Daniel Bailey, one of ECI’s Investments Directors, talks through the investment areas he’s most excited about, the IoT device he’d like to invent, and dinner with a Navy SEAL.
Why did you choose to move into private equity?
My background was in corporate finance. In that role, I’d work very closely and intensely with the management team of an exciting growth business for a period of six months in preparation for a transaction, then once a deal had been done, I would move onto another project. So, I wouldn’t really know what happened with that team and company after that. Did they deliver on the strategy and plan? Did the team get on with their new shareholders? Which strategic initiatives were adding the most value? You’d only really ever find that out if the business came up for sale again in four years or so.
So, I knew I wanted to get closer to those businesses I worked with and to see what happened on the other side of a deal. In a small way, even though we’re not operators, you do still get to be a part of the entrepreneurial journey of a business, and that’s so rewarding. I also enjoy the fact that you have to make some pretty big decisions, as to whether to invest or not in a business, and your career is ultimately built on those decisions.
Has anything surprised you since joining ECI?
I think all private equity firms talk about how they help their investments, but I have been surprised by the number of hours that are spent at ECI supporting the teams of the businesses we back in any way we can. Most frequently, on growth projects. That could be mapping markets to help a team do M&A; determining a new product launch strategy, performing a market pricing review, developing an international market entry strategy, or improving the internal technology of a business to make it more scalable… I mean I’m just listing some of these off the top of my head, but there are many more. It has been a surprise, just how much time we spend to help the teams on projects that drive growth.
I mentioned I joined private equity to get closer to businesses and working with our investments in this way really has brought that to life.
What advice would you give to people considering the move into private equity?
The main thing I did, and I know other people did, is network. It won’t get you a job, but it will help you understand the industry more broadly. For example, it will allow a candidate to distinguish between different private equity firms’ strategies and cultures. Then when that person comes to interview at a firm, they can be that much better at articulating why they want to join the industry and they will also likely be better at assessing an investment opportunity with a private equity mindset. It also shows a go-getter attitude, which is required in the industry. For example, it is the same as thinking, how do I get an edge to win a deal. Finally, it shows you can build relationships, which is also key in the job. Our market is competitive and good relationships can mean the difference between doing a great deal with a great team or missing out. Generally speaking, people are happy to help. I’m incredibly grateful to those people who gave up some of their free time to chat to me. It was extremely helpful. So, when I have time, I try to do the same for those people who occasionally reach out to me. I’m sure the advice I give isn’t be nearly as clever or wise, but I always try to help!
Which sectors are you seeing exciting growth opportunities in at the moment?
Well, at ECI, we don’t tend to look at broad sectors, we focus in on the sub-sectors where we have real depth and experience. So, look, I’m going to be biased here and talk about the sub-sectors I focus on. I think IoT is an incredibly exciting and fast-growing area, I think the technologies that underpin it are continuously evolving and changing, and that is creating huge amounts of opportunity. Connectivity is getting cheaper, battery life of IoT endpoints is getting better and the data you can transfer quickly is greater… so, it’s opening up so many new use cases that weren’t historically economically or technologically viable. That will only continue to grow.
I also think the shift of businesses’ IT estates to public cloud infrastructure is an interesting area. Public cloud can allow businesses of all shapes and sizes to unlock growth and scale benefits. So, for example, AWS and Azure, have inbuilt AI/Machine learning applications that corporates can use on a plug and play model. This provides companies with the environment to digitally transform and to continuously evolve with new technologies thereafter.
Then lastly, I like businesses that have some degree of regulatory underpinning – so, businesses that provide testing, inspection, compliance software or services – are interesting and are seeing very fast growth. The UK is a thought leader in this area and can often export best practice to international markets. An area that’s interesting there is supply chain assurance, as everyone wants to understand where their produce comes from. The ability to understand your supply chain from end to end will become increasingly important as consumers and businesses become increasingly discerning.
If you could invent an IoT application what would you choose?
Oh wow, there’s so many. What problem do I need to solve? During lockdown, we purchased so many houseplants to make our working environment better. Despite a lot of investment, the plants continue to die! I have no idea what I am doing wrong. I suspect I kill them with kindness, so I’d love some sort of health monitoring IoT offering that can cater for specific plants survival whims, or that could just take over the watering for me!
Are there any interesting projects you’re working on at the moment?
For the last four years, I’ve been working closely with an investment of ours that is a Microsoft focused digital transformation, cloud and IT managed services provider called Content+Cloud. They’ve been on a fantastic growth journey, doing five acquisitions since ECI’s investment, quadrupling in size and becoming a leader in its field both in the UK and globally. The business continues to look to acquire complementary businesses and skills, and the ECI team support C+C’s leadership as best we can by providing M&A know-how, horsepower and resources to complement the team’s own wealth of experience. So, that is always interesting and is an open ended project that keeps me busy alongside new investments for ECI.
Quick Fire with Daniel:
Do you have any secret talents?
I can speak a bit of Polish and a tiny bit of Mandarin having spent a period at a university in Beijing. My partner is Polish, so I am learning! Mandarin I’m not so good at now, but I was there for a couple of months at University and, at the time, not so many people in Beijing spoke English, so I got quite good quite quickly!
What is the best live performance you’ve ever seen?
So, as a Mancunian, I have to say going to see Oasis at the Old Trafford Cricket Ground when I was a teenager was pretty special.
What was your worst lockdown purchase?
You might think, plants! However, no, I’d have to say canceled holidays. I am sadly the proud owner of various Ryanair vouchers…
What famous person would you most like to have dinner with?
I recently read a book by a man called David Goggins (it was kindly given to me by a former colleague Caroline and I think I’ve since lent it to both Rory and Jeremy in the ECI team). David was an obese young adult who then went on to become one of the first African American Navy SEALs. After that he became a serial elite ultramarathon runner and winner.
Now he’s a globally recognized endurance athlete across various disciplines, author and motivational speaker. He came from an extremely tough background and he’s just a pretty inspiring bloke all round. His ability and singularity of focus to achieve what he wants is incredible. So, that would be fascinating, albeit probably not that much fun! I imagine, it would probably be a fairly intense meal.