GCI announces new senior appointments
GCI has announced the first tranche of new senior appointments to lead the organisation’s three-year growth plan.
Adrian Thirkill has been appointed CEO of GCI as the company’s founder, Wayne Martin takes on the role of Chairman. Adrian was previously managing director of Easynet Global Services and was instrumental in its sale to Interoute in a deal valued at £402m.
Phil Hambly, previously with InTechnology and SAS Global Communications, has also joined GCI as marketing director.
Commenting on the appointments, Chairman Wayne Martin stated, “There comes a point in every business where we need to make that leap to the next level – the resolute push through the Premiership.”
“Since our founding in 2000, GCI has grown rapidly through a mix of organic growth and strategic acquisitions. During that period, we’ve developed what I believe is a really credible operation and the injection at this point of fresh blood and raw energy is exactly what’s needed. I have every confidence that as I handover the keys to Adrian and his leadership team, I am placing the business in the best possible hands for the next stage of GCI’s journey upwards.”
Adrian Thirkill added, “Over the years I have witnessed the rise and rise of GCI, sometimes as a competitor, but always with quiet admiration for their tenacity and resolve. I can see huge untapped opportunity in GCI and in its sales channels and it has a proven, well-invested and scalable platform. The substantial recent investment in its core network will enhance performance and resilience, and will underpin our commitment to deliver a great service at a fair price. I am delighted to be joining such an accomplished and well accredited business at such an exciting time.”
Commenting on his appointment, Phil Hambly stated, “The transformational impact of the millennial generation’s appetite for new ways of communicating is really opening up the cloud and the managed services market. GCI covers all the bases and our objective is to grasp the moment by focusing our organisation without losing the agility for which GCI has become known.”
In closing, BGF’s Gurinder Sunner stated, “Our engagement with GCI has been about providing the financial muscle and broader support necessary to ready GCI for this milestone. Leading industry analysts continue to cite huge potential in the cloud and managed services sector. We believe that GCI is in exactly the right place at the right time to benefit from the growing demand as organisations transition from legacy infrastructure to cloud-based technology stacks.”
Tim joined BGF in September 2011 and is based in Birmingham. His main role is to identify and successfully execute investments for the fund. He sits on the board of a number of portfolio companies.
Tim has 15 years’ experience in private company investing and has been involved in or led investments into over 16 businesses. His investment experience was gained initially at Natwest Equity Partners, Gresham Private Equity and then at Sovereign Capital, where he was involved in a number of growth capital and management buyout transactions, across multiple sectors and throughout the UK. Tim began his career at Coopers & Lybrand starting with the Business Services team before moving into Corporate Finance both in the UK and in Continental Europe.
Tim has a BSC (Hons) in Biochemistry and Biotechnology from Birmingham University and is a qualified Chartered Accountant. He is married with two children and lives in Hertfordshire. When he is not working Tim enjoys leisurely cycling, competitive motorsport and clay pigeon shooting.
“At BGF I have the privilege to meet, work with and support many exciting, growing companies and high-quality entrepreneurial management teams and to help them to deliver their vision for the future of their businesses.”
Latest investments/Board positions:
- RVL Group (Board Director)
- Rutland Cycling (Board Director)
- PTS Consulting Group (Board Director)
- Celaton (Board Director)
- Springfield Healthcare Group
- GCI Telecom (Board Director)
- Paintbox Group (Board Director)
FUNDING STRATEGIC ACQUISITIONS
For businesses determined to grow quickly, a strategic acquisition can be the transformative moment in their evolution. But buying another company requires both deep pockets and the skill and experience to integrate two organisations in a way that realises their combined potential. Many growing companies have the ambition to expand this way, but lack the means to do it.
By the beginning of 2012, Anthony Foy, the chief executive of SkyDox, a business offering secure file sharing facilities that use cloud technology, was facing exactly this dilemma. “We were a small and innovative company that was a leader in its field, but we were growing in incremental steps, mostly thanks to business angel investors,” Foy explains. “We came to the conclusion that making an acquisition would enable us to realise our ambitions more quickly.” He identified Workshare, a US company with a very complementary document management business, as the perfect target. The question was how to finance the deal.
