Episode 11: Jon Grant - Achieving Premium Valuations in Tech Services M&A

Welcome to Unlocking Value. I'm John Howard, a partner at Garwood Growth. This podcast is for founders, owners and leaders of professional services businesses who are building great firms and want to fast track their success by learning from the experience of others. In each episode I talked to guests with real-world experience of building, growing, and realizing value in professional services. You'll hear candid practical conversations about what works and what sometimes doesn't when it comes to growing a great firm. If an investment or exit process might be on the horizon for your firm at some point down the line, feel free to jump back to the first six episodes of the show. There are six part masterclass and everything you need to know about how transaction processes work in professional services. Wherever you are in your journey, we hope there's something to show for you. Thanks for listening. Today's guest is John Grant, who leads the technology consulting and digital transformation practice at Clearwater, one of Europe's leading corporate finance firms. John is without a doubt one of the most experienced advisors on technology and consulting deals in the UK, and it was a real privilege to get to spend some time with him. He's worked on some of the sector's most high-profile transactions, from infinity works, sale to Accenture, to growth capital partners, investment in Hippo Digital, and the sale of Oakland partners to SoftCat. That deal flow gives him a unique perspective on what really drives value in professional services. For leaders thinking about investment or exit, there are lots of challenges to grapple with. Understanding what acquirers actually value, how to position the business, and how to make sure business is ready not just to sell, but is actually ready to be bought. John helps us unpick all of that more in this conversation. We talk about the market shifts to the last five years and how they've changed valuations, the difference between business priorities and M&A priorities, why having a focus on a particular sector or technology makes firms more resilient, and the importance of leadership and shareholder alignment in getting deals done. It's a candidate in practical insider's view packed with lessons for anyone building long-term value in a professional services firm. So without further ado, let's get into it. John, thanks for joining us on the show. You've built a career working with professional services businesses that are at quite pivotal moments, and I reckon you've probably done as many or more investment deals in professional services and tech services than just about anybody else in the UK. So I kind of love to start by just giving listeners a sense of your background and what shaped your perspective on value. So could you tell us a bit about your work and maybe some of the experiences you had with businesses that influence how you think about creating value in a business? Hi John, thanks for thanks for having me on. It's great to be speaking to you today. By way of introduction, I lead the tech consulting and digital transformation practically water. We're a boutique investment bank with 400 plus people across Europe. The firm was founded 20 plus years ago now and is still independently owned today, which is something that we're really proud of. And we very much focused on how best to support our clients, and for us that means combining. Deep sector knowledge was strong local presence, and we've got offices in London, Birmingham, Manchester, Leeds to do just that. And we have a long track record of advising founders, known as of really exciting tech consults and that could be supporting them to sell their business, finding an investor to support the next stage of growth, or raising or refinancing debt. And over the last five years also tech consulting has without doubt been one of our most active and dynamic sectors. And it's fair to say we're one of the most active and experienced advisors in this market. And because of this, we've been lucky enough to work with some of the standout businesses in the UK, including Fintyworks, which is a cloud engineering specialist now acquired by Accenture, a Padme, which is a mobile engineering specialist, which remains independent, but has a very experienced investor supporting them, Anoclomd, which is a day to an eye consulting specialist now acquired by SoftCut. And that's the name just a few. And what this means is that we spend a lot of time talking to the trade acquires and investors operating this space. And in turn, this means we have a really good sense of what they're looking for, what matters to them. And therefore, what's driving value in this market and the fundamentals and valuation for tech consultancies. And if we take a step back again, just in time, so it's actually being quite a bumpy ride over the last five years in terms of market valuations. So in 2020 and 2021, we had COVID. And that was the biggest wave of digitization that we've ever seen as businesses tried to fit five to 10 years of digitization into a single year. They couldn't do this internally. And so they relied more and more on consultancies to help external consultancies and this trophy huge imbalance between supply and demand. And this in turn drove some incredible valuations in the market as businesses need to service, system and and grown organically alone wasn't enough. And it a great example of that is ThoughtWorks, which you may be familiar with, which listed under now as Dachon September 21 at $26 a share. So ThoughtWorks, global tech consultancy, great road