Ask the leader – Richard Tredwin

As featured in Management Today and The Times.

Richard Tredwin is a serial business builder and former CEO of SRL Traffic Systems. “I love helping to effect change in ambitious businesses,” he says. “I enjoy seeing business grow, helping people develop and building relationships.”

In 2017, he saw the potential to build SRL Traffic Systems into a truly national provider. SRL could really fly with the right investment he says. “At that point, the business was 20 years old. It had done 10 years as a pure manufacturer of traffic lights and then, when the banking crisis hit and companies couldn’t afford to buy the lights outright, it moved into equipment-as-a-service. It needed to diversify further into new products and equipment, invest in its systems, procedures and back office, technical and support teams to have a platform for growth.” LDC backed the management team with a £24m investment in September 2019.

What made you decide to take on private equity investment?

At SRL, there was enormous growth potential. The existing shareholders wanted to exit and were keen for the management team to take it on and benefit from the future growth. It was the perfect set-up for a management buyout (MBO) and partnering with a private equity investor was the right solution. With private equity behind you, you have more firepower and can really supercharge the business, both in terms of products, services and investment in people.

Why did you choose LDC?

I had worked with LDC before on a previous transaction, so when we decided to do an MBO, LDC was among a very select number of firms that we approached. They were local to the business and were keen from the outset. Throughout the process, the team at LDC was consistent, supportive and stuck to their word. From the offer to the delivery mechanism to the timetable, the team didn’t waver at all. That’s really important when dealing with shareholders that want a defined timetable and approach, and LDC absolutely facilitated that. They were engaged and respectful of the business from day one. They didn’t just put significant capital behind us, they encouraged investment in innovation, people and growth.

What advice would you give to anyone considering private equity investment?

It’s all about preparation. Your plan needs to instil confidence in a potential investor. Be honest about where you are and what’s needed. Think about what makes your business attractive – for us, we knew SRL was a fantastic business with strong cash and profit drivers and predictable growth and with a respected and invested leadership team.

I’ve been lucky over time that I’ve had the opportunity to help deliver a few similar growth journeys, and I’ve learned that being flexible, open and honest with your investment partner is key. Also, make sure you ask, “what else can you bring besides just finance?”. LDC, with its Value Creation Partners, network of contacts and hands-on advice was always there to support and facilitate, which was really valuable.

How did the partnership help when times got tough?

The pandemic was challenging. Having just done the MBO, the business was structured to deliver a plan to grow. We had a strategy in place, and we were bringing in new faces. Then we hit March 2020 and I start thinking, “Do I need to reverse everything we set out to do?”. That was an enormous shock to the system. Working with LDC, we decided to pause for breath rather than go into reverse. We took stock for a few weeks and then we became key workers, and everything came back again. We put the brakes on but didn’t go into reverse. When choosing your private equity partner, you need to be confident you can pick up the phone when things don’t go to plan. How will they react? Will they listen? With LDC, nothing was an issue. If you identify the problem and present a solution, LDC has the patience to support you and see the opportunity. The team is there in good times and bad.

What’s your proudest business achievement?

Definitely the MBO at SRL. We brought 27 people into the equity from the management team. It’s been a great result for everyone and I’m so proud. Seeing the management team grow and flourish and commit to the future of the business, and benefit from outcome of the MBO, that’s a great achievement.