Episode Transcript
[00:00:00] Speaker A: 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 and Marcel Corporate Finance, and me, Chris McGuire, executive editor at Business Cloud. Welcome everyone to the Dealmaker Uncut podcast, powered by Alvarez and Marcel. My name is Chris Maguire. I'm the co host. I'm also the executive editor of Business Cloud. As always, I'm joined by the multiple award winning dealmaker himself, Jonathan Boyes. Jonathan's been involved in deals in his illustrious career, totalling £5 billion. And he's a managing director and head of Alvarez and Marcel's corporate finance practice in the uk. Welcome, Jonathan.
[00:00:46] Speaker B: Thanks, Chris. Great to be here. Very excited about this session.
[00:00:49] Speaker A: No, really. Before we introduce our guest, a quick shout out to what media who. Who produce the Dealmaker Uncut podcast and make sense of our ramblings. They're the kings of content creation and we're delighted and very fortunate to be working with them. So thank you very much to what media? Now, it's fair to say this podcast has got everyone talking. In the first part of today's show, we're going to be interviewing our very, very special guest. After that we'll be taking a short break and in part two, Jonathan will be leaning on his 35 years of experience of working in corporate finance to answer some questions from you, the dear listeners. So who are we talking to today? Jonathan?
[00:01:23] Speaker B: Thanks, Chris. So the timing of this podcast is perfect. So Steve Byrne is the CEO of Travel Counselors. You've just hit sales of a billion pounds in the last few weeks and also been named an international leader for the north in EY Entrepreneur of the Year. So I'm really grateful to you for joining us, Steve. And I'm excited about this because I am a customer of Travel Counselors and have been for 10 years. And almost every holiday I've had in the last 10 years had been arranged by one of your travel counselors.
And on the odd occasion when I've not used them, we always notice that it's not as good. So I'm really pleased to have you on board for this session.
[00:02:07] Speaker C: I'm delighted. Delighted to hear that and also relieved.
[00:02:10] Speaker A: So are you like an ambassador for travel counselors or something?
[00:02:13] Speaker B: Well, I could be. I could be.
[00:02:14] Speaker A: Now I feel like I'm in the presence of business royalty. So Jonathan has done deals totaling 5 billion. Steve's business has topped sales totalling 1 billion. He's won an award. I'm here in my 99 pound biorite suit, so I'm definitely the odd one out. But I do want to set the scene if I may. Steve joined travel counselors as long ago as 2004. So 20 years now, 10 years later, you did an NBO which was backed by Equestone. In 2018, there was a secondary buyout from Vitruvian Partners. I know you've announced plans to try and turn travel counselors from a billion pound turnover business to a 2 billion pound turnover business in five years. We're also going to discuss something I think which really decimated the travel travel industry. And you'd have been at the heart of this, Steve, which was Covid, which was absolutely devastating as well. Have you ever had anyone do a this is your life, Steve? Because it sounds a bit like this is your life.
[00:03:06] Speaker C: It sounds a bit like that. But I'm looking forward to sharing our story with you both.
[00:03:09] Speaker A: Okay.
[00:03:10] Speaker B: Well I suppose for those, obviously I'm familiar with travel counselors. It would be great if you could just set the scene and describe the business and just talk about what you're doing and what the offering is.
[00:03:22] Speaker C: Business has been going for about 30 years. Maybe later on we'll talk about the evolution of it. But in its current state, we provide a platform that enables over 2,000 individual travel entrepreneurs to run their own travel business. Powered by our platform, part of a community. And those travel entrepreneurs organize the personal travel holidays of people like yourself. And we also have travel counselors who organize the corporate travel for small to medium size, medium sized businesses. And we do that in the UK and five other countries.
[00:03:54] Speaker B: Brilliant, Brilliant. So this is a deal, a deals related podcast. So we're interested in some of the deals that you've been involved in.
You've been MD at the business since 2004.
And then it was about 10 years ago, I think you said that you'd taken on private equity investment with.
I'd just be interested in hearing about some of the background to that deal and the decisions involved in doing that.
