodating in most situations.
How long does a sale take?
Information is the gate. Where the records are in order and questions come back quickly, a process can move quickly. Where they are not, no buyer can move fast, and anyone promising you a timetable before they have seen the data has not looked properly. What we can say is that there is no investment committee adding weeks at our end, and no deal team waiting on a slot.
Would there be an earn out?
Probably, in some form. A deferred or earn out element is normal in deals of this size. The parts worth negotiating hard are the ones people skip: what the targets actually are, whether they are within the reach of the business as it will be run after completion, who controls the decisions that affect them, and what happens if we change something that makes them harder to hit. We would rather discuss all of that early than present it late in a term sheet.
What if my business is too small?
We look at profitable, stable businesses with enough scale to support a management team rather than depending on the owner for every decision. Smaller firms are considered as additions to a group we already own.
What happens if your funding does not come together?
Then we tell you early and you are free to talk to anyone. We will not ask you for exclusivity before we can show you where the funding stands, and we will not let a process run on while we work out whether we can complete.
Also worth reading
Alternative to private equity
You have a private equity offer, or expect one, and you are not sure it is the right home.
Read moreEOT and MBO alternative
You are looking at an employee ownership trust or a management buyout and want to know what else is on the table.
Read moreTechnology and your team
You have heard that a buyer will modernise the business, and you want to know what that means for your people.
Read moreStart a conversation
If any of this sounds like your situation, let us buy you a coffee. We would like to hear where you are, what you are thinking, and work out together whether we are any use to you.
Get in touch