roundtable


retain talent at a level that can support our partner-led accountancy services and client relationships.”


Scholes said merging company processes and operational models was often challenging, but highlighted: “It’s the cultures that you must understand first and foremost. Get that wrong and often things don’t work afterwards.” He also mentioned the ‘buy and build’ scaling option whereby accumulated acquisitions are left alone to ‘do their thing’.


Sarah Phillips highlighted ambition thresholds. Scale-up enthusiasm and business focus can change over the years, particularly when re-assessing personal priorities – retirement, health, family succession and inheritance – linked back into the business.


“Business strategies get deployed day-to- day by real people, but a shared strategy is important to bind and inspire employees,” added Jeremy Hill, referring to Kleinwort Hambro’s belief in sanity checking whether companies and investments have value, momentum and sentiment driving them.


Lawyer Sarah Cardew mentioned the need to ensure “one’s house is in order”, ready to scale-up or for key shareholders to exit. “Too often there are tax matters, payroll or HR issues. When focusing on strategic scaling-up it is very easy to lose sight of the basic business requirements.”


Scale-up businesses can quickly outgrow their existing professional services providers, she added, so having a capable third-party support network on board is important as you scale.


Riddick revealed his litmus test for scale- up success. “When you visit you can ‘smell’ that the staff all understand where they are going, their direction of travel. Sometimes, management is moving so quickly that staff are terrified, unsettled, wondering what’s happening next. You have to take your staff with you on the scale-up journey.”


Growing too fast ... into the red zone


Acquiring too many companies can bring “a monumental amount of escalation of people and client issues,” said Francis. “Companies often try to expand their ‘successful’ growth to disguise those issues, and then they are really in the red zone.”


“Before you know it you can scale too much,” Gidar warned, having once scaled- up with the wrong management team, just as the UK’s banking crisis and care sector changes compounded to produce “an absolute nightmare.”


McLeman stated alignment with an ongoing strategic direction and purpose


THE BUSINESS MAGAZINE – MARCH/APRIL 2018


was necessary, particularly in larger workforces. “If you try to micro-manage, you can’t scale.” Maintain focus, keep on track, or you can end up at an unexpected destination, he advised.


Francis: “It’s a management discipline to stay on point. It only takes a CEO constantly coming up with great ideas, and soon 50 IT developers can all be coding something different.”


Riddick: “Growth can provide opportunities but choosing the right opportunities to invest in – buying similar ‘comfort zone’ companies or interesting ‘left-field’ businesses – was often a second phase management challenge. You don’t want to scale-up the business and lose the core of what it was good at and known for.”


Bob Atkinson agreed, exampling his company that faced that challenge and achieved success by focusing on being a proven specialist provider gaining recognition and an industry reputation that attracts big clients. “You can’t take over the world while turning over around £2 million, but you can be best in the world in what you do.”


Scholes: “A £5m business that is ‘exactly something’ is more valuable than a £10m ‘bit of this, a bit of that’ company because not all buyers want all the bits.”


Big companies don’t build by growth, but by buying attractive businesses, Taylor agreed.


Griffiths exampled FISCAL Technologies, as an ‘exactly something’ company. “Our little 50-person British company is really laser-focused on doing something in one specific area and we outperform everybody else including all the huge global companies.”


Atkinson: “The big guys are the generic sector backbones, but you are a ‘best of breed’ model.”


Playing to one’s strengths was important, said Hill. “There are very few true entrepreneurs. You may be a leader, have a good business mind, but having a good team around you to give that sanity check is key.”


Is suitable funding for scale-ups available?


Taylor: “One of the biggest sources of investment at the moment is coming from US PE houses.”


Griffiths: “We get approached by around 100 US PE companies, but only about two UK firms. The problem is they only want to invest in big £10m or £20m chunks, which isn’t what we are looking for. There are lots more funding options nowadays but there is still a £1m to 5m investment-funding gap.


Continued overleaf ... businessmag.co.uk 39 David McLeman Simon Telling


Jeremy Hill


David Griffiths


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