business

BGF is backing GCI's bid to continue acquisition trail

GCI Chief executive Adrian Thirkill explains how he is working with BGF investor Gurinder Sunner to find new companies to buy

L/R Gurinder Sunner (BGF) and Adrian Thirkill (CEO at GCI)

Midlands technology group GCI has been very busy buying other companies and shows no sign of stopping. Chief executive Adrian Thirkill explains how he is working with BGF investor Gurinder Sunner to find the next targets

Adrian Thirkill of GCI says...

Wayne Martin, who founded the company 20 years ago, organised the funding with BGF and I have been with the group since early last year.

We are a managed technology services company whereby we take technology from different vendors and different parts of the supply chain from an IT point of view, and then wrap them together so a customer can use them.

In layman’s terms, a company might be using a traditional, old-fashioned telephone system and we could provide a Skype For Business product to enable it to use the internet as a telephone system.

Our headquarters are in Lincoln and we have offices across the UK, including Glasgow and Derby.

We wanted to achieve two things with an equity investment.

Firstly, we wanted cash investment to grow the business.

Secondly, we wanted guidance and professional support to develop the strategy of the business, look at different markets and help us in areas where we didn’t know what ‘good’ looked like as these were not our core skills.

Wayne made the decision that he wanted to step away from the day-to-day business operation to become chairman, and I was fortunate enough to be asked to meet the board and become chief executive.

My focus is on creating a single organisation from all the acquisitions that had become a bit disparate.

And I expanded GCI’s senior management team by bringing on board people who had worked for me previously.

I wouldn’t have joined GCI without it having an investor on board. Many entrepreneur-led companies are very good at creating opportunities but then find it hard to crystallise them.

Gurinder and I are well networked, so we know about the conversations that take place when people are looking to sell their businesses.

And we know when someone has done really well with their business but needs some extra money to grow.

We also know if a business is struggling and could benefit from being part of GCI. We look at how acquiring that business could help them get back on their feet and at the same time enhance our offering to customers.

At the moment, the companies we buy are always smaller than us because it makes sense and there isn’t anybody larger that would enable us to be as successful as we are now.

But if there was a larger company that we could reverse in to give us a capability lift then certainly we would look at it.

Even though we are the biggest, privately-owned managed technology service provider in the UK, we are still small compared with competitors who are listed or majority owned by private equity.

Would we look to growth outside of the UK by investing abroad?

There is still a massive opportunity for us here in the UK.

The question for us is whether we want to dilute our focus by increasing the complexity of the business when there is still lots to look at here?

I am not saying we won’t ever buy an international business, it’s just not an immediate goal.

I have worked in businesses before where we have had minority stakeholders, who don’t take a minority interest in the business from the perspective of helping out.

Having BGF on board feels like you have a major private equity house invested in your business but without loss of control..

They do all the miles as well as help and advise which is really their raison d’être as an equity investor.

It works well.

BGF investor Gurinder Sunner says...

BGF made a £10 million investment into GCI in February 2012.

GCI was actually our first ever investment in the Midlands and also BGF’s first £10 million investment.

The purpose of our funding was to support GCI’s acquisitions strategy.

Up to that point, GCI had grown through 13 acquisitions but Wayne wanted to carry on making acquisitions and doing even bigger ones so, since our investment, we have carried out a further nine.

The other reason we came on board was because the business needed to transition from an entrepreneurial-led, fast-growth outfit to becoming more of a small corporate and Wayne wanted our help to achieve that.

That was the whole point of bringing Adrian and his wider team on board about 18 months ago.

One of the reasons Wayne took our investment was the ability to help him as an entrepreneur, so he could leave the business from a day-to-day perspective without it suffering as a result.

GCI was turning over around
£45 million at the time of our investment and it has now reached around £95 million, while staffing numbers have grown from 250 to 500.

Profit during this period has risen by about two-and-a-half times.

Wayne had always wanted to remain as majority shareholder while at the same time bringing in outside help and guidance.

We started a conversation in 2011 where I said: “We’re a bit different and we can do this a different way.”

Gurinder Sunner (BGF)

I don’t think Wayne had ever really countenanced doing an institutional equity deal before BGF, because it just didn’t fit with what he wanted.

What our funding did, in the first place, was kick-start the company with a level of long-term capital that enabled it to grow much faster.

So we started by buying some smaller businesses, integrated them and grew the company.

We have just bought Poole-based Blue Chip which is the largest acquisition GCI has ever done, probably by a factor of three.

GCI has reached a stage and size now where it can generate sufficient levels of capital such that, if we don’t buy another business for six months, our level of debt will drop substantially.

This quickly creates further debt capacity, which means we can go out and buy something else.

As a shareholder group, we don’t really need to get any additional external equity funding at the moment because what we already have does what it needs to.

We find ourselves now in a position where the business is doing so well that it is self-funding.

We get a lot of in-bound enquiries as we are known as an acquisitive company in the sector.

The sector is also quite hotly followed by corporate finance advisers, typically London based, who see us as a credible buyer.

At the end of last year, we made a conscious decision to buy something bigger than we had done before. This is pretty seminal because it’s going to help us break the £100 million turnover ceiling.

Blue Chip was the last skill set acquisition we required, so GCI now has all of the skill sets it needs within it in order to organically grow.

At some point there will be an exit in the future.

But we are driven by what Wayne, as majority shareholder, wants to do.

While there have been opportunities to exit the business, we have always said let’s keep it going. That could change if both the timing and opportunity is right for the team. It’s been great to see the vision for GCI become a reality.

BGF is the most active and influential investor in growing companies across the UK. The independent company provides long-term capital for a minority stake, from earlier stage investments to established private and AIM-listed companies.

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