story. When it listed, it was trading over 10 times revenue, which is more like a software multiple than a consultancy multiple. And it shows the value and the tailwinds of projects they were delivering their client base. And this was a time if you think back into 2020, 2021, low inflation, low interest rate, cheap credit and huge demand. So a bit of a peak period fast forward three years in the pictures really different today. So the market, as we know, is a lot more challenging growth is hard as come by. So now the flip, the flip situation. So there's a shortage of demand and over supply services, economic and geopolitical picture is much more challenging. So inflation's higher interest rates are higher, investor confidence has taken a bit of the hit. So instead of ThoughtWorks, what that meant was that in 24 and so last year, Apex, the private empty house took them private at around $5 a share, which is a phenomenal fall in value from the listing in 2021. But there are learnings from it. The first of which is Apex still believe in a long term potential in this market. And the take private price was good, good value. And secondly, you know, being agile and adaptable to market conditions, that is more important than ever. You can translate that into mid market M&A and valuations. So what we're seeing today is valuations are under pressure. And the way we see this manifest is much wider spread between the tops of the premium valuations and the bottom. But it is still possible to achieve really good valuations if you're meeting certain conditions, so certain fundamentals. The first of which I would say at the moment is a super clear proposition. So I've been out to prove that your right to win is really high. That often means being aligned to certain software vendors, you know, we talk about Microsoft, Databricks, AWS, all really big ecosystems. If you've got a track record within those software vendors and a good place within them, then that is really interesting for buyers and can drive high valuations. But also having a track record delivery into a track to them markets. So public sector is actually the most active end market for tech consulting, financial services is another one or having any service offering that's in high demand. So, you know, data is a great example of the moment. A bit of a buzzword to be honest data. We can come on to that A to it. But it's certainly driving high valuations at the moment. So having a super clear proposition is really important. Having the metrics that, you know, benchmark well against the market is really important. That means strong gross margins, utilization is well managed overheads of suitable for scaling business and ideally, and it's not always this easy, but ideally, you have long-term engagements with the clients. This means delivering to clients over multiple years across multiple projects. And we're talking about people businesses here, but the profile begins to look much more like a recurring revenue business model, so software business model. This gives buyers, investors, confidence in the resilience of the business going forwards and this translates into higher valuation multiples. I think that the final one is probably just some mentions customer concentration, which is all the time. So I think, you know, rough benchmark is 30%, so ideally, your top customer is not above 30% of your revenue. There's always two sides to this coin. So, you know, you provide a great service to large clients, then client concentration naturally arises as businesses scale, but showing traction outside of that client is important when you come to sale or something you could think about quite far in advance. Thanks, others. I'm really helpful context setting. What we often talk to founders and owners who are thinking about getting ready and thinking about valuation and often they've been told or they heard these kind of multiples are happening. I should be able to expect X or Y. Just is it possible to give a sense of kind of for some different broad types of businesses? What are the kind of realistic multiple ranges that people can be thinking about and that's multiple of even dined? When you're working with teams that may have a preconceived notion of what a business is worth in their minds versus what it might be worth in different market conditions, how do you help people navigate that? I think that partly goes back to the start of our conversation, which has been in the market as shifters over the last few years and in terms of valuation, you know, more broadly. So it's normal to find it difficult to bench market your business in terms of value, but the dynamics I explained before around supply and demand have definitely shifted into being a demand constrained environment and that is having a significant impact on value as is constrained budgets from a client perspective and then in turn from an M&A perspective. The biggest driver of value in all of this is still scale. So I think you know, don't like to use the term a smaller business is sub scale business, which can be different things to different people has a significant impact on value, but that can be counted by having a really interesting value proposition. For example, if you are a business that delivers less than 10 or two million of EBITDA and you have a super differentiated proposition in a high value area, for example, data Can you still achieve valuations that are into the mid multiples? Yes, you can. If you get the positioning right, you think about the right things in advance of launch. To what's a mid-multiple? A mid-teen multiple, sorry, you know, would be between, say, 12 and 15. Possible, but