[00:04:24] Speaker C: So this was created 30 years ago by David Speakman. It was super, super successful. In 2014 he took the decision to divest some of his ownership of the business. So we did the first transaction with Equistant and you'll understand with all of your history, the transition from founder led to bring the private equity is an important milestone. It should be handled really, really carefully. And then from that we carried on growing the business quickly. Carried on investing in the tech and expanding the business. And then that led to a second buyout in 2018 with Vitruvian.
[00:05:06] Speaker B: Yeah. And one of the things I'm often interested in is that dynamic when. And a management team takes over from a shareholder who's exiting. So you'll have worked together for a while before, I guess, and somebody else has taken their money off the table and then it's all with you and you've got a new investor. Just really interested in how that felt.
[00:05:27] Speaker C: Yeah, I think the most important thing, and maybe this hopefully will be a constant theme. So whether it's change in ownership or change in the marketplace, you focus on what's most important, which is how do we, you know, what's our strategy and strategies change and evolve and what people do. We need to execute that strategy. And fundamental underpinning, whatever strategy you've got, is how you look after your customers and people. So both in 2014 and 2018 and during COVID and now it's more a case what do we need to do to enable our travel counselors and our people to be even more successful and do a better job looking after their customers? So you tend to focus on that and then you put partnerships around you that facilitate that.
[00:06:09] Speaker B: Yeah. And you. So the business grew and it seems like it was quite a successful initial investment cycle with equestone. And then you took on Vitruvian.
[00:06:19] Speaker C: That's right.
[00:06:19] Speaker B: And again, I'm interested in how the different. Those two investors were different and how that change worked.
[00:06:26] Speaker C: Yeah, it's no different from, you know, as you. As you grow your business, you build talent around you and people around you that you need that time in your. In your journey. And in 2014, 15, it was the first transition into private equity. So there were a set of needs and requirements then that were really well met by Equistant. They had a presence in the Northwest, which is really, really important to us at that time. And then in 2018, it was about how can we scale the business but still keep it very, very personal. We wanted to create more of a platform basis to the way we went about things. And we wanted to do that to scale. So we wanted a partner who could help us both scale had experience of helping platform businesses grow and how could we grow, but also make sure that still felt really, really personal as far as the travel counselor and the customer is concerned. So you find a partner that will help you achieve those objectives. And that's what we did with Vitruvian.
[00:07:27] Speaker A: Can I ask a question?
In terms of investors, a company of the scale of travel counselors would attract a lot of interest as how do you choose the right investor? Because a lot of our listeners and viewers, they are SMEs, they'll be thinking about going into the investment process as well. Have you got any advice in terms of how to choose the right investor for you?
[00:07:50] Speaker C: I think just like with any relationship, then it's what you need at that time. So what's important to you at that at that time. So the needs in 2018 were different from 2014. But then what is constant is what you believe the quality of the relationship will be like because relationships can and they really count when things are tough.
So you know that people mix that personal mix. How does that partner behave when things perhaps don't go as well as they you would like, through no fault of your own. And obviously we had experience of that in Covid. So you sense that by the time you spend with them and you sense check it by reference, checking. So two things. One, what are you looking for and does the partner provide what you're looking for at that time in your journey? And secondly, does the relationship feel right? And like any relationship, you spend time with each other, get to know each other and you sense check that through. Others have been involved in that partner because that relationship is really, really important. Because things will go awry in your plan because business isn't perfect. Markets change and you want a partner who will be for you both. Not when things are just going well, but maybe when things are a bit more challenging too.
[00:09:09] Speaker B: I think it's often something that people underestimate. They don't think about the importance of the individuals in the investment house you're taking on board. The relationships and just generally the host style because they do vary quite dramatically, from very hands on, very almost authoritarian to quite relaxed and.
And often people look at the headlight, the enterprise value of a deal or maybe even some of the other metrics, the equity stakes and stuff like that. But the most important thing is often the relationships and how people will support each other.
[00:09:48] Speaker C: That's the most important thing in business and in life, isn't it?
[00:09:51] Speaker B: Totally, totally.
