OPINION
Ask the Leader – Matt Parker, Chief Executive of Babble
11 Nov 2020
This year has taught all businesses, large and small, the value of smart IT. London-based Babble has been providing this vital communications and cyber security expertise for 20 years, and now works with more than 2,000 small and medium-sized companies.
Matt Parker who became CEO in 2016, has grown the business nearly five-fold over the past three years through a mixture of strategic acquisitions and organic growth.
“I saw the opportunity to do a ‘buy and build’ and go on a really exciting journey,” he says. “We have acquired six businesses in three years; four during 2020, despite two lockdowns.”
Matt plans to accelerate growth further over the coming years, and will acquire six to 10 business in 2021. “I don’t really know how big we could get,” he says. “What I do know is that there is room for a billion-pound player in this space and we are very well placed to get there first. The only thing that can limit our ambition is our ambition.”
Did you consider a buy and build strategy before partnering with LDC?
Another private equity firm had invested in Babble before I joined but that relationship didn’t deliver. I came in to try and turn the business around and give that investor a sensible exit route. I really liked the business and saw the opportunity to try a reasonably aggressive, yet low-risk buy and build strategy. The original investor couldn’t support that but fortunately, I found LDC.
How have you delivered your acquisitive strategy with LDC?
We have made six acquisitions over the last three years and the results have been compelling. We recently completely a secondary buyout, which valued the business at £90m. That’s 20 times the value of the business when LDC invested. Buy and build is absolutely the way to get a steep curve on the growth of your business.
Buy and build is absolutely the way to get a steep curve on the growth of your business.”
How has buy and build created growth and or resilience in your business?
Our buy and build model is simple: we only acquire good businesses, never turnarounds. We retain the bulk of employees from the businesses we buy; half our senior leadership team is made up of the management from acquired businesses.
When you buy good businesses, you buy good people.
When we acquire a business, we immediately move them onto Babble’s own platform, and we work hard to improve customer experience post-transaction. It’s a super disciplined process and one that creates a lot of efficiency and resilience in the business.
What advice would you give to anyone considering a buy and build strategy and/or private equity?
We only buy businesses from people we like. Usually, they have been growing their company for 20 years or more. They love that business, and want the best for its future. If you buy businesses from people you like, you know that the negotiation and due diligence – which may require some awkward conversations – will be that much easier.
LDC is sharing inspirational stories from its current and past portfolio company leaders to mark 40 years of backing ambitious businesses across the UK.