In the first of our Evolution Capital Alumni series, we speak to Tom Carroll, founder of Our IT and an avid cyclist, about the lessons learnt following the sale of his business.
Deal stories make headlines. As a sector we’re obsessed with what our rivals are doing; who is selling, who is buying, who the movers and shakers are. But what happens once the deal is done? What do entrepreneurs do once they have parted company with the business they have created, nurtured and grown?
Two years on from the sale of ICT support firm Our IT, a business he built up over a period of 15 years, Tom Carroll is smiling. It is thanks to the advice from Evolution Capital, which paved the way for a successful exit back in February 2017, that Carroll has been able to fulfil his lifelong passion for cycling.
“Financially the sale of the company was very rewarding and gave me plenty of time and choice for deciding my next move. The first thing I did was to cycle from Chile to Argentina which gave me lots of space for meditative thought. I then went on another cycling adventure from Lasa (India) to Kathmandu (Nepal) and then onto the Everest Base Station – traversing about 20 different mountains as I did so. When I came back I took intensive French lessons and then went on some more big trips – this time in Australia and the US.”
Thankfully, Carroll has now got rid of the wanderlust and is considering his next move. He remains on the hunt for businesses to buy.
Looking back on the deal of his life, Carroll says there were numerous lessons learned and challenges met along the way, but ultimately the decision and subsequent execution of the company’s disposal was based more on serendipity than planning.
He explains: “I had no plans to sell the business but I was highly active on the acquisition trail and had purchased and integrated a couple of businesses into Our IT. It was not until Evolution Capital approached me that I realistically considered selling the business. My one takeaway from this process is the time to transact is only when you have the right counter party in the room at the right time. Until that happens, the rest is just hot air.”
He believes that in the increasingly frenetic M&A marketplace there are actually very few credible buyers. This might well explain the disproportionality between market activity and execution.
Tom continues: “You can of course increase the chances of making something happen by doing the fundamental things well and presenting the company confidently, but most of the offers I received had little credibility and it made no sense to follow through with them.”
In hindsight, what were some of the unexpected bonuses learned on the way? Carroll continues: “Running and driving your own business is a lonely path to take. Like many owners in the same position, I did feel incredibly isolated at times. Of course employees and consultants, all with their own agenda, are always around but it was not until I joined The Supper Club that I discovered like-minded people. These businessmen and women were all under similar business pressures as me; the same HR, growth and cash flow issues that we face every day. It was comforting to learn and share similar experiences with my peer group.”
Many business owners, when they leave their companies behind, particularly those that have taken many decades to build and grow, feel a certain sense of loss when then finally decide to give the reins to another.
Carroll explains: “Most people who dispose of businesses suffer some sort of sellers’ remorse. When you have created a thriving organisation, something that is not only a profitable business but one that has a flourishing spirit and ethos, it is hard to leave it all behind. One minute you are at the very centre, a self- determining, respected business leader who is looked upon for advice and guidance and the next you are not. It’s almost as if you are half the person you were, albeit with a much more healthy bank balance.”
One thing Carroll doesn’t miss is the stress. “I don’t miss the constant pressure of running a business or the trials and tribulations of driving a growing one. What I really don’t miss is the need to be in constant touch with the business and never being able to turn off. For the first time in years, I recently left my lap-top at home went I went on my holiday – contrast that with the panic I experienced when I forgot it on one vacation from Our IT.”
Being an entrepreneur is certainly tough; even when the deal is done. Carroll recalls finding the so-called earn out period the least enjoyable part of being a seller of a business.
“Although I was still there, managing the business and fully accountable, I was no longer in control. It was a sterile, semi existence and I completed it quick as I could – well within the allotted earn out period. I would advise others doing an earn-out to complete it as quickly as they can,” he explains.
As someone who has lead and run a business for more than fifteen years Carroll has plenty of advice for entrepreneurs. “The one major lesson that I learned is that there is no silver bullet. All businesses are a sum of the parts, and owners need to make marginal gains in every area of their business to be successful. This is where Dave Brailsford’s Marginal Gains philosophy comes in – every company has to think like the British Cycling Team and try to apply small gains to each area of their operation. It’s hard work but if you can look at each part of your business and apply a positive change, the whole thing will start to produce major productivity gains over a period of time.”
So what next for Carroll? “I have numerous projects on the go at once and I am always looking for businesses to buy. However the success rate is in the low percentiles and once you apply an experienced eye to a business, a little due diligence often turns into a show-stopper. My other projects include acquiring commercial property and I am always looking to add to my portfolio.”
He adds that were he to run a business again, he hopes he would achieve things much quicker on the basis that he would not make so many mistakes the second time around.
As always, says Carroll, the “devil is in the detail” in any business and the successful owner will always be constantly looking at, reviewing and tweaking their processes.
“A decent valuation is not something that an owner can just wish for and can only be improved over time with constant tinkering to the process. What we did at Our IT was not unique but I ensured that we did it to the best of our capabilities,” says Carroll.