[00:09:51] Speaker C: It's all about the human glue. So you're making a big decision, particularly if you're a founder, it's your life's work. And entrepreneurs who create businesses from scratch, which you know, I haven't done that they're to be celebrated. And if they're going to take some investment and de risk themselves, then they want to do someone who's going to take care of the fantastic business that they have created. We've gone on, you know, we've done some acquisitions since, and I've been really careful that as we go about those things, that I can look people in the eye and say, if Travel Counsels invest in you, we'll look after your customers, we'll look after your people and protect your legacy. So it's no different when a founder is partnering with a PE firm, I think.
[00:10:30] Speaker B: Yeah. So you've got. It's obvious to me that you've got a really strong philosophy in the business. Would be just because of the engagements I have as a customer. But I'm interested in when you make an acquisition, how you. How you bring that into the business and to integrate that to keep that culture in the business.
[00:10:49] Speaker C: Well, a couple of things. So, I mean, statements of the obvious. Acquisition is a tool to effect your strategy. So it's got to be a way of enhancing your strategy or accelerating your strategy.
And then subject to that, we would only be interested in a business that was culturally aligned with ours. And what do we mean by that? A business that is focused on looking after its customers got a strong record looking after its customers got a strong record looking after its people. They are the cornerstones of Travel Counsel because whilst we're a technology platform, actually we celebrate much more the fact that it's a community where people feel better for being part of something that's bigger than themselves that they can contribute to and benefit from. We want something that's compatible with that.
[00:11:29] Speaker A: I mean, you talk about relationships, and I think we've got a good relationship. Jonathan, you know the dynamic on this podcast, but I think I read a statistic that 50% of acquisitions fail. And it's fascinating to hear Steve talk about the amount of effort that they put in to get the right cultural fit as well. And why do you think as many acquisitions as 50% don't work? What goes wrong?
[00:11:53] Speaker B: So I hear these statistics about acquisitions working and not working. I'm not sure where they all come from. I think they're often from consultants making things up.
I think a successful acquisition can be successful for a whole variety of reasons, and it can fail for a variety of reasons. I think Steve's right, though.
If you get cultural alignment and then you're careful to bring the people in the business that's being acquired so that they almost feel like they've not been acquired, but they've become part of a group and that they combine to a vision that is successful and Inspiring, then you're much more likely to get alignment. There's some basic sort of integration, things like getting accounting systems the same and HR systems so that one business doesn't feel different to the other. But fundamentally, if you inspire people and then bring people culturally aligned, get them to feel part of your business, then it's probably going to succeed.
I suppose if you don't do any of that and you get something where the people aren't in the same mindset and you don't spend the time to bring people along, then it's going to be harder. But yeah, so that's all. I think acquisitions are hard and to do them effectively needs a lot of thought and you need to be careful.
[00:13:20] Speaker A: Any good advisors like yourself?
[00:13:22] Speaker B: Yeah, well, it's not really the advisors, I think it's often the businesses, how they integrate people that make it work.
[00:13:29] Speaker A: Can I ask a question about the travel counselor story? Because I was doing my research for today, today's interview. I think there's probably three phases to the travel counselor story. There's the founder led stage, there's the privately owned stage and there's the growth and scale stage. And I think you're at the growth and scale stage now. Is that an accurate summary do you think, Steve?
[00:13:49] Speaker C: Yeah, really spot on, Chris. So we talk about the TC story in three main phases. You had founder, founder led and created super, super successful. Then first buyout in 2014 where private equity partner put a bit more corporate governance in place because we were growing quickly, expanded management capacity and capability, brought in some non executive expertise into the, into the business. Continued investment in technology, had a very clear strategy, two or three prongs to it at the time. And then that led to the third phase which how can we scale it as a platform business but still keep it feeling personal? So it's not just a platform business, it's a personal digital platform we're creating that enables travel cancers to feel part of something bigger than themselves, part of a community and do wonderful things for their customers. Because the business model is based on customers coming back to us and referring us to their family and friends. So the opportunity that we've got is a billion pound in transactions now going through the TC community. Does it still feel personal for our customers, for our travel councils and can we double it in size and it still keep that, still keep that DNA? So that's how we broadly articulate what we're about.