quite difficult to achieve. I'd say most business valuations for businesses that have got less than two-minute-a-liv-bit-dare are between 8 and 12. That's quite a broad range still. Once you get between two and five, you can start to be more confident that you can hit the top end of that range. So a 5 million EBITDA cloud engineering consultancy. There's got good growth, good clients, good management team, good growth plan. That could achieve 11, 12, 13 times EBITDA maybe with the right buyer. And is that both trade and private equity? What differences do you see in those buyer types? I think the nuances between trade and private equity. More broadly, private equity are relying on management teams to grow the business. So having a great team around you is important and I'll be really focused on that. So to unlock those high valuations, you need to be thinking about who have I gotten this business and how are they going to help me deliver the growth plan. Fundamentally private equity are backing management teams to deliver a growth plan. So the more comfort you can give them, that you can double the size of the business, triple the size of the business over the next four or five years time. The more comfortable they are by paying higher valuations. They in turn can add value to you around investment systems and processes that scanning businesses often need. What they find it more difficult to rely on as synergies because they are typically investing as a standalone platform. If they have a platform already, they may talk to a business around Big and Bolton, which is then between a private equity acquisition and the trade acquisition. Trade buyers, you can plug in, you can be plugged into their existing structure. They can be more relaxed on, you know, your sales function might not be there yet. They can be more relaxed on that. They may have one that's well established already. They can support your growth. Cross-sell is a big part of the story for them. What can you sell to, what can they sell to your client base and vice-person? And how much is that worth? Theoretically, if the synergies between two businesses are high enough, then that can unlock spike valuations. And therefore, you know, you could argue that trade buyers have got their capacity to pay higher multiples for the products he houses. And is that possible to generalize though about, because we sometimes talk to people who think, "Well, do I go to trade route, do I go to private equity route?" For people who are fixated on a number, they might have a view of which might be higher. Is there any truth in that? Or is it more of it? It depends. I think if you're very fixated on a number, you need to think about the timeframe of which you want to realise that number best way in the risk, the best, the least risk you want to achieve it. If that makes sense, so private equity, you do get two bites of the cherry over a reasonably short period of time. So you can drive significant value in the medium term. Trade buyers, if they really like something, and if you talk about the premium trade buyers, so the ones that have got track record of paying highest multiples, which are global systems integrators, you know, Accenture, Cognizant, those sort of global businesses, they can pay very high multiples that products he can find it difficult to compete with. The counter to that really is trade buyers of that type, sometimes more interested in bigger consultancies, so they often tell us that they want a business to be 5 million plus EBITDA or 10 million plus EBITDA to be interesting. So the question is, what is the value that you want to achieve as a founder? What is the best way to achieve that? What is the best way to de-risk that? And can you drive competition between private equity and trade, and are you open to the optionality, perhaps, of getting that value over two transactions? Yeah, yeah, that makes sense. We kind of dive straight into devaluations and what makes that tick? If we step back from that for a second, what do you think is really driving value in kind of deal flow, I guess, in the market right now? And here I'm thinking about both trade and private equity, what are the factors that you think make a business really stand out to buyers and investors at the moment? So we're in a demand constrained environment. I'm so any business that has a scalable and repeatable way of winning clients stands out. That normally comes from the service proposition and the sector that you're delivering into. That is why data is a very interesting space at the moment because most businesses are wrestling with how to use their data, how to drive value from their data. Therefore, if you're positioned well in that space as a, you know, beauty consultancy, you may find it easier to win clients. And that might be translating into faster growth. We are in an environment at the moment where the benchmark for revenue growth in the UK between zero and 10%. So, you know, a lot of businesses are flat. If you are growing, it's quite hard to grow and some unfortunately are shrinking a little bit as well. So if you can benchmark at the top of that range or above it, then you will stand out. But that is just a, that's a financial metrics, even look underneath and say, well, how are they driving growth? And it often comes down to that point, that service proposition point, that sector focus point, relationships in the market that have been built up. But outside of just relationships, a scalable go to market. When we spoke before, you mentioned that sector focus and technology alignment were two things that really were making a difference right now in terms