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Daisy Communications: Matt Riley

How to build a £24m turnover company and retain 100% ownership

“We keep it very simple,” announces Matt Riley, chief executive of telecommunications company Daisy Communications. Rest assured he’s talking about his company’s services only.

Building a business with a turnover of £24m in five years, while retaining 100% equity, isn’t the simplest of tasks in most people’s books. Planning to increase this to £60m within three years, still without sacrificing a shred of the company, isn’t particularly easy either.

Riley sets his sights high. He founded his first business at 23, and by the time he was 27 had launched and sold three others. He now considers these ventures as springboards for “the big one” – Daisy. The aim for Daisy was ambitious: to take a substantial amount of business away from communications giant BT. The company is now fi ve years’ old, and its rival may have something to worry about.

Daisy is a service provider to around 20,000 businesses, lured to its broadband, mobile and landline services by offers of a 25% discount against BT’s pricing. It’s on track for being short-listed for the title of The Times Fastest Growing Technology Company for the third year running. In 2005, thanks to 467% growth, it won the award outright.

This phenomenal expansion rate has been largely down to the emphasis on customer service, explains Riley. “It’s just too diffi cult for a company as large as BT to have that personal service,” he says. “Our salesmen actually go to every customer to discuss their options. But as we grow, it will get more diffi cult for us to keep that personal element, too.”

It’s a very imminent challenge. In the past 18 months, an aggressive acquisition strategy has been pursued. Some 15 businesses have been acquired so far, 11 in the past year. Astonishingly, these acquisitions took place without outside investment. The strategy was fi nanced by bank loans, the fi rst debt the company has taken on.

Now, consolidation is the main focus as Daisy starts its second growth phase. It’s latest acquisition was the purchase of Logicom Systems, which had revenues of £5m. The choice now is between chasing big companies like this, or focusing on smaller firms.

But whichever route the business takes, the acquisitions will certainly need financing. One option that Daisy is looking at is AIM. But equity is all-important for Riley.

As Daisy’s non-executive chairman Ian McKenzie, articulates: “Although we have been looking at flotation on AIM to get the cash to grow further, there are things about AIM we might not like. With Matt being the only shareholder, flotation could bring other infl uences we might not want.”

As a result, if taking on more debt is an option, this will be the business’ preferred strategy. But will this be enough to acquire a substantial chunk of the 60% market share BT enjoys?

“Well, we’re going to give it a really good go,” Riley says. And judging by the past fi ve years, BT would be wise to take this as an understatement.

COMPANY PROFILE

Company: Daisy Communications

Launched: 2001

Founders: Matt Riley

Turnover: ?23.5m

Employees: 130

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