[00:14:56] Speaker B: So I used travel counselors to book my honeymoon and I decided on the morning we were flying out, we were Going to Singapore that we, I didn't want, I wanted to stay in that big hotel, you know the one with the three thing and we weren't booking there.
[00:15:10] Speaker A: So the way you describe that hotel, everyone knows it.
If you've ever watched Race around the World, it's. I don't know what the name is but it's an iconic shaped.
[00:15:20] Speaker B: I can't remember what it's called, I can't remember what it's called. We want to stay in that hotel. And I rang Kari Whittle and must have been 6 o'clock in the morning and left a message to say, can you change the hotels that were booked in that one? We were only there for two nights before we went on to somewhere else and by the time we landed we'd been moved into a different this hotel and we got there and said most travel companies you couldn't do that.
[00:15:49] Speaker C: And Karen, Karen Whittle is an absolute legend within travel accounts, has been with us a long time. So you know, when I joined the office in Bolton 20 years ago, she was part of the business then and the travel counsel reputation has been based on wonderful people like Karen doing wonderful things for our customers.
[00:16:06] Speaker B: So I totally get it, I totally get that.
[00:16:07] Speaker A: I can also imagine the message that comes through when she listens to her voice message. Hi, Jonathan here, can you move me into that funny shaped hotel, I can't know the name of it.
[00:16:15] Speaker B: The Marina Bay. I knew which one it. Anyway, that's. We're getting distracted now.
[00:16:20] Speaker A: I thought Steve made a really interesting point actually, which, which resonated with me, which is you talked about the fact that you want to look after existing customers and incidentally if you've never been to travel counselors offices, it's near the traffic centre. It's amazing. Got like, you know, TV studios and all sorts. It's a really, really amazing place because they've not got the shop fronts, you know, and the expense that goes with that. So they bring people into their head office. When I was the editor of the Chorley Guardian, the statistic that I used all the time was it's 10 times harder to get a reader back and you've listed lost than it is to get a new reader. So if you keep hold of your existing reader base then you add to it and we were the second fastest growing paper out of a group of 200.
And that's why what you say, you know, look after your existing customers and they become your advocates like Jonathan and it becomes a virtuous circle. But anyway, I'LL hand over to you now.
[00:17:07] Speaker B: Yeah. So I suppose obviously the COVID period must have been different. It was difficult for lots and lots of different sectors and obviously travel was probably one of the most severely affected. I'm really interested in, from a leadership point of view, how you manage through that period because you've obviously come out of it very successfully. But it must have been a really difficult time. And like I said, it's the leadership aspect of how you took a business through that that I'm really interested in.
[00:17:36] Speaker C: Cool. I mean, everything in, in context, it was a difficult time for everyone, wasn't it? And you know, I can. I lost people through Covid, you know, you may have done the same. So everything in context, but from a business point of view, it's really, really difficult for our customers. Many of the mad holidays that they'd pay for that they could no longer go on and very, very difficult for our travel counselors who were self employed.
So in reality what happened is people were no longer consuming what we offered. They couldn't. We weren't the only industry that faced that, but we were probably one of the hardest hit because it went on for so long. And then secondly, what is peculiar about our business is that a lot of people have already booked holidays and trips and they wanted their money back. So not only do we not have any cash coming in, people wanted it, we also wanted it. We needed to give it, to give it back. And that had a profound impact on the livelihood of our individual travel consoles because they've got their own business and many of them weren't able to take advantage of the furlough scheme and that was intra introduced. So what you saw in that was just an example of a couple of things. The sheer strength and resilience of the brilliant people that they are. Many of them took on other sources of income to keep themselves sane and to keep themselves financially afloat. And you also saw the huge power of culture and community because I think a lot of them would say they would not have come through it without the support of their fellow travel counselors and the restless prosody and the kindness that they got from each of them. Give you some examples of that.
