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[email protected]@JMW.co.uk And he can be your lawyer too. Hi, this is Jonathan J and welcome to the business buying strategies podcast, the number one podcast for people interested in buying a business. On this week's episode, we'll find out what happens when you buy four businesses totaling six million in annual revenue. What happens after you bought them? How you integrate them? How you run them as one operation. Now Peter starts off as an employee of one of those businesses and then he went on to own the company. So let's hear from Peter. So we are back for part two of this podcast with Peter. Peter has bought four businesses totaling six million of annual revenue in the last three, three and a half years. Yes, yes, yes. Pretty good going. Now, on a previous episode of this podcast, we talked about the deals, how you put the deals together, how you negotiated the deals, how you funded them, all of those things. Now we're going to talk about what happened after you bought the businesses. The exciting bit. Yes, that's where the work really starts. So what has been the biggest challenge post acquisition? Yeah. So on the build up to the acquisition, you're dealing with the owner, the seller, and very much commercial, legal, financial, very high level discussions going on. You're going through your due diligence stage and you do as much as you can without kind of ruining the business. And that's great. And then you get past that, you get the case to the business, if you like. And then people, so the people make the business and you've got to look after them. So you've got to treat them right with respect to the business, continuing the business continuity and everything like that. So making sure you communicate with the team that you inherit, they share that. Again, you kind of just want to settle them, post completion, they're like, oh, new owners, what's going to happen. Because there's always business uncertainty is my job safe. Yes. That's what everyone's thinking. Is the job safe? Is it still going to be here? How long have I got? Do I need to look for a new all of them, negative emotions, very quickly set into human nature? So reassuring them that this is a good thing. Business is going to continue. We wouldn't have bought it if we wanted to close it down. We actually want this to succeed. Our success, your success, success goes both ways. So just for us, making sure that they're looked after and we've been trying our best to create a culture where we are putting the people first, we are putting the employees first is absolutely best you can. And that is easy, I said, then done because to business, there's challenges, external, all everything that goes with it. So you've got a lot on your mind, isn't it? But we're always trying to bring it back to the people are the supported. Yeah. It's a simple things from the early view, it was frequent communication, all of them sort of basic, here, trust, which is easy to miss when you're worried about the renters due or is a supply as chasing their payment or a customer hasn't paid. It's easy to forget about that. But despite all of those things, you still have to sit down, talk, listen, and talk. Yeah. All of those things. And actually, none of that, as you said is particularly complicated. It's just sticking to some basics of treating people like you would expect to be treated yourself. That's it. And coming from the tools, taking that quick succession from engineer employee to owner, boss manager, whatever, making that quick switch, I didn't forget that I was an employee. I remember how I would like to be treated. So you're able to pass on that, say compassion, it still works. Well, it's an everybody. It's an understanding their position. And for people who haven't listened to part one of this two-part podcast, Peter just a few years ago was the employee working in the business that he then went on to own the business and then went and bought three more businesses to create a group with six million of revenue. So in a very short space of time, as he said, you've gone from being the person on the tools to being the boss. Yes. So knowing how I would like to be treated is how I want to create that environment for the team for the employees. So the three directors, myself, business partner and our ops director are aiming for the culture where essentially people are knocking at the door to work. It's a place where people want to work. Yes, it's hard work. But yes, it's reward. If you want to work here, it'll be reward and it'll be challenging. And that's the environment we're trying to make. Yeah, very good. Very good indeed. And have you integrated? You said the businesses are quite close together geographically or three of them are. So have you integrated the working practices? So is everyone on the same HR contract, employment contract, for example? This moment in time, no, that will be on the cards at some point in the future before a lot of different reasons. You know, these businesses were all established. They were all being going 20, 30 odd years. And a lot of people, a lot of the staff have been there a long time, sort of 10, 15 years when they got their contract. It's the laws change three or four times since then. So actually to check, because people's employment contracts are sacrosanct and to change someone's contract is like, that is a turmoil for them. So it's actual fact. So if they've had that team. Keeping them as they are. If everything's working. Yeah. Yeah, for 15 years. There's no point rocking the boat, is there? So you've actually answered my next question, which was about branding. Clearly, if the business has been going that long, you're buying the brand, the recognizable name, the reputation that goes with that, the good world that goes with it. So clearly you haven't changed that either. No. You