of buyer investor appetite. What is about those things that are making a difference? So I think there's probably, there's two parts to that isn't there. So part of is protection against downside risk. So, you know, the risk of artificial intelligence, which is everywhere at the moment, you know, everybody likes to talk about it or the risk of commoditization. So, putting, you know, top tier technical ability, actually understanding the space that you're in, it makes you more resilient. And the reason it does that is because it creates IP and that IP, my definition, it's harder to offshore and it's harder to be re-created by a large language model. And some of this goes back to building a trust to relationship with the client now they perceive you do they perceive you as technical resource that they don't have internally. And they're just looking for a cost effective solution or do they see it was a trusted advisor that's helping them solve complex business problems. So, one of those positions is probably easier to do if you are embedded into a sector. And therefore, you've got case studies experience, knowledge connections within that sector, long track record of delivering projects within that sector means you deliver high quality advice and naturally delivering those projects you need to have really impressive, you know, advanced technical ability to do it. So, putting those two together makes a lot of sense. From downside risk, it also helps people and clients see that, you know, you can deliver value to them quickly and often with a clearly definable ROI. Bearing in mind, we're now in a budget constrained environment. These projects are much more likely to get signed off and therefore more likely to turn into revenue for a consultancy. And the reason they allow you to deliver value quickly within ROI is because you've done it before. So, you've delivered sales force into retail or AWS into public sector or Oracle into local government. All those things kind of add up together to be, you know, you client trust you and that both unlocks revenue now and it also protects against risk in the future. And to what extent are those pillars that will have sector focus technology alignment? How is that different from a few years ago or kind of past or those are those constants? What what tends to come and go in in things that make a difference? They've always been there as two elements to, you know, what makes a business attractive, but the supply demands environment has changed dramatically. So, you know, in a world where businesses have huge demand internally to push digital transformation projects through what they need is they need more people in that can technically run these projects or supplement their own teams. So therefore technical ability is more important when you move into a more normal environment where people are thinking a bit more about budgets and how to add value and get things signed off than actually being a set an experience. Being an expert in their space, so you know, being an expert in public sector or financial services or manufacturing becomes a lot more value, but that's the last to be allowed to really good technical ability. There's a lot of conversation in the sector at the moment around AI and Gen AI and Commolatisation and you know what you can and can't replace. And if you're just selling on technical ability at the moment, then you know that that might be more of a, you know, a conversation that's higher up the agenda, then if you're actually selling on business outcomes. So, kind of data, ML AI, all that's like in constantly conversation right now and how you using it, is it going to drive us all our business and the list goes on. You work in that space a lot. What's real and what's hype? I'd say, you know, there's honestly a huge amount of hype and around the board table, people want to hear about agentex solutions and how they're going to completely revolutionize their business model themselves to their customers in new ways. Some of that is hype because the business can't do it. So the real value at the moment or a lot of the value is under the hood still. So there's lots of different stats out there, but let's say something like 90% of a business data might be untapped because it's not stored properly. It can't be accessed or it can't be analyzed. So you can have the fanciest agentex solution in the world. If you can't actually put data into it, that's relevant to that business that it's a lot less useful. You know, businesses that are able to work it. complex environments, often with legacy systems, help clients think about these things, they are really well placed. If you can then layer on top of that, business intelligence, analytics, data science, then suddenly you become top tier premium, incredibly interesting because you're both helping clients get data into the format it needs to be in but actually drive value from that data. When investors are looking at those businesses, are they buying for growth, are they buying them to how much transaction activity I guess is there in those kind of business. How many of those businesses are there that are really good at that? If you're not there, how worried you should be and what can you do about it? I think the advice if you're not there is the same around what you should be focusing on which is delivering a valuable proposition to your client, a valuable service to your client. You get pulled in certain directions as a business owner. I'd imagine you getting pulled in a direction that is more than lines of, I have a business problem here. How do I solve it? Here's a budget that I have. How does your proposition