And our job was to help navigate it. So we were going into Covid in February 20th looking to turn over 650 million, make a sizable amount of profit, growing by 15% within two months, we were 95% down and we had more money coming out than coming in. So I'll never forget travel counselor emailing me very early into this and said, you know, what's your strategy to get, you get us out of this? Not a really good question because it's a once in a lifetime event. So we took some time to reflect and we identified we need to do three things which were we need to make sure we navigate this. So make sure we navigate it and we're sensible how we, how we run it. So we really, really diligent cash flow management, intense communication, daily calls, et cetera. Second thing was make sure we look after our customers and our people. We're going to need them when we come out of this travel return. We're going to need great customer advocacy and great people advocacy. We didn't need our travel counselors. So I, you know, one of my things at the time was this will make us do something we didn't want to do. We did some very, some awful things, you know, in terms of redundancies and stuff. But yeah, but it won't dictate how we go about how we go about it. So we'll stay true to our values. We're trying to do our best, look after people and care for the people. And then the third thing was as we emerge from this and we didn't know how long it's going to go on for, but as we emerge from this, we as co church, we won't let this crisis go to waste. We'll build something even, even, even better. So that's what we, that's what, that's what we, that's what we did.
And we were very much focused on, on giving people hope and giving people aspiration that when travel returned because of the way that we conducted ourselves going into it with that advocacy and what we did in Covid, look after customers and refund them when we didn't know. We have a financial trust so our customer doesn't go into our working capital. So we had the money to refund, but in some cases we'd already paid the money to supplies and that wasn't forthcoming back in a timely way. So we stepped in to look after the customer when we were under huge pressure ourselves. But we wanted to support our travel counsellors and our customers.
We created a financial welfare fund for our travel counselors. Just a couple of true stories and this is genuinely true.
So I had a couple of customers, not everyone, but write to me in Covid and said, I'm due a refund. Don't give me all my money back.
Don't give me all my money back. I want you to give some of that Money back to the travel council who organize the trick, because I know they haven't got any income. We had travel counselors who obviously had some financial cushion around themselves because we have monthly fees for our counsellors. We waived those, of course, in Covid and I had some travel counselors saying, I want you to take my fee and put it into the welfare fund that you've given out to other travel counselors. So that approach to values and looking after people enabled us to navigate it. And my job was to, as part of a brilliant senior team, was to set the tone and carry on running the business based on caring and kindness for our people and our customers. And because of that, we'll rebound really, really quickly. So I was really proud that Martin Lewis went on record during COVID and said, when travel returns, if you're going to book your travel, book it with some wire travel counselors.
[00:22:31] Speaker B: That's brilliant. Really good.
[00:22:33] Speaker A: Yeah. And you don't get a bigger endorsement than that. What I find fascinating is that one word that you didn't use was survival during that Covid period, because the perception of the word survival has a certain connotation as well. Was that a deliberate ploy by you?
[00:22:47] Speaker C: Absolutely deliberate for two reasons. So you can pretty understand why travel would be calling for help and using words like that, because I said it didn't get a huge amount of support. But my view is that customers read what we say.
So I don't want a customer thinking this business is talking about surviving. I want to think this is a great place to be, to be aligned with and be an advocate of. And secondly, I want. I wanted our people to have hope travel was going to return. It's a wonderful thing for people to be able to experience the globe. And if you want to choose to do it in the most sustainable way possible, increasingly it's important to people. Connecting people is a wonderful thing to do. So when travel returns, our customers are going to need us and we're going to do a wonderful job looking after them. So this is all about hope and aspiration and inspiration and building something even better when we come through it. Yeah.
[00:23:44] Speaker B: I think how businesses behave in a crisis like that does say a lot about the culture of the business.
In corporate finance, the COVID period, we experienced the same thing. Deals all stopped. And I've seen it before at the credit crunch, actually, when the same thing happened and in our industry, what I think when a crisis like that happens, people do really, really worry. You can get people focused on growing market share for when the Recovery comes and taking actions that will improve the business while you get a chance to do things that you wouldn't normally get a chance to do in the business. So the last two or three downturns that I've been through running corporate finance businesses, they've ended up growing very rapidly out of recession because we didn't panic. But what you just said, I think is inspiring about. About how to react in those situations.