know, definitely the right thing to do. Yeah, we've just kind of added on part of the fairly gun group. Absolutely. Absolutely. So a subtle tieing it together. So we had a former mastermind to come to the Inner Circle group. I don't actually think you were there, that particular meeting, unfortunately, called Sam. Sam's been on this podcast as well and he bought, I believe, four HVAC businesses. And he previously worked for Tui, the travel people. And Tui had bought another business and he'd been told to go and do the integration and put the business together. He said it was such a nightmare. He would never ever do that again. So he's kept his HVAC businesses operating completely separately. And as a result, he hasn't even attempted the integration because he doesn't want to go there. And it sounds to me like that's actually the same path that you're going down as well, all over different reasons. Yeah, absolutely. Unless there's a fantastic reason to integrate them, I can't say you're still in that. Because is your say you're buying that brand, that entity, that recognition within what I'm going to do? Absolutely. And to destroy that and start again, doesn't make any sense. Doesn't make sense. Doesn't make sense. Doesn't make sense. Doesn't make sense. Do you remember how they rebranded the post office years ago and they've tried it and it doesn't work. They're going back to the post office. So what about the back office functions? What about finance, for example? So that's slowly being taken shape. So we've got a financial controller who kind of looks after all four businesses as well as our operations director. She's got a strong financial background, so she's able to oversee that on a day to day basis. So that's slowly being consolidated into sort of one or two people who have seen everything. And that helps because of our finance and arrangement with a consolidated facility that means everybody knows what's drawn down, how much is available and where. So I would imagine your lenders want to see regular management accounts, want to be informed of exactly how trading is going. So did the lending go into the top co, into the, into the holding company or into the trading? They're actually into the trade and businesses, but it's, but because the part of a group structure they're able to have it aggregated. Yes. And this is your refinance that you did. Yes. We're doing that earlier this year. Yeah. Fantastic. Do they have security presumably over the group? Yes. So there's cross debentures, cross charges. Okay. Everything. So they've, they're, they're, they're, they're holding onto that company very tight, but no personal guarantees. No personal guarantees. Yeah. And that's the big more. That was a big one. When we first started personal guarantee or known everything like that, kind of to be expected. But once we'd proven ourselves. And you have proven yourselves.
the thing. You bought four companies. That's right. Absolutely. And I think that is something that you need to preserve. It's like your reputation. You see your business reputation isn't it? That you can do this. You can accomplish this. Yeah. Yeah. Absolutely. So, make my chat about before actually getting the deal done, getting that to the execution point. A lot of people can talk about it. A lot of people can spend months, years going through JD, but at some point you've got to do it. Absolutely. I think that with due diligence, if you let your external due diligence company quite often, you're accountant just have free reign, they will never stop. Yeah. Because there will always be another month of management accounts. There'll always be another set of annual accounts. At some point, you've got to say, no, we this cannot go on any longer. We have to sign the deal. We have to do the deal. You're just going to get yourself comfortable enough with whatever risk it is. Yes. You say, what is the worst that can happen? And am I okay with that? Yeah. And if you structured, as you well know, if you've structured the deal well, then you've got a bit of a buffer as well. Because if something comes out post diligence that's been warranted, then you can have a right of offset against anything that you've retained. Yes. So you haven't given them all the money on day one. You held a bit back just in case they haven't been completely truthful. Yeah. And it keeps them motivated as well. Absolutely. Yeah. And I've talked about this and you all want it to work. Yeah. Well, I want to get out the money. We want it to work and we want a business that continues. And creating that consistency of focus where everyone wants it to be successful is how it does become successful. If people are pulling in different directions and sometimes you get sellers of more of smaller businesses where they actually have this sort of sellers remorse and they don't want you to be more successful than them. In fact, I was interviewing someone for this podcast earlier and he was saying exactly that. He had the seller being negative to the customers. So how did you approach telling the customers and the suppliers that the business had changed hands? So an open and honest approach and because we'd worked with the previous owners, we'd worked with the sellers. Again, we all wanted it to work. So they were quite happy to do some sort of handover period. So when you approach the suppliers, you approach the customers, tell them about your background, what you're up to, don't fear. We've still got the previous owner here. It's going to be a smooth handover. And then actually doing that smooth handover. And we took the approach if people don't realize it's changed hands for six months, that's been a success for us. Absolutely. Yeah. What do you mean you bought it six months ago? Visible external changes. Yeah. Absolutely. Absolutely. I was like suppliers, keep getting paid on time. Ish. Customers are still serviced in the