OPINION
Ask the Leader – Mark Goddard
20 Sep 2021
As featured in Management Today.
In 2013, Mark Goddard was at a crossroads. He was CEO of property portal Property Software Group (PSG) at the time of the credit crunch. Its parent company was looking to raise capital and concentrate on its core operations. Mark knew he had two options: effect a management buyout or sit and wait for its parent company to agree a disposal. He wanted to create his own path for the business and, with the help of LDC, chose the first route. PSG is the UK’s largest supplier of software, technology and design solutions to the property industry.
“I was a firm believer in our business model and our software,” he says of the decision. “I had also seen an explosion in software-as-a-service (SaaS) models across other industries. I knew that it was only a matter of time before the property industry caught up.” Mark decided to buy the business and pioneer its SaaS model, shaking up the industry. This bold move required the right kind of investment and support to really capitalise on an emerging opportunity.
Mark and his management team chose to partner with LDC, completing a £17.8m buyout in 2014. With LDC’s support, Mark and his team focused on a two-fold strategy – a technology migration to the new SaaS model and an ambitious M&A programme, buying up smaller rivals and complementary technologies.
The partnership with LDC helped Mark and his team to firmly establish PSG’s SaaS capabilities, acquire eight complementary businesses and revolutionise the property sector. Zoopla came knocking and acquired the business for £75m, almost four times its value two years prior.
As an entrepreneur, there are always 200 things you could be doing but probably only two or three things that matter. LDC helped to give us that focus.”
Why did you choose LDC?
It was an open auction and it became very clear as we went through the process that LDC was committing a lot of effort and time getting to know the business. Long before they ever wrote a cheque, they wanted to understand the market they were buying into and the management team. That wasn’t replicated by any other private equity house. The rest of the potential investors were going to the presentations and sitting back, waiting for information. LDC was very proactive, which meant we were able to get to know them a lot better. After the deal was done, there was no learning curve: we were able to go straight into the business plan and make it happen.
What value besides capital did LDC bring to the business?
We really believed in our SaaS strategy and had a great CTO but, ultimately, the SaaS reference points in the property space weren’t there. It sounded good, sure, but no one had done it. LDC was able to put me in touch with leaders at their other portfolio companies that had already been on a similar journey. We learned a lot from these interactions.
What’s your advice to anyone considering private equity?
The one thing every management team should ask a prospective private equity partner is where you are in their fund. Many private equity houses have funds and if you are the first in, you’re the baby. You’ll have a lot of expectation put on you but also support. If you come in later and they have spent all their money, you’ll struggle to execute in terms of investment. LDC was unique in that it doesn’t have a traditional fund structure, so it can always make the right decisions for the business. It’s not dictated by the phase of a fund. Also, choose someone you like. You’ll be working really closely with these guys for three years plus, so make sure the chemistry feels really good.