fit into that? It's easy for me to say what you should do is you should double down on data engineering and upgrade legacy systems to modern cloud platforms and help with integrations between different systems and then analyze that data. Is that a business reality for some businesses? No, it probably isn't. If you're on that path anyway, then keep going and ally it with one eye on sector. Also, easy for me to sit here and say you should be sector specialized, but it's also another matter to go out and build that presence within distinct sectors and scale within them. But the more presence you can build up in a sector at the time than the better placed you will be. It's a very active space, but there's a lot of small consultancies in there and being differentiated within those consultancies is important. The best ones combined, what I've just said, which is the different layers of the data proposition and it ties it to a sensible and coherent proposition and they've got a track record of winning in attractive sectors and to pros clients. And what, what's, kind of practically speaking, what are those businesses doing for the client? Those businesses, they're advising on data strategy, they're modernizing data platforms, they're building integrations from other software solutions into those platforms that it's stored in the right way, in an accessible way, and then they are building or using some sort of intelligence system over the top of it helps their clients to analyze that data and drive insights from that data. And how many of those are out there? I guess I'm just trying to give a sense of how, how worried should somebody be if they're kind of in the tech space? They're not really clear in that. Are they absolutely, people are going to wash the floor with them or they actually everybody is trying to catch up and trying to give a sense of how, back to that kind of real versus height point, how far into this are we? I think we're at the start of it. So there's a huge amount of market to go still from a data modernization perspective and it's growing, you know, that part of the market is growing at 10 to 20% as opposed to zero to 10%, so it's fast growth part of the market at the moment. But it will continue to develop over time. So, you know, five years time, we'll be talking as much about we need to improve legacy environments, maybe not, maybe more of that work will be done. And instead we'll be talking about better ways to access value within that data for clients. You know, having said that, we've talked a lot about data today, but there's a wide variety of businesses out there, you know, in tech consulting and digital transformation that are still very, very valuable. Cloud engineering, you know, definitely went through a burst a few years ago, but it's still valuable to help your clients move to the cloud and operate within the cloud. And that links directly to data as well. Software engineering, a product engineering is still really valuable, you know, customers still need to build products. They still don't have the capability in-house. Therefore, they still need external support to do that. Whether that is, you know, a senior person coming in and advising them on product strategy or a team coming in to help them turn what they, their product roamed up into into reality. And that will carry on over the next five, 10 years. And who's, who's investing that's built? So, you know, the mid market has a number of quite well established investors, but the successes that people have seen has made other investors see the potential from returns, perspective, and have started to move into it. So there's actually a very wide range of investors now that will look to invest in technology consulting and digital transformation. And take this in a slightly different direction for a minute. So again, kind of one of the things that we've spoken about in the past was you talk about the difference between business priorities and M&A priorities as you've described it to me. And I think that's we're going to come then to a bit about kind of priorities about being ready to sell versus being ready to be bought. But if we just do the kind of when we've spoken, what do you mean by the differences between business priorities and M&A priorities? And how might that play out for somebody who's thinking about doing a deal at some point? Yeah, I mean, in a best case scenario, these are completely aligned and they often are. A business priority is something that helps you grow your business even hour in the future. And M&A priority is something that helps you either drive value or bring in the right investor or acquire a few business. You would think they're linked and they are linked, but there can be ways in which they are quite different. And that is why it is valuable to get advice as soon as you can, not just in a few months leading up to a deal. Because worst case scenario is you're making decisions in your business today that means that your business is scaled so it's grown, but it's actually reduced multiple or likelihood of deal success. So bring it to life a bit. What's an example of a of a business priority that might find itself in conflict with with an M&A priority? I think the most common example is customer concentration, which we touched on previously. So it's hard to turn down work when existing customer. You know, you've got a good relationship. The work is secure. It's often easier and cheaper to win that work, but why if that customer becomes 50% of your total revenue? You know, as a business owner, you may be lulled into a false sense of security that you grow and well. And it's the path