way they are by whoever they were dealing with within the business. Just keep all of that going. There's no point in coming in, move along and the bus now. I'm going to talk to the customer. That doesn't help anybody. Yeah. Yeah. Absolutely. And how did you deal with the first conversation with the staff, the first time you met them? So again, because we all wanted this to work, they were all been to us, given a talk, pre-completion. So it was actually, I'd actually done a couple of talks. I'd met the key staff, the management earlier on in the process, then they were involved, got the buy enough them, they were motivated, they were excited for the change, the future, all of that. And then the rest of the team, we were, it was kind of the mutual decision, okay, now seems about right. We've gone far enough in a D-Day, we've gone through a couple of revisions of the SPA. We're now at a position where, okay, it's highly unlikely to fall over at this point, let's now have that conversation with the staff. Yeah. Good. So, so, I mean, this is always the debate. Do you keep it confidential until you complete and then it's a surprise or, as staff always describe it as a shock, never as a surprise, always a shock, which is more sort of negative than a surprise. Or do you discuss it prior to completion, which feels a more sort of democratic fairer way of doing things, but it carries the risk of, if the deal doesn't complete, than the owner, the seller has got egg on their faces and it's all very embarrassing. Yeah. And I suppose you have got the risk also of staff looking elsewhere for jobs, but it sounds like that didn't happen with you at all. So, for the third one, we did have that, we had quite a big workout, it seems extreme. There was only, there was only a small business, I saw people there and we had a couple of key staff members leave who left a huge hole within the business. As it turns out, in hindsight, reflection, I think they were already checked out long before we come on the scene. Sure. You were just the catalyst for that particular moment, they said, you know, if Jeff's selling, well, we might as well go at the same time. The change happened either they didn't like it or didn't go as they planned or that was the catalyst or that was their excuse. Then they moved on, which left a huge hole for us to fill. I had a quote there, it turns out to be, dare I say, a bit of a blessing. So, we went out and actually built the team up from scratch with people we wondered, people who aligned with us, aligned with our values, wanted to go where we were going. So, now we've got that team, the business is better for it. Interesting. Interesting. It's always interesting how with hindsight, things are never as bad as they felt at the time. Probably heading your hands. What's going on here? Yeah, what do we do? You just work through it. Yeah. You haven't really got a choice. But they just went to tell the stuff. I don't think they're probably isn't a right time. You couldn't say, you couldn't say, do it at this point. But the approach we took was, when the SP is at an agreeable state, there's very little tuning for on going on. You've got the deal structure nailed down. You've got the initial consideration nailed down. That feels like a comfortable time. And then when you have the discussion with the staff, say, oh, this has actually been going on for a while. We're making sure it's right. We're making sure you don't really notice any change for the near future. Yeah, that makes sense. That reassurance. Yes. And we talked in the previous episode about consolidation. So, you're going through this period of consolidation now. Making sure that everything is absolutely rock solid. So, what does that look like? Does that involve recruiting new people? Yeah, it would be an endless recruitment. So again, because the business is well, established sort of 2030 years old, Deira, say the previous owners, and maybe he's retired in the head five years, and he tried it, it was coming along. So, the quite happy he had been doing it a long time. When he was coming in, business was successful. Happy days, techno long, no real pressure for business, no real desire to make it bigger because they knew they were retiring. So, we've come along and there's a huge amount of organic growth just sitting there. So it was pent up. So, I don't remember Jason in the inner circle group with his manufacturing business. Right. The fabrication. Yes. Yeah. So, the previous owner, they stopped answering the phone to new customers. Yeah. So, the fastest way to grow the business was answer the phone. Yeah. And take the order. And so, you took on this business and you think it's doing whatever it's doing, then you're like, well, hold on. There's this, there's that, there's this. And before you know it, you've actually grown quite organically. Yes. And then you're like, oh, he was going to do all of the work. So, then you go down the recruitment process. You add in the acquisitions, then that just sort of accelerates the growth. So, so you're going through all of which is why we're going through this consolidation and the premises move to facilitate and actually realize some of that potential. Okay. So, have the additional capacity. Yeah. To actually take on what we've already got. Never mind bringing a new stuff. Good position to be. Yeah. Because quite often, when you take over a business, there's an attrition of the staff and there's some attrition of customers. Have you lost customers? I couldn't sit here and say or identify anywhere more lost. But we have let customers go. Okay. So, there was one one particular customer that I can think of where we went through the accounts, kind of done a customer review. Actually, let's see what's going on here. We noticed one customer who was a fair size of turnover, but I don't know what would go on with the previous owner. There was some very favorable discounts and terms and there were just demanding a lot of resource from the staff. And as it turns out, it's interesting. The people who pay the least want the most. Right. Yeah. Absolutely. So, it was the one that they were paying the least, the one of the most resource. And we weren't making very much and there was actually a probability that we were actually making a loss on this customer. It was just feeding. We think they were just feeding cash from it, just keeping it going. So, we said so this customer, this kind of go on like this, offered them, would love to still do business with you here. Customer value, because my have been for a long time. But we kind of support them discount values of being getting. So, we give them a new price and structure, business dropped off pretty much straight away, but that freed up all of the resource to go to