[00:24:36] Speaker C: Well, we focus on the, you know, it's the individual that's changed. The individual, you know, in a business is a human being in facing all the things we all went through in Covid, they're facing all of that and their own livelihood is. So it wasn't about us as leaders. It was about. It was about our people and what they were going through. So how can we wrap our arms around them and give them a comfort and source of support to see them through it so that when it does come back, they're in a better place than anyone else? And our customers would come back to us really, really quickly because the way we looked, looked after them. And one of our travel counselors sent me a lovely little quote in the middle of it from Seamus Heaney, which was the poet. She was. If you can winter this one out, you can summer anytime, and you're going to go through tough times in business and in life, but that's when you find the resilience to get through it. But it's even better when you pass something that will help you through.
[00:25:24] Speaker B: And how did your relationship with your investor work during that period? Because that's the key feature as well.
[00:25:32] Speaker C: I mean, super supportive. We made sure we had a clear strategy and we put additional capital into the business during it to make sure we had the financial strength that we needed. Because it went on for a long time. It was a couple of two and a half years really, for the business to recover.
[00:25:51] Speaker A: Because you had two years of losses, didn't you?
[00:25:52] Speaker C: Yeah, in 20, 20 and 21. But it rebound really quickly. I mean, in next year we'll be trading 91% more than we were before the pandemic.
[00:26:03] Speaker A: So I'm going to mention the U word, if I may, which is the unicorn. Now, I don't know what the valuation of travel counselors is. I don't. You do either. But you just hit a billion pounds worth of sales with a plan to hit 2 billion in five years. You know, as the CEO of a business which is growing, do you ever think about the unicorn word?
[00:26:22] Speaker C: No.
[00:26:24] Speaker A: That's a short conversation.
[00:26:26] Speaker C: No, I mean, no, I mean, I think when I start talking about that, it's time for me to put a push on you. Think about your customers and your people and you're agitated every day about how can you make things better for your customers and your people.
[00:26:38] Speaker B: Well, we're doing the series of these chats with people of all different scales. We've talked to one or two people who are very early, at relatively early stage businesses or in the early stage of their growth.
And you've obviously been through it, through a journey where you've learned a lot and you've had a great degree of success.
I was just curious if you've got any advice, particularly to somebody setting off on this journey with private equity on board.
Anything that, any lessons that you might have learned.
[00:27:12] Speaker C: I think it's a lovely quote from the American psychologist Howard Gartner. He says leadership is ability to create a story that affects the thoughts, feelings and actions of others. And I think entrepreneurship is the, is the same. So what you're trying to do is create a with the idea that you've got and the way you execute it. Ideally also create something that's bigger than yourself and create a legacy. And there's things you're going to need to do along that, along that journey. I mean entrepreneurs will have this skill about don't take things personally, build a high quality, perform because high quality team because they can amplify or the opposite of, you know, your own performance and style. Understand that people are wired differently. But I think the most powerful reflection I've got both from the personal journey.
You know, as I say, that the entrepreneur that starts from scratch is the real hero. I think like our travel counselors and others is it's linked. Two things are linked ready, which is resilience because you're going to have some tough times. And linked to that resilience trying to find a positive in any given situation. And I've got just three little anecdotes on that if that's helpful to share. And everyone will have their own. So my dad had a progressive multiple degenerative disease. He passed away when he was 68. Got diagnosed it when he just as he retired. He was a school caretaker. My mom had something similar. I was saying to my dad once when he couldn't do anything for himself, completely dependent on others, you know, you never once complained dad. And he said, he said to me, son, what's the point? You've got to make the best out of every day. And then a close friend of mine passed away in Covid couldn't go to the funeral because there's only 10 people invited.
I went to the wake afterwards, about 200 people in the room. And his wife, he was only 51. And his wife spoke and she said, I'm not going to spend the rest of my life mourning for the love that I lost, but celebrating the time that we had together. I just thought that was just class. And then I carried around with me this little thing that I found. An interview with Rob Burrows when he was interviewed for the Times.
