Shaper: Alastair Stewart

Show aired on 26th September 2015

Transcript

Elliot Moss
Mel Torme with All That Jazz, a nice swingy start to Jazz Shapers here with me, Elliot Moss, on a Saturday morning with you. Thank you very much for joining me. This is the place, they call it Jazz Shapers and it is the place where you can hear the very best of the people who are shaping the world of jazz, blues and soul alongside those people who are mixing it up, breaking conventions, creating new rules in the world of business and we call them Business Shapers and I am very pleased to say my Business Shapers today is Alistair Stewart. He is the part-owner, and we will talk about what part ownership looks like, of etc.venues. He is also the managing director. They are a forty million pound business or they will be by December of this year and he bought into the business about eight years ago and you are going to be hearing what that looks like as we talk to him. In addition to talking to Alistair we will be hearing from our partners at Mischon de Reya, some words of advice for your business and you are going to get some great music as well of course from the shapers of jazz, blues and soul, Ella Fitzgerald, Eric Bibb and also right now it’s Robert Glasper.

Robert Glasper with Reckoner and for those of you that have recognised that, it is actually a Radiohead cover and interesting it is too. Alistair Stewart is my Business Shaper, as I said he is now in charge and partly owns a forty million pound business, it’s called etc.venues and welcome. Slightly different Mr Shaper today or a Mrs Shaper but you are a Mr. You bought this business back in 2006. Where were things at, at that point in your life? What led you to the path of becoming a part-owner and I know we are going to talk about how you raised the money and things, a part-owner in a business obviously in a world that you knew which is events but what made you say ‘I don’t want to work for someone else in quite the same way anymore’?

Alistair Stewart
Well it was a decision that was forced on me because at the age of forty six and after having worked for the same business for over twenty years, which was part of a Plc, the business was sold, not by my choice but by the choice of the Plc and the new owners of the business decided that I was not going to form part of the future so I found myself suddenly out of work for the first time out of twenty years at quite short notice and therefore it was, in my view, was a short-list of choice as to what I did next but I had the taste of selling a business, the business was incredibly well sold, got three hundred and twenty five million for it, I’d met a whole lot of people in private equity and investment, had got the taste for owning some of the business as well as being an employee of the business and the opportunity to acquire etc.venues was there and that’s what I went for and took.

Elliott Moss
Now I understand, I mean many people in that position, aged forty six, twenty years working for the same company, would not have opted for the route that you took. They may have had a couple of years where they quote/unquote thought about stuff, they may have never recovered from that knock. Unusual that you didn’t just do something pretty good, you did something fantastic. Where do you think you got that attitude from? That tenacity and that sense of ‘you know what, this is the beginning of something else’ rather than ‘oh what am I going to do next’?

Alistair Stewart
Well I mean even though I saw it, a possibility of it happening, it was still a very brutal shock at the time and I sort of initially agreed with my wife that I would take six months off, you know, as you do. There was a good payment, a good settlement. There were no immediate short-term financial worries but I just couldn’t settle. I was unhappy, I couldn’t sleep, I was worried about you know, the future, kids, you know kids and schools and liabilities and even though as I say, none of the pressures were immediately short-term, I just couldn’t settle and in fact I remember my wife saying to me, you know after about six weeks, ‘this isn’t working you need to go out and sort yourself out’ and etc.venues was a business that I had gotten to know, it was a much smaller business in our sector. I knew the people well, had a cup of tea with the chairman and said ‘look how about you know, we revisit some of the ideas we had when I was with my old business but except on this occasion I’ll, you know, I’ll look at it personally and you know, she thought it was a good idea and over a cup of tea we agreed a price and she gave me ten weeks to get the deal done. It happened to coincide with the founder’s fiftieth birthday and she wanted to leave on her fiftieth birthday. The most ridiculous and artificial of timetables but that’s what it was.

