ECI Partners gathered CFOs and FDs from across the investment portfolio last week, meeting in London to discuss lessons learned, share information and discuss regulatory, tax and tech updates.
Whilst each company backed by ECI is unique, CFOs and FDs often share several the same goals and challenges – for example, weaving advanced analytics into the fabric of the business, or the considerations required to efficiently manage a buy-and-build strategy. The Finance Forum provides an opportunity for knowledge and experiences to be shared.
“No two integrations are ever the same” – Andrew Insley, CFO, IT Lab
Implementing an effective buy-and-build strategy has been one of the key facets in IT Lab’s strong growth during ECI’s investment. Since partnering with ECI in 2016, IT Lab have made three bolt-on acquisitions: Perspective Risk (May 2017), Content and Code (Sep 2018) and Mirus IT (Aug 2019). Andrew Insley, CFO at IT Lab shared his experiences of how IT Lab have made this strategy work.
He discussed the importance of building the pipeline – “you will have to kiss a lot of frogs” – and the sheer number of businesses that are identified, considered, and whittled down to get to the completed deals, pointing out that the work involved for smaller deals is often the same if not more than for the larger deals.
Andrew shared some “top tips” with the group, such as effective use of ECI’s Origination Team, considerations around the structure and timing of the deal, how to negotiate the deal process itself, and post-closing – such as integration and announcements.
There have been 11 acquisitions across the ECI portfolio so far in 2019, and Andrew’s insight under the bonnet of a company that has successfully negotiated three bolt-ons, was invaluable.
CPOMS using advanced analytics to focus outbound sales
Max Jackson, Associate in ECI’s Commercial Team, discussed the role that data science is playing in supporting growth across the portfolio. Several examples were shared, including a recent initiative with CPOMS, using advanced analytics tools to harness data and more effectively target outbound sales.
The group discussion that followed shed light on several common questions:
– Which insights really move the dial, and which are just interesting?
– Which tools and techniques can be deployed? How easy are these to use?
– Who are the right people for this type of work? How should a team be structured?
While advanced analytics is a new field, it can lead to highly actionable results and be a significant driver of growth for companies, as was shown in the case of CPOMS.
Regulation, Tax and Tech
The Forum concluded with Philip Shuttleworth, CFO at ECI, taking the group through upcoming regulatory, tax and tech considerations.
There was an update on the Environment Agency’s Energy Savings Opportunity Scheme (ESOS) which affects most of ECI’s portfolio. The scheme requires companies to record and submit energy usage – in most cases this is being co-ordinated through ECI although larger portfolio companies are making their own submissions.
A key part of many of the ECI portfolio companies’ strategies is international expansion, with several showing strong growth across multiple global territories. Pursuit of this strategy brings with it tax implications, and the group discussed their experiences with international tax systems, and the impact this had on their business.
IR35 (tax legislation) is a hot topic as the April 2020 implementation date draws closer, and businesses look to prepare for the changes in practices that it will bring. Preparations are well under way across the portfolio, and individual queries were discussed among the group. A follow up session on this topic is being arranged.
To close the day, highlights from the cyber readiness survey developed for the ECI CTO Forum were discussed. The importance of having a robust cyber security policy in place and approved by the board was noted, along with the recommendation to have a documented and tested response plan.