From the start, John Casserly and his fellow shareholders planned to sell their technology consultancy, Xceed – the question was, when?
There was no secret sauce to it, no magic
John Casserly started his career in the mid-1980s, training to be an accountant before deciding to move into the IT sector. As John explains: “Accountancy just looked like hard work whereas IT was really opening up at the time and was quite exciting with lots of growth.”
He was working for Deloitte Consulting when he decided to start his own business. “I loved working at Deloitte,” recalls John, “but having been there a while I figured out that there was no secret sauce to it, no magic. Deloitte was just about hiring the best talent and finding work to keep them busy, and I reached the conclusion that maybe I could do that for myself.”
In the early years of Xceed, there were two shareholders; John and Gary Stewart, who had known each other from their school days and worked together at Reuters and Deloitte Consulting. They were joined soon after by John Turner who had been an IT director at a major bank and who Gary had met undertaking consultancy work for Deloitte.
The plan was to grow a business and sell a business
When John Turner joined the business, the shareholders started with a blank sheet of paper and wrote a simple business plan for how they wanted to develop Xceed as a technology consultancy, advising banks and other financial services organisations on complex IT change and modernisation programmes. However, overall, “The plan was to grow a business and sell a business,” explains John.
Originally, the shareholders thought they would sell the company within 10 years of starting it, but as John recalls: “The time was never really set in stone because it depended on a lot of things beyond our control; we just got on with growing the company.”
The shareholders worked diligently for 15 years to deliver the business plan and developed the company into a leading technology consultancy, with a turnover of ~£13 million, a total of ~£130 million invoiced revenue since inception, and branches in London, New York and Edinburgh. John recalls: “One of the most enjoyable things when we sold the company and looked back at the business plan, was being able to say, ‘we did it’.”
“In the early days the three of us were very hands on, we couldn’t afford for us to be some level of management that didn’t earn any fees,” remembers John, “but as time moved on, we were able to step back from the day-to day hands-on activities. We hired a leadership team to do most of the day-to-day stuff, as we realised it was going to be hard to sell a business that relies on the three founding shareholders, especially if we wanted to leave the business straight away, which we did.”
Is now a good time?
What was the trigger for selling the business? John laughs: “One of the events that really triggered it for me was when John Turner announced that he was having a 60th birthday party, and I thought, ‘hang on he’s getting on a bit’. Then I realised we were all heading towards 60. So, we started having a conversation around ‘is now a good time to sell?’
“The first time we had a serious conversation, I remember vividly that Gary, our numbers man, said ‘yes, we should start thinking about it, but now is not the time as the numbers will look much better in a year’s time’. So, we agreed to work another year and see where we stood.
“The following year he said exactly the same thing. Then I thought, ‘hang on, we will never get to selling the business because the numbers will always be better in another year’. Gary agreed it was a fair point. It was not just about the numbers it was about the company in the round. It had been more than 10 years by then, and, personally, I felt I had been doing the same thing too long.
“We got ourselves into a position where Gary became a non-billable consultant first; he became the CFO. Then, I took on the mantle of CEO and became 100% focused on managing the business, with the leadership team reporting to me. John [Turner] had a pretty much 50:50 delivery and operational role.
“We wanted to get the business in shape so that we could say to potential acquirers ‘apart from me as CEO, we don’t run the business the leadership team does, so you can buy the leadership team, revenue and customers and we will leave’, which is what happened at the end of the day.”
John goes on to explain: “It took us a while to achieve this, which is why it took us over three years from having a serious conversation about selling the business to putting it on the market and then about another year to achieve a sale.”
We obviously didn’t do it alone
When asked how Xceed found BCMS, John explains: “One of the companies we jointly delivered a number of projects with over the years was a company called Infrasolve Ltd. I asked them how they sold their company and it was a bit of an eye opener when they said, ‘well we obviously didn’t do it alone we had to have help and the company that helped us was BCMS’.
“It was an eye opener because our naïve thinking was if you work hard and build a good company someone will notice you and make an offer to buy you. We did have several shoulder taps over the years, so in a way, that naïve thought did happen in real life, but I never felt we owned the process. I never felt we were in control. I always knew, if we got to an offer stage, it would be a take it or leave it situation.
“Talking to my contact at Infrasolve about how they had sold the business through BCMS, I realised that you can take control of the process and create a lot of competitive tension by going to market in an orchestrated way, so I got my contact to introduce me to Howard Dingley [Associate Director Corporate Finance, BCMS]. I got him into the office for a chat and told him we weren’t looking to sell now but at some time in the future. He did a pitch on BCMS and its methods, and I found that really useful. I thanked him very much, and then I don’t think I spoke to him for another six, maybe more years.
“Howard left a real impression on me and opened my eyes to the industry out there helping companies like us go to market and get the best deal. He did a good job of staying in touch over the years, and when it came to the point of agreeing that we really were going to sell the business, we spoke to a number of different advisors, and I got back in touch with Howard.”