“It was a slightly unusual transaction because we were hoping to buy a company that was both older and bigger than us,” Foy says. Securing sufficient debt from risk-averse banks was out of the question and equity investors were wary too. “We did pitch to several private equity companies, but I wouldn’t say imagination is a particular hallmark of that industry,” Foy recalls. The solution proved to be an injection of growth capital from BGF.
In September 2012, it invested £7.25m in SkyDox, with Scottish Equity Partners also participating in the financing. The acquisition of Workshare was completed a few weeks later. “Raising money is never easy – it’s a painful and humbling process and you have to really believe in what you’re doing,” says Foy. “We chose BGF because they had the intellectual capacity to see beyond the immediate risk of the deal to the longer term potential of bringing these companies together – they had the capital we needed to grow, but they also offered a partnership where our interests were aligned.”
Nevertheless, Foy says he thought hard about whether he had the drive to make the deal work. “The pain is something you put up with in order to realise your ambition,” he says. “Not everyone desires that and part of this process is deciding whether you really want to go for that growth, or whether you prefer to run a lifestyle business.”
That’s a familiar refrain for Chris Hodges, an investor in BGF’s London office. “Our single-biggest competitor is the ‘do nothing’ approach,” he says. “The reality is that it’s tough out there and ambition is a crucial ingredient of business success.” This is one reason, why, says Hodges, the quality and attitude of the management team are priority considerations when he is mulling an investment in a business. “I need to get a sense they’re open to the bigger picture, to really strategic thinking,” Hodges adds. “We only take minority stakes, but equity dilution can be an emotional thing, so we need managers who recognise that growth capital can really turbo-charge their business.”
For those managements that meet these tests, an equity investment – especially from BGF – is the ideal way to finance an acquisition, he argues. “Equity capital is far less restrictive than bank debt, where the borrower is subsequently required to perform to very tightly defined criteria where failure may mean losing control of the business.”
Mervyn Williamson, the joint managing director of business travel management specialist Statesman Travel, points to another advantage of growth capital he says was crucial when his business was considering fund-raising options. “Bank debt wasn’t going to be practical – the problem we pose for the banks is that we’re not an asset-backed business so there’s no security for a lender – because our model depends entirely on earnings,” he says.
“But even if we had been able to borrow the money to do the deal we wanted to do, we wouldn’t have gone down that route because we were also looking for additional expertise at the boardroom table, ideally from someone outside the business travel sector who would bring a different mindset to our company.”
Like SkyDox, Statesman was also on the acquisition trail. “My partner and I had bought Statesman in 2007 and we grew it from £28m of annual revenues to £50m three years later,” he says. “But we needed to be bigger than we were in the eyes of some of the larger potential clients, who felt uncomfortable dealing with a company where they’d be a disproportionately large customer.”
That posed a chicken-and-egg problem, with larger clients unwilling to come on board until the business grew bigger while the business struggled to achieve that growth without the bigger clients. “We began looking for acquisition targets and having identified Commodore Travel, we had to think about how we would finance the deal,” Williamson adds.
Having decided growth capital was the best fit for his business, Williamson began talking to a number of interested private equity firms. But he didn’t want to give up control of the business and he was concerned about the “churn factor” in the industry. “Three years after they buy you, you can find yourselves sold to someone else who you may or may not like,” he complains.
Finally, Statesman was introduced to BGF by its banker, Lloyds Banking Group. In October 2011, the company became what was then only BGF’s second investment, accepting a £4.25m injection of funding, which was crucial in clinching the acquisition of Commodore. “We did think long and hard about bringing in a third party, but we’re happy to have ended up with a minority investor whose interests are aligned to our own,” Williamson says. “We also like being part of a portfolio family – we’ve been able to offer our services to some of the other companies in which BGF has subsequently invested and to source from those businesses at a competitive rate.”
A year-and-a-half later, Williamson says both the rationale for the acquisition and Statesman’s choice of funding solution are proving themselves. “The combination of our two companies has given us a great deal of additional credibility in the market place, boosted our procurement power and given us real strength in depth – we’ve totally raised our game,” he says. “We’re also continuing to invest, which costs money, but there’s going to be a return on that investment and we’ve had the support of BGF as we’ve made those commitments.”
All of which is music to the ears of BGF’s Chris Hodges. “More people need to recognise the attractions of growth capital,” he argues. “It became deeply unfashionable for a period, amid the first dot.com boom and the years of easy credit that followed, when leverage and debt were all the rage, but this really is an excellent way to develop a business.”