of least resistance to keep doing this. But that will have a big impact on the type of buyer that will be interested, the deal structure you might be able to achieve in the headline value. Another one is international expansion. So on one hand, moving into new markets is exciting. It opens up new opportunities. But on the other hand, trade buyers might find difficult integrates if you have 20 people in Portugal, 10 people in Bulgaria, 20 people in China. And decision makers in certain buyers may differ in each country. So look at the global accounts you firms. They actually will network. So buying businesses that split across five, six, seven different countries is more challenging for them. It would be the buyer business that has operations in two territories. Thirdly, I'd say people. So it can be very effective to use contracts as usually the work. You can scale quickly. You can deliver good margins. But ultimately, the strategic buyers out there that pay the highest valuations or typically pay the highest valuations, which are the GSIs as some of the mid-tier consultancies, like Globe and for example, they have employee-led business models at the moment. And that is what they have always acquired and what they will probably continue to acquire. So if you have a business that is 100% contractors today, that will be challenging to sell to some of those buyers and that goes to value. But you still have a brilliant business that's growing really quickly. It's very good margin. All that sort of stuff can be good. And so that's a clear divergence between business priorities and M&A priorities. And so what do people do about that? How are they balanced or how have you seen people kind of reconcile those different sets of priorities? And when should they be reconciling then? Just going back the first bit is to take advice when that's from someone in M&A or elsewhere. Someone who's been through it before knows what to do because it's often hard as a business owner. You grow in your business the best way you can. So it can be difficult to change the mindset from opportunistic to strategic. But at some point you need to make that mindset change. So international expansion for example, pick a territory that makes sense and invest in one territory. You get a scale in that territory. Then pause and have a think about where is naturally the next one to move into. As opposed to I have a client over here that's always just happened to move over to this one and they have operations in another countries or I'll kind of go over there as well. So a lot of it is just changing that mindset between opportunistic and strategic. The same as customer concentration. It's very difficult from my experience say no to an existing customer. But at some point you have to begin to invest in that scalable go-to-market proposition that in a scalable go-to-market strategy. That is hard. It takes time to get right and you need to do it. If you're going to do it well in advance to the deal happening. But it will pay dividends when you get there from a multiple perspective and from a deal success perspective. It's almost in conversation about how you get yourself ready. We've spoken to people on previous episodes about readiness as a topic. You've talked about not just ready to sell but being ready to be bought, interested in what you mean by that and from your perspective what is being ready to be bought look low. I think being ready to sell is more around we decided to sell the business. Got an idea of who we might want to sell it to. We're reasonably aligned maybe as a group of shareholders. So we've made that decision. Ready to be bought means that an acquireer will actually follow through. On that you can actually deliver a deal whether that's to strategic trade or privacy. We think about this a lot. A lot of what we do in advance for deal is preparation either directly leading up to a deal. for years in advance. The first step is actually getting the right team together and that can be corporate finance advisors, bankers, lawyers, dealers, providers, operational support, growth specialists, actually challenging yourself. You know, do I need non-exec support at this point in time? Who do I need around me to get the right team together to make sure that a transaction is a success? Because a transaction is very different to running a business. The second point is very common to meet businesses that you know have good data and they're very comfortable with the level of data that they have to run the business, but this might not be the same level of data that you need to transact on a business. So if you're not tracking things like pipeline conversion, margin by customer and by project, KPIs around day rates, you know, you need to start doing that as soon as possible because that will be very helpful when you come in through to do a transaction and the level of detail and data that buyers and investors go into is always quite surprising or usually quite surprising for business owners. The customer concentration point we talked on before, one to two years ahead of doing a deal. You should laugh times, do something about that. Months ahead of when you want to do a deal is a lot harder. You still tell a story around it, you can still point to pipeline growth outside of that top customer and your plan is to bring it down, but actually actually bring it down. We'll be helpful. Customer concentration is risk and risk means deal structure so that a trade by a situation you might end up with quite a big urn out, with high concentration from a practical perspective. They will protect their risk around, you know, with structuring, positioning