[00:29:32] Speaker B: Yeah, I saw that.
[00:29:34] Speaker C: And he said this. I refuse to talk about end of life because I refuse to let negative thoughts in my head. I built up this positive mindset in my head. I will not let badness into my life. He says he thinks about something in the future, like growing old with Lindsay, his wife, or seeing the kids graduate or get married. It gives me a goal to strive for. No one is going to change that. As he puts it, I have too many reasons to live. I'm not giving in until my last breath. So my counsel for people is and to myself is stay true to your values. Go and do something special and do the people that care about you proud. That's what I try and get across to people. That's why I try and live my life.
[00:30:12] Speaker B: All I'd like to say to just in conclusion, I'm full of admiration for the business that you built and I think it is a testament to your leadership and the team. And I really like the business.
[00:30:23] Speaker C: Well, our job is to look after your customers like you. So thank you for all your business and thank you to the people who make Travel Counsel. It is.
[00:30:29] Speaker A: Okay. Thanks very much for that. Time for a quick break. When we return, we'll be discussing this interview and we'll also be answering your questions. Thanks very much.
Welcome back to the second half of the Dealmaker Uncut podcast. We've just interviewed Steve Byrne of Travel Counselors. What do you think, Jonathan?
[00:31:06] Speaker B: Yeah, so I really, really enjoyed that interview.
Like I say, this is a business that I'm really familiar with as a customer and I really like it, as I said. But it's also a great story of Northwest business that has grown. I've observed it over the last decade or so as it's grown and developed and there's been private equity investors on board and there's been some deal activity, some acquisition activity, but it's just a business that's grown in profile. And I just think that Steve's self effacing, but it's A great example of good, strong leadership.
[00:31:49] Speaker C: Yeah.
[00:31:49] Speaker A: Two things I found interesting. One is that the business that you love, because you mentioned it at the start, it comes from the leadership and works its way down. So it permeates into every aspect of the business. It's a very personable business. Two things that sort of stood out for me really was the you asked, we spoke about examples at the end and advice you would offer. And he used the three very personal stories, one about his dad, one about his friend and you know, one about Rob Burrows as well. And when he mentioned his dad who sadly died at the age of 68. So, you know, my dad died early this year, he's 87 and he had a nine months battle with cancer at the end. Never complained, he just got on with it and he's, he didn't come out with any great big sentence that I could share because that wasn't dad's way. He was a minor, his dad was a minor before him. But his attitude in life was you live every day as if it's your last day and you live your best life as well. And dad said, he said, I've got no regrets, none whatsoever. So even at the end he never complained, he never had any regrets as well. And I think you can be successful in business and be nice at the same time. You know, it's not an either or.
And that's why I think when people see travel counselors enjoying the success that it does and Steve enjoying the success that he does, not that he wants any personal glory, he always likes to deflect it onto his team. It's, you think, actually good on him and good on them because they're a good business and they're based in the North. So a brilliant, brilliant, brilliant guest. And this next section is called Ask Jonathan. And it's when the listeners can ask Jonathan any question they want. Now, for obvious reasons, people who are selling their business, they want to be named, but we know who they are and they know who they are. All the questions today relate to private equity, which is quite topical actually.
You've seen lots of private equity investments in your career, Jonathan, what makes them work and what makes them fail?
[00:33:40] Speaker B: So, I mean, we talked about some of the things that I think make private equity work during that session. I think often people appoint advisors and run a private equity process focused on the metrics of a deal. So they'll focus on the enterprise value, they'll focus on how much cash they're going to get out of the business and they'll run Quite hard processes, which does make sense because it helps make sure that you get the best deal outcome. But at least as important in my mind is getting the right investor on board so that the personal chemistry is right. The business philosophy is right. Some people want hands on support from an investor who knows the sector and will bring in a chair that might get it heavily involved. To some people that's total anathema and they just want to be left alone and they just want a deal with the money and an investor that will let them lead the business. And the different things that people want from an investor on the softer side, I think will often drive the outcome. And often when you hear of relationships breaking down or a private equity having to step in, it's often because the goals of the people involved weren't set right. And so I think that. And it's sometimes difficult to know in a short period leading up to a deal who you'll get on with most if you're a management team. But it's often worth getting to know people. Business is about relationships and it's often easy to check that the business relationship with an investor is going to be right if you've spent quite a lot of time with them before a deal, in my view. So I often encourage people to meet some investors before the actual process so the process can drive the outcome of the deal. But the relationships are often made beforehand.
