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John Casserly - Xceed Group

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.”

“We felt we were more likely to succeed with BCMS given the size and reach of the business.”

Who is the safe pair of hands?

“There were two serious contenders, BCMS and one other, and at the end of the day we decided on BCMS.”

When asked why Xceed chose BCMS, John explains: “The other company specialised in our marketplace. We felt very close to them in that they knew our market and business really well, and we talked the same language.

“BCMS does not specialise in any one sector, which has the benefit of scale. The people that you meet at BCMS have all done it before, in fact many times before, whereas in the smaller niche company we were being introduced to people who hadn’t really done it before. There aren’t that many sales in just one sector, so they couldn’t point to hundreds of companies that they had sold over the period of a decade, although they had some good case studies and success stories.

“For me, it came down to ‘who is the safe pair of hands, who are the people we can trust?’ We had done our homework and BCMS ticked all the boxes. BCMS also offered a better, friendlier fee structure. We felt we were more likely to succeed with BCMS given the size and reach of the business.”

It was like a well-oiled machine

When asked about the BCMS sales process, John says: “It was an enjoyable process. We always felt that we were working with people who knew what they were doing within a proven framework, and this gives you confidence straight away – the relationship felt right throughout the process.

“A good thing for me was being able to bring our leadership team to the table. We felt that since we had put a leadership team in place, it was important to present the team members to potential acquirers. BCMS was very supportive of this given that this sale was all about the shareholders selling the company and exiting the business straight away.

“BCMS helped to prepare me for telling the leadership team that we had decided to sell. This was a high for me as it meant we had extra people to help who were inside the tent and we were able to talk openly to them.

“The real highs came when I went along with the leadership team to present to potential acquirers. We had to pitch our company to them and they had to pitch their company to us. This was a two-way process – we weren’t going to join with an organisation we didn’t like, people we didn’t relate to, or an organisation whose values were totally different to ours. We were looking for a fit from many different aspects.

 “The interesting thing was, we did not present to a single UK company, they were all from overseas – the majority European and a couple from the USA.

“At the start, BCMS made the point that the company that buys you will likely be a company that you have never heard of. We didn’t believe this because we thought we knew all the players, but the reality was the company that bought us was a company we had never heard of before. And most of the other companies we met with, we had never heard of before.

 “BCMS showed us that we always had options, and one of the roles that Andy [Andy Denny, Lead Advisor, BCMS] took on, which was very helpful, was that anything blunt that needed to be said to the potential acquirers could be said through Andy. We didn’t have to say it, so we didn’t have to be perceived as the bad guys.

“One of the good things that stuck out to me in the early part of the project, when the research was being done to identify companies that might show an interest in buying us, was that it was done with very little input from ourselves, which was good. Similarly, the information memorandum (IM) was put together with very little input from us. BCMS asked us questions and asked us to review things, of course, but at no time did we feel that we were doing someone else’s job. It was like a well-oiled machine with someone turning the handle in BCMS to bring all the parts together.

“When we finally went out to market and BCMS started contacting organisations, the updates were good all through the process.

“Working with the lawyers at Freeths was another good decision. Freeths [Leon Arnold] were introduced by BCMS who pointed out that our existing corporate lawyer probably didn’t sell businesses day-to-day, whereas Freeths had a specialist department dedicated to this. We found Freeths very responsive, very professional, culturally a good fit with BCMS and then with us.”

There were no real lows in the process

After a moment of thought, John reflects: “There were no real lows in the process. The business was in good shape. There were some tense moments when potential buyers dropped out. We got to the stage where I think we only had two players left in the game and then one dropped out earlier than we thought. Andy [Denny] had to use his skills to make the remaining party realise that there was still competitive tension as we could always go back to market. But we got through this despite a few sleepless nights.”

A mixture of relief, excitement and anxiety

Remembering the moment the deal was verbally agreed, John recalls: “There was a mixture of relief, excitement and anxiety because until the deal is actually signed anything might happen. Unfortunately, when it came to signing the deal, I was on holiday and John [Turner] had to attend his daughter’s wedding, so Gary pretty much had to sign all the paperwork and drink all the champagne on our behalf.”

Recalling the staff reaction, John says: “Most staff kept their cards close to their chests, absorbed the news and went away to think about it, but never came back to seek any further clarification. There was a minority of people who immediately thought they would lose their jobs no matter what I said, but this allowed us to highlight those people and work on them with Wavestone [the acquirer] to show them that there was a good future for them. Other people seemed to share in our delight and excitement. I really enjoyed those people who would come into the office and shake my hand and say congratulations.”

“I didn’t have any hobbies. My hobby had been Xceed 24/7. So, I thought I better get some.”

I have been emptying my head

Post-sale, John recalls: “Wavestone wanted me to stay on for six months given my role as CEO. In that time, all I had to do was handover to other people and make sure everyone was happy. Gary [Stewart] exited the business as soon as the paperwork was signed, with John [Turner] staying on for a while to complete a number of client commitments.

“I left nearly a year ago, in October 2018, since then I have been emptying my head I give a little bit of minor help here and there to people who I used to work with or people who know me. I have been to a few BCMS events, and I'd like to do more of those and get more involved. And I attend board meetings and do other bits of work for another company the three of us own in the US.

 “I have changed my mindset a little since the sale. I am now more likely to invest my money than my time in a project. So, I am looking for those types of opportunities, but I am in no rush.

“After we sold the business, a few people said ‘that’s good, now you’ll have time to get on with your hobbies’, but I didn't have any hobbies. My hobby had been Xceed 24/7. So, I thought I better get some. I have now started doing triathlons, and I am trying to get back into golf."

When asked about the other shareholders, John says: “John [Turner] carried on doing some delivery work for a number of Xceed clients as an executive advisor, which he still does, but he is mainly catching up on 30 years of missed holidays. Gary [Stewart] is doing occasional consultancy advisory work, looks after the finances for our business in the US, and has taken up sailing as a hobby.”

Get help from someone like BCMS 

Based on his company sale experience, John has three key tips for other business owners considering a business sale:

"Get help from someone like BCMS. Recognise the fact that you have probably never sold a business before. Don’t be naïve and think that you can do it on your own or think that someone is just going to phone you up one day out of the blue and make you a spectacular offer – and even if they do, you are still going to need help.

“Expect to be anxious as well as excited because it may not work out for you the first time. You may need to go away and try something different and then go back to the market again. You need to go into it with your eyes open – a sale is not a dead cert, even with all the help in the world.

“Take as much control of the process as possible, but don’t expect to have control all the time. Once you have selected the one company you want to do the final negotiations with, they are in control, not you. And realise that there will be ups and downs and that you need to stay robust.”

 

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Company name
Xceed Group
Location
London (head office); New York; Edinburgh; Dublin
Founded
2003
Business activity
Technology consultancy
Annual sales
£12.4m (FY16); £13.3m (FY17)
Reason for sale
Return on Investment
Sold
2018
Acquirer
Wavestone SA
France’s Wavestone acquires IT consultancy Xceed