the business, which is a lot of what we do. What is the market noise around the business today and how do you change that over one or two years and get it ready for a transaction? What are people saying about you externally, not just clients but other consultancies? Maybe investors have heard of you. What do they think of you? Have you spoken to investors and trade buyers before? What are you saying to them? How consistent is that message? Are you positioning yourself as a data consultancy? Are you positioning yourself as a management consultancy? Are you some data capability? Who are you and what do you want to be? The more consistent that message is, and the more tailored it is, then the more powerful it is, and the more chat the better chance you have of competing a deal that you want. I think the final one is just thinking about a management team. You can run a business with a very lean management team, but that might be a different shape management team to actually scale a business, post-investment, which is what all buyers fundamentally care about. What are the gaps in your management team? Do you have a CFO in place? Do you need a chief commercial officer? Who is your head of consulting? Do you need to think about splitting up service lines and how they head off for each of those? What investment do I need to grow over the next three or four years? Investors in particular are all over this, and they add a lot of value throughout investment cycles, advising on it and helping people think about management teams, systems and processes. The more you can do in advance, typically the better, because you can give them confidence that you're already on that journey. We often get asked how people should engage with the investor community with the market, how soon should they do it. I personally see lots of businesses that seem almost reluctant to talk to people to get out early for fear of well, we're not ready to go yet. What you review on how and when people should, if they're thinking about doing something, or even it might be a glimmer of an idea, and they might not know, like how do they go, what's the best approach to educating themselves, getting that story out in the market that you talked about? How do they do it in a way that creates the right, particularly if they don't have a fact-fine thing? How do you create, on the one hand, you say you need to create the right impression yourself and get people saying the right things, and so you might not want to go to talk to people because you're worried you will say the wrong thing. So how do people reconcile that? What should they be doing? I think it goes back to just getting that right team together in advance of launch because that team would have seen many transactions and they can help an advisor team, a non-exec team, an advisor team, whatever shape those advisors look like, somebody who has experience in your sector, someone who can help you with the positioning and introduce you to investors, for example, that will be well suited for you. So there is a risk that you might go out and speak to investors over a period of time and they get to know your business and they will have a perception in your business. Once perceptions are there, they can be quite difficult to change. It doesn't hurt to have a coffee here and there, but the more that you do it, and you can spend a lot of time meeting with investors and they will be very interested in your business because they are fundamentally for great businesses to invest in, but that is where the positioning can get a little bit more lead and the perceptions out there in the market. So it is just getting the right advice at the right time, work out what your growth plan is, what you want to sell and then if you have two or three or four or five years to get ready for that then brilliant. And if somebody is a few years out and thinking about, okay, it's not an extra thing, it's one to three years out, what should they be doing now to position themselves for and give them some options for different kinds of investment or exit options? I think they should start to think about three to five year growth plans, which isn't always the case depending on the size of the business and the way it's been run previously because then you can track yourself against where you thought you were going to be and where you are. And part of that is a link to shelter objectives. So in order for it to be bought, you have to be aligned in terms of what you want out of a deal. What you know, what you want out of a deal, you can begin to think about what is my business needs to look like to be attractive to the investors or be attractive to trade parties. You know, some of that is my proposition right. You know, with my customer base, good or doing to think about, you know, the size of customers that I'm delivering to is my management team, complete, trying to think about bringing in, you know, some extra senior support. I think fundamentally that's it. And you mentioned shareholder alignment. Have you seen examples where there's different shareholders who can fund them and they out of sync with each other? And if so, what's the impact of that and how do you deal with that as an advisor to them? Well, there's only so much we can do. I think shareholder alignment is that one of the most important things and one of the points that we try to get, you know, the very outset of a deal. Fundamentally, if you have majority or significant shareholders in a business that aren't aligned, then a deal is impossible because people need to get what they need out of a deal to be happy. So once you have alignment, most things