Elliot Moss
And that’s how it happened you see, sometimes the stories come together in all sorts of extraordinary ways. Lots coming up from my Business Shaper today, Alistair Stewart. Time for some music right now though, this is Ella Fitzgerald and I’ve Got You Under My Skin.

The mellifluous sound of Ella Fitzgerald with I’ve Got You Under My Skin. Alistair Stewart is my Business Shaper, forty six years old as he was telling us earlier, twenty years in a company, it all came to an abrupt end. Six weeks in to quote/unquote part-time retirement before he moved on to the next thing, his wife said ‘enough’ and ten weeks after that, after a cup of tea with the chairman, he ends up as you were saying, having the opportunity to raise enough money and buy a company called etc.venues – and you pulled it off. How long did it take in fact?

Alistair Stewart
Yes. It took about eleven and a half weeks.

Elliot Moss
You were late Alistair. You started in a bad way… but eleven and a half weeks to raise how much money did you have to raise?

Alistair Stewart
For that deal we raised twenty one million. I think the challenge initially was that the previous deal that we were working on was three hundred and twenty million pounds and therefore all the equity partners were at a level well above what I needed so I was lucky, a couple of people I had met through the course of the deal I rang up and said ‘can you introduce me to someone who will back this sort of deal’. One of them was Malcolm Offord at Charterhouse who is a very big figure and Gavin Simmonds who is a well-known figure in the business world and had a hotel background and unbeknown to me, both of them introduced me independently to Dunedin Capital Partners and you know, clearly said something that made Dunedin meet me quickly and within a week of meeting them, they said ‘yep we like you, we like the company, we like the target, we like the story, we will back it’ and we got into detailed talks very quickly, the nine weeks is just ‘cos you have to do your due diligence and the tricky bit of it was that it had to be a management buy-in, buyout and that is known as a BIMBO and the founders terms to me were simple, it is you on your own, you have to work with my team, you step into my shoes as the MD but I want you to work alongside you know, my fellow directors and I want the opportunity of this transaction to be as good for them as it is for you. So I had to really having worked with an established team that I had gotten to know over many years, suddenly meet a new team and persuade the bank and the private equity investor to back us in a buy-in and you know, for many of your listeners they will know that buy-ins are much more difficult to pull off than buyouts.

Elliot Moss
You sound incredibly calm about the whole thing and obviously time is, you know, it’s nine years on but I get the sense that at that time you were probably calm too. Align that with an entrepreneurial spirit which obviously you have and not an easy gig and the skills that you need to grow the business are not necessarily the skills that you need to raise capital. How have you squared that circle? How do you manage to kind of have both a head for the investment as well as the head for actually growing the business?

Alistair Stewart
Well I think I was lucky enough to have spent a year selling the old business and once you spend a year doing that you get to know the language that investors like. You get to know the things to say, more importantly, the things not to say.

Elliot Moss
What shouldn’t you say, give me one little snippet, come on…

Alistair Stewart
Well I think…

Elliot Moss
…we want to know.

Alistair Stewart
…you, you know, you’ve got to never reveal your anxieties to them, they just want to hear the good news. They want to understand that you understand risk but above all you’ve got to be opportunistic, you’ve got to be bullish, your numbers have got to add up so it is important to… your financial models are correct and I think you know, if you want to do something quickly, you need to keep it simple.

Elliot Moss
Lots of brilliant advice already but you are going to get some more with my Business Shaper that’s Alistair Stewart. Latest travel first in a couple of minutes first and before that some words of wisdom for your business from our programme partners at Mischon de Reya.

This is Jazz Shapers and I am Elliot Moss every Saturday I am talking to someone who I think is interesting and I think you will also think is interesting. They are called Business Shapers and they sit here and they tell me all sorts of things that they maybe haven’t told people before. If you have missed any of those programmes you go on to iTunes, put in the words ‘Jazz’ and ‘Shapers’ you will find them there or if you fancy Cityam.com, if a computer is near you and it probably is, you can find a whole host of people who are listed over there as well. Alistair Stewart is my Business Shapers today, he’s the part-owner, I use the words carefully and managing director of etc.venues. They are a forty million pound business and we were talking about the bit before you got the business and the bit of raising the money and then as you said, it was called a BIMBO, a buy-in and a buyout. Now for and I am not sure I would know necessarily what a buy-in is, explain very briefly what it is and then explain why it wasn’t so easy for you to pull it off?