[00:35:41] Speaker A: I think the key word today is relationships. Second question then asked Jonathan, Jonathan, what advice would you give a CEO to maximize a private equity investment?
[00:35:51] Speaker B: So again, I think when CEOs need to produce a business plan in order to present to private equity, and there can sometimes be pressure to make that business plan very bullish so that the value of the business can be, can be pushed up.
And occasionally some CEOs are worried about making sure that they've padded the plan so that they're going to achieve it. It's easy to achieve. I think in reality the plan should be what you intend to do and having straightforward, honest conversations with investors about the plan and what you want out of it. And if there's in agreeing the management deal, the management terms of a deal, often there's certain items that a CEO really needs to get right and sometimes they can be off market. I think it's important to pick the right items to win on so that you set up the business in the right way for the investment cycle. But I would say communicating with investors openly, I would advocate some people are wary about the communication of their investors. I would say communicate Openly make them feel part of the team, share problems, share opportunities and create trust. And I think if you do that with your investor, then you're much more likely to get support and it's much less likely that anybody will ever want to refer to an investment agreement to see what was agreed.
I think creating trust with the investor, not over promising, not being open with the dialogue, I think is the way to get the right outcome on a deal.
[00:37:41] Speaker A: Last question. I'm aware as I'm reading it, it does sound a bit like an agony aunt.
[00:37:45] Speaker C: Colin.
[00:37:46] Speaker A: Dear Jonathan, my wife has left me now, but that's another one. Dear Jonathan, quite often you'll be running a sales process involving both trade and pen. What are the key questions CEOs should be asking themselves to ensure they take the right exit route beyond who offers the most money?
[00:38:01] Speaker B: So often when we're running as a sale process involving both trade and pe, people will ask, do you think this is going to be bought by trade or bought by PE?
I think, and I've been doing this for 30 years, it's very difficult often to predict the outcome. So I've gone into deals with a management team and a vendor where I've completely thought that the outcome would be a sale to trade. The vendor wanted to sell to trade, that's what everybody expected. Then, lo and behold, private equity will outbid them or the deal ends up with a private equity house. And I've seen it the opposite as well. So it's actually really, really difficult to predict what will happen.
There can be conflicts of interest between various shareholders in an exiting business. In a selling business, if some sellers are selling, particularly if there's a selling private equity house, they're not always aligned with the management team. If the management team are being incentivized by equity for the first time, and again, I think it's important to manage those conflicts carefully.
I find that when there is some competitive tension, agreeing the value and agreeing the management terms are easier. When there is still some competition and still the possibility that different buyers could buy the business.
But again, often open dialogue between shareholders about whether there are various issues that are not necessarily people are not necessarily aligned. We can usually manage our way through it. Occasionally you end up with people falling out, but normally you can manage your way through those conflicts if you handle them carefully.
[00:39:51] Speaker A: One of the things that the listeners and the viewers might not pick up on when I ask some of these questions is that when I ask you a question at the end in Dear Jonathan, you know, the focus on your eyes you're so fixated. It's like you know, you're taking yourself straight in there. That's how. That's what 30 plus years of experience does for you. Feel free to send your questions to Jonathan via the Show Notes as well. And that's all for this episode of the Dealmaker Uncut Podcast. Hope you've enjoyed it. Powered by Alvarez and Marcel, and we couldn't do it without our friends at what Media and of course, the star of the show, Jonathan Boyers. And don't forget to subscribe to the podcast. Tell your friends and family. Follow us on social media until the next time. Stay safe.
Thank you for tuning in to the Dealmaker Uncut Podcast. We hope you enjoyed today's conversation and found it insightful. 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.
