Gary Laurence: What I’ve learnt from being a serial seller
Gary Laurence, who has sold two businesses, reveals what it’s like on the inside
“I've sold two businesses. The first company was Selected Accounts Personnel, which was sold to Acsis Group Plc in an outright sale, including earn-out. Its shares were racing, so I accepted a significant amount of paper.
Over the next few years the value of the shares dropped to virtually zero from 80p. Technically speaking I had to wait a year because it was a public company. There was also a huge moral responsibility because of the effect selling would have.
The second sale, of a company called The Management Resource Group, took place in 1995. This time I insisted on cash despite the acquirer being a Fortune 500 business. I wasn't prepared to hang my future on somebody's paper, particularly without being able to influence the company's performance.
The first process was fairly quick. It took around four months, including due diligence and legals. Mine was one of five companies acquired in November, before Acsis' year-end of December. By taking those companies' profits into its accounts it inflated the share price.
It had to make acquisitions because of the expectations of the market. This particular company made 26 in 18 months and it's almost impossible to integrate successfully in that time. My company was one of the few that subsequently survived. I achieved my earn-out – ‘maxing out' – and was then on part of the main board.
I felt very much a part of it, given the paper I'd accepted. I didn't feel like an employee. But it was a ‘puppet board' run by the chairman and CEO. They were far more experienced and the rest of us turned up and signed what we were told to until it got sticky, when we started taking advice.
I remained for five years, leaving when the public company needed cash and offloaded some assets. I bought back my company along with a couple of others where vendors had left to sun themselves in the south of France.
I renamed the company Management Resource Group and once we had started making healthy profits we sold in 1995 in an all-cash deal, with an earn-out on top. I achieved it in a very short period of time, securing the maximum multiple of future post-tax profits over and above what the acquirer was initially paying.
What I learned second time round is that you should always use advisers used to this sort of deal. First time round it was laborious, despite being quick. Second time it took eight or nine months and needed to be smoothly handled to ensure the goodwill was not eroded.
We also relied heavily on our M&A broker Cavendish Corporate Finance. We eventually sold to a US-based group. Cavendish was discreet and arranged a lot of meetings, which the joint-head partner came along to personally each time.
I know I could have achieved a higher price as profits soared while negotiations were ongoing. But I placed a high value on cultural fit and the development of my career – socalled soft issues. I became head of the European operation, gaining international experience in a Fortune 500 company.
We had other offers and the structure of the deals varied enormously, with shares and three to four-year earn-outs involved. I left the technical side to the advisers. The first time I'd sold I'd been far more involved.
I have no plans to sell Huntress. I've had opportunities and consciously decided not to sell. There are other ways to realise value. The VC might choose to exit in full or partially. Quality of life is very important, but business is not just a means to an end for me, it's an interest and a hobby. When I leave Huntress, whenever that may be, I think it will definitely also mean me leaving recruitment for good as the thought of another exhausting start-up does not appeal.
Company: Huntress Search
Formed: November 2000
Status: Privately owned VC