Alistair Stewart
Well the buy-in bit is… was me as the managing director doing what they call a management buy-in so I arrived, buy a shareholding in the business and under a private equity structure the private equity give the management a stake in the business and the proportion gets split between the buy-in candidate i.e. me and the buyout directors so, you know we ended up with about, it was a minority stake, it was about forty five percent of the business and that got split up between the directors.

Elliot Moss
And why was it difficult Alistair?

Alistair Stewart
Well I mean I think the hardest thing to do is to put an ambitious business plan that you have to do otherwise you don’t get the capital in to a team of people that had run a very successful little business but had gone quite slowly and had had a lot of time and no debt to worry about and I think the pressure of an ambitious business plan and a lot of debt was too much for some of them.

Elliot Moss
And those people I imagine left?

Alistair Stewart
Well the key, the key problem was the finance director who resigned after three weeks and I mean I remember well, in about three weeks in we were sitting one evening and she said ‘look this isn’t working for me’ so I said ‘well what’s the problem’ and she said three things to me, she said ‘you are a man, you are too old and I am not sure I trust you’ and…

Elliot Moss
But apart from that we are going to get on really well.

Alistair Stewart
I said ‘well look I am not planning to have a sex change and unless you have got something that can reverse my age, I mean I don’t think there is anything I can do’ and I think it was unusual the company was all female, the chairman was a female, the managing director was female and that was unusual and you know, at the time probably I arrived it was probably a bit more of an alpha male, pushing and saying we’ve got to this, we’ve got to do it quicker and I think it was difficult for them but to some extent I wasn’t willing to compromise what I believe needed to be done and I think it did cause a bit of conflict.

Elliot Moss
Now obviously you said, you know, I wasn’t willing to compromise what needed to be done. Your… the numbers have worked. Whatever you said you were going to do in that plan I am imagining you have delivered? Is that a fair thing to say? Has it worked completely or have there been, I mean, I don’t know what, what was the turnover at the time that you bought the business?

Alistair Stewart
The turnover when I arrived was just about nine million and they were making about 1.9 million BDA so I mean yes, the numbers on the score board looked very good and I think…

Elliot Moss
And what other metrics do you look at because you have been now in business running this yourself for the last eight years so your, so obviously your revenue we just talked about earlier has quadrupled, margin has quadrupled with it or not quite?

Alistair Stewart
No the margin, the margin has been pretty steady. I mean it was a good business with a good margin but I mean I think we have grown BDA to 10.6 which is what we did to June ’15 which is our financial year end so to go from 1.9 to 10.6 I think is pretty good by most people’s standards and when you consider that included through a period of quite heavy recession, I think some people regard that as, as almost exceptional and certainly for our sector it is good because a lot of businesses had quite a lot of trouble during the recession.

Elliot Moss
Stay with me to find out how Alistair has bucked that particular trend in the events business. It is time for some music, this is Eric Bibb with Silver Spoon.

Silver Spoon from Eric Bibb, nice and relaxing for you I hope. Alistair Stewart is with me and Alistair we have been talking about this events business which has grown quite nicely. Obviously the numbers are critical and we’ve talked about those doing rather well. What are the other things that are important to you personally as you think about whether you at the end of the day have had a good day or not a good day or at the end the year had a good year or not a good year. How have the team measured up? Is there happiness in the business? Are customers happy, you know, what are the other things around it that you go ‘I am really enjoying myself’ or inversely ‘I’m not’?