profitable work are very good. Yeah. Yeah. Yeah. I just all feed the I've seen that before. So it's really looking at your customers and deciding because there are so many times that mates rates are being applied by the old owner. Yeah. And of course they expect those to continue with you the new owner. So if you eliminate those, there's no profit in those clients. And if you remove those clients, they say it frees up the resource. It allows you to go and get the profitable customers and basically everyone wins. You win in every single angle. You've got a better client who's who's more profitable and probably taking up less less resource because the people who want all the discounts are always the most demanding. Yeah. Yeah. That's probably how they've got it. Got them discolored. Could be. Could be. Yeah. It's chicken and egg, isn't it? Which came first. And then that's obviously tricky conversations to have. But as the owner, they're the conversations you need to start having. Yes. You need to start identifying them. And then it's balancing that with the people element. The people may have been dealing with this customer for a long time. Then they may be feeling comfortable or as that how we're going to treat them now. They've traded with them for 10 years. Now you're treating them like that. So there's you need to go through the cycle of yes, but this is for the benefit of everybody. Yeah. Absolutely. Absolutely. Have you had to let anyone go in terms of were there redundancies when you bought any of the businesses? No, no redundancies. There was people left which have to spoke about and then there was some that never worked out, which you've got to go through that. No redundancies. And when we're going through this consolidation, that no redundancies were actually taking people on. Oh, very good. Consolidational, be around systems, processes and physical resource, not so much people resource. Do you feel that you're a different person to the person you were four years ago? I feel like I've grown into the person I was meant to be rather than different. Great answer. Great answer. I should have practiced that. That's really insightful. And so I've got an idea how old you are. Would you be willing to share? 34. Just turn 34. So you started this journey in your 20s. 30. Just turn 30, yeah. Okay. Was creeping up on 31. Oh, I got this one. An old age. Yeah. 31. So when you said you feel like you've become the person that you were meant to be, was there during your 20s then this desire for more? Yeah. No, because I didn't know what it was. I'd see how thought I wanted to work with myself, have that sort of control over what I do. Go the subcontract and wake or the engineer and contract and way that kind of thing. I knew there was something there and there was always this agitation that I could do more, I could be more, was pretty good engineer back when I was under tools. But I knew I could say I knew I could just do more. And then finding this I'd kind of, I'm not into property and I'd kind of toyed with going into property because that everybody's doing it or there's be something in it. But I'd never took that leap of faith with the courses and stuff like that. But when I'd found your course, something resonated and twigged and I was like, yeah, I'll take that leap with this and it's worked out. Okay. Amazing. What I'd like to do. This will go out onto the podcast October November 24. What I'd very much like to do is invite you to come and speak to our mastermind 2025 people next year and come and share your story. I'm sure with some updates, maybe even another acquisition at that point and share your story with them because I think that people don't necessarily appreciate this isn't just about buying a business. This is about the person you evolve to be while you're buying the business because I imagine the conversation we're having now, we wouldn't have had four years ago. I mean, this is a completely different type of conversation. Yeah, absolutely. Absolutely. And have your friends and families in a difference in you? Less. I've seen less of you. Okay. Okay. So when they do see you, do you feel they see a different Peter? Yes, so definitely see us all. Yeah, definitely. I think they've, I'm not actually asked them, but they've probably always known I could do more or better or whatever. It's quite a high achievement school and high achiever throughout all of the academic life and pretty good employee when I look back so I always knew and they're probably always new. You'll do all right. Yeah, are you going to a great future ahead Peter? Thank you so much for being with us today. Thanks for very interesting, very insightful. Thank you so much. Thank you. Thanks. Thanks for listening to this week's podcast. Have you got your free business buying toolkit? It's a huge free resource that Jonathan's put together to help you get your deal done. Go to www.dealmakerspodcast.co.uk and claim your free toolkit now.
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