kind of flow from there, if you will. Shareholder alignment does change over time as well. So people's priorities change, people's thoughts and feelings change. We've got to be very alive to the fact that working with founders in particular, these are businesses that have been growing over 5, 10, 15, 20 plus years, you know. There's a lot of emotion in it as well. So actually checking in all the time on what, you know, what shareholder objectives are today, what are they in six months, what are they in a year? Are they developing and how do we react to that? Is really really important. And do you find that most people pretty clear on that? Do you think you've got two, three, four? Is it something people tend to be on top of? Is it something you get to neglect? But you're. I think typically neglected. So it's definitely something where people need to take advice leading up to a deal. The more shareholder's, the rather more complexity there is, especially with our clear majority. So I'd advise anybody who starts to think about that, stuff to have conversations within yourselves and that often be helped by having an advisor alongside you. And if you're. I mean, you obviously come out of the world from people actively doing deals and that's kind of where you. And how much of this, all this stuff matters, even if you kind of may never want to do a transaction. Like of all these things, what's the. what's the non-exiting founders' advice you get? I think if you don't want to sell your business, then you still do. The things that we have spoken about should still help you run your business more effectively and grow the business. So there doesn't have to be a transaction at the end of it at all. A lot of it is still good business-sense. It retores about customer concentration, insulational expansion, service proposition, building out management teams. All that stuff is great for M&A. It's also great for growing an exciting business. And that's what M&A is. People are. whether it's an investor or a trade buy, they're buying the future of the business. So there is typically good alignment there. Yeah, good. That's been really useful conversation and much appreciated. We're kind of closing these by asking, er, the same couple of questions. So you've had side to these in advance, I think, just as a first one. What if you go back and do one thing differently in your business, your career, what would it be, Joe? So I think that it took me personally, it took me a little bit of time to find my way into corporate finance. So previously a buy chemist, I then trained as an accountant. I then moved into M&A. I bought businesses with PBC. My passion is advising tech businesses, tech consultancies, and work with people that have grown really cool businesses. So I would say that making that move a little bit more quickly for me would be, would be something that I'd do differently. But having said that, not everything about speed, not everything is about titles. So actually, what I've learned is just doing the right things along the way really matters. So that is, you know, building trust with your clients and in the market, being credible about what you talk about, I think is also really important. And if you do those things right then, and do them right sooner rather than later than the rest follows. How many of you get from biochemistry to M&A? That's probably a great question. I think, you know, I come from a side's background, but biochemistry, I've worked in the NHS for a number of years. It's a very unique environment and I think much better suits it to the business world. There you go. Something, something we've known each other for a long time, and I never knew that. Final question then, what if you're going to be a bit of advice to somebody who's looking to build kind of long-term value in a professional services business. What bit of advice would you give them? I think it's, you know, focused on being someone that people can trust, build long-term relationships, build a reputation for delivering. Fundamentally, consultancies are the same as M&A firms, so when I advise my clients, I'm always rating it back to my own business model, and that is what we focus on. You know, we have taken the decision as a business to be very sector focused, sub sector focused, but also have local presence, so we're close to our clients. Putting those two together means that we deliver, you know, hopefully, a really good service for our clients and they trust us. It's exactly the same for tech consulting, digital transformation consultancies, so focus on the fundamentals being known for doing what you do and doing it well, and you know, was I said before, I think the rest will follow. You did voice about life and generality, faith is, I know that's great, great to put it on. If you, anyway, wants to reach out, you have to be contacted, what's the best way for everybody to get in touch? Of course, yes, I'm, you know, I'm an active-ish on LinkedIn. We've got a website, drop me an email or my number's on the website as well, so just give me a call. Very good. All right, we'll put that in the thing in the show notes. Thanks very much, John, and we will talk to you again very soon. I'm sure. Lovely. Thanks a lot, John. Thanks for listening to Unlocking Value. If you've enjoyed today's episode, we'd love for you to follow us and share the show with others. We'll be back soon with more real-world conversations about how to build and unlock value and professional services. In the meantime, if you've got guest recommendations or any feedback, please feel free to drop me a line at [email protected]. Thanks again and see you next time.