Alistair Stewart
Well we are a completely customer centric business and I am sure that is common to a lot of the businesses that your programme covers so that is at the very heart of it. I think in terms of sort of sticking with the private equity thread then a lot of people ask me about private equity and you know, what is the criteria for success and failure. There are a lot of different views about private equity out there so I think you know for me, we’ve got to, got to grow the business by at least fifteen percent top and bottom line every year to keep that story going as far as working for private equity and you know, the next round of investment when it comes, that’s the sort of track record you need to be putting on the table you know, to raise, to raise the next level of investment.

Elliot Moss
Now that’s critical and I get that and there is and you are right, people talk about whether you should or you shouldn’t and we will come to that in a bit but I am interested in your emotional connection to the business beyond the fact that you have to deliver the numbers. Is there one or is it much more of a like ‘I am running a business and I need to deliver the numbers’ or are there other things that fill you with joy so much that you jump up and go ‘yes’?

Alistair Stewart
Well look this is a tough one because I absolutely love the conference centre industry but to most people it can at the surface appear a bit dull but I mean a lot of people listening will be going to meetings and training courses and conferences and they will know that in some venues it is a good experience and in some venues it is not a good experience. I don’t get involved in the content, that’s for our clients to deliver but what I can do is ensure that the venue they go to adds to the event, whether it is just a great cup of coffee or a particularly good lunch or that the air conditioning works or that the comfort of the chair they are sitting in is right. These are the small details that we spend a lot of time trying to get right so that we can deliver an enjoyable conference venue experience as hosts.

Elliot Moss
Well that makes perfect sense. Final chat coming up with Alistair today plus we will be playing a track from Cryille Aimee, that’s after the latest traffic and travel here on Jazz FM.

Cryille Aimee with a really interesting take on Michael Jackson’s original Off The Wall. I am with you Alistair just for a few more minutes so I had better make them good. You’ve talked about private equity, you have obviously built your ability to be part of this business on private equity and there are people and I have had one on this programme who you know called Lara Morgan who would say ‘never sell any last percentage of your business ever; sell your grandma before you do that’. You are in a different camp, it’s worked for you. What are the watch-outs to ensure that it works for other people contemplating private equity backing?

Alistair Stewart
Well it’s a good question, I think, I think I had the benefit of a corporate background where I understood that you know, you need to report figures to people, you need to you know, run your business in a professional and to some extent, standardised way and therefore in terms of the difference between reporting to say a Plc and reporting to private equity, there is not a lot of difference. I think some of the entrepreneurs I meet who have to adjust from running their own businesses, sometimes without necessarily very vigorous or rigorous financial controls, sometimes they don’t have you know, finance directors and it can be a bit of an adjustment when they meet professional investors who expect a certain standard of, of control. I think if you then couple that with someone who has never been told how to run their business or has never had people challenging them in a way that you know, you would expect professional investors to do, it can lead to a clash and I think in that sense it can be done but the criteria I say is three – one, you have got to be able to grow your business as I said earlier by at least fifteen percent a year, you yourself have got to be able to share your business with others and that means occasionally listening, it occasionally means doing something necessary that you think is not necessarily the right thing to do and you’ve got to be prepared to bring in to your team, people sometimes of a higher calibre who private equity investors will expect, particularly the finance directors.

Elliot Moss
So I think what it comes down to culture, the fact that your background enabled you to see where private equity fitted suited you just fine because you were used to that environment but someone who was a maverick who had only ever worked for themselves ever, ever, ever would find it very difficult to have a whole new set of bosses with a whole new set of rigour around it. It is kind of, it feels like it is not right or wrong, it’s really about where you as an individual have come from. On that point I think, you know, we’ve said that you are a… not the founder of the business but now you are running it and it’s your baby along with your PE friends – do you ever think of yourself as that entrepreneur? Do you… when people say are you entrepreneurial… do you say ‘well of course I am’? I mean what is your, what’s your take on that for yourself?

Alistair Stewart
I don’t call myself an entrepreneur. I have got huge admiration for those people who start-up businesses and take in some cases huge risks, you know I know there’s the great sort of t-shirt of failure they all love to wear. That is not my story. My story is that you know, I wanted to get it right from day one. We think very very carefully about every decision we make. We don’t make mistakes. That doesn’t mean to say we don’t take risks… yes we do but we take very calculated risks and for the people that are with me on this journey, you know, I don’t want to turn round to them and say ‘sorry guys we failed, let’s start again’. Starting at forty six there was no second chance and you know, for my entrepreneur friends I sometimes say ‘was that mistake actually avoidable? I know you wear the badge of failure with great honour’ but for me it is not a badge I want to wear. I wanted to get it right first time.

Elliot Moss
It’s brilliant, really good to hear a different take on making a business super successful. Alistair thank you so much for being my Business Shaper today, you’ve been great. Just before I let you go, what’s the song choice and why have you chosen it?

Alistair Stewart
So I have, I have chosen a track called Lemanja from The Absence by a fantastic singer called Melody Gardot.

Elliot Moss
And any reason why this one in particular?

Alistair Stewart
It’s, a lot of my background was in South Africa, my grandmother who started a hotel out there and it is what brought me into the industry. She was a great influence in my life and Melody if you research her, had some African influence in this. It is also apparently partly written in Marrakesh where I recently had an incredible stay and it is an incredible place and I love the track.

Elliot Moss
Here it is just for you. Thank you so much.

That was Lemanja by Melody Gardot, the song choice of my Business Shaper today, Alistair Stewart. The corporate man turned entrepreneur though he wouldn’t use the phrase entrepreneur but he is running and growing a business which he is partly and owner of. Someone who understands what private equity is an investor will require and he understood exactly how to deliver them the details that were important to them. And finally someone who would say on his t-shirt, ‘we don’t make mistakes’ rather than ‘we are proud to have failed’, an interesting take on the world of developing a business. Great stuff. Join me again, same time, same place, next Saturday, 9.00am for another edition of Jazz Shapers. In the meantime though stay with us because coming up next it’s Nigel Williams.

Alastair Stewart is the Managing Director of etc.venues. His ambition of running his own business can be traced back to his entrepreneurial grandmother who, amongst her many accomplishments, set up a hotel in South Africa which drew the young Alastair into the hospitality world.

2006 was a pivotal year for Alastair when he left Rentokil Initial, where he had been MD of the conference venue business, Initial Style Conferences. With private equity backing from Dunedin Capital Partners, he acquired the specialist city centre venue company, etc.venues, which has become the fastest growing UK conference venue business. In 2012 he secured fresh capital from Growth Capital Partners in a secondary management Buyout.

Alastair recently spoke at a “Startup Grind” event – if you’d like to watch a video of the event click here. Alastair was also an Ernst and Young Entrepreneur of Year finalist in 2009 and again in 2013.

Listen live at 9am Saturday.

Having worked for the same business for over twenty years, it was sold – the new owners decided I was not going to form part of the future, so I found myself suddenly out of work.

I remember my wife saying to me, after about six weeks off, ‘this isn’t working – you need to go out and sort yourself out’.

I had to suddenly meet a new team and persuade the bank and the private equity investor to back us in a buy-in. Buy-ins are much more difficult to pull off than buyouts.

If you want to do something quickly, you need to keep it simple.

The Finance Director said, ‘you are a man, you are too old and I am not sure I trust you’.

I absolutely love the conference centre industry but to most people it can appear a bit dull.

We spend a lot of time trying to get the small details right so that we can deliver an enjoyable conference venue experience as hosts.

Those considering private equity backing have got to be able to grow their business by at least fifteen percent a year and be able to share their business with others.

My story is that I wanted to get it right from day one.  We think carefully about every decision and we don’t make mistakes – starting at forty six there was no second chance.

I know people wear the badge of failure with great honour, but it is not a badge I wanted to wear.