Matt Hogg - From high street recruitment to an MBO, the learnings, the wins, and what it takes!

Welcome to the Recruitment Mentors Podcast. My name is Hishem Azzouz. Today I'm delighted to be joined by Matt Hogg, who is the Managing Director of Wallace Hind. Matt started his recruitment career in 2000 and started his career with a high street agency in which he progressed his career from trainee to branch manager. Then in 2005, uh, sorry, 2004, he joined Wallace Hind where he is obviously still currently, and he's progressed from consultant all the way to partner before actually successfully achieving a management buyout 3 months ago. So Matt now is in charge of the strategic growth of the company as he looks to carry on the brand, but also build a new chapter. So there's currently 20 people, uh, within the business. They're based in Northampton, and Matt has big plans to, uh, take the business forward, grow the, uh, company, and, uh, Thank you for joining me on the podcast, Matt.

You're welcome. That was a belting intro. It's better than, better than my wife knows me. So thanks for that.

Well, loads for us to go into, but where we always like to start is, in your opinion, what characteristics and traits do you feel really make up a highly successful recruitment consultant?

For me, it always came down to two very, very basic things, and that's purely resilience and determination to keep going. It's, you know, in our job we say no, not— we get told no and we say no 99% of the time. So you've just got to keep going. If you, you give up too easy, you'll, you'll fail in this sector. I mean, that can apply to lots, I'm sure, but every good consultant I've ever worked with has just had that single-minded determination and the resilience to keep going when it's tough.

Did you Did you have that from the very beginning of your recruitment career, do you think?

I'd like to, I'd like to think so. Um, you know, I imagine you'd have to ask some of the mentors and some of the people that I, that I worked with, but I was lucky to have some really high-caliber, uh, individuals, or I thought they were high-caliber, that, that just said snippets to me very early, which I still use today. I still use it when I'm coaching and training people today. Um, because it made sense to me. And it, you know, I think as soon as that— you have that light bulb moment, or it just drops and you get it, then it makes it a lot easier. Um, okay. If, you know, if you've been through some— not hard times, because that makes it sound like, you know, we're not getting shot at, and, you know, we're not in the armed forces or anything. So, um, but yeah, that, you know, that resilience is absolutely key for me.

So what— why I was really keen to, to speak to you, which also we've discussed before we started recording this, was obviously your journey with Wallace Hind and the sort of recent management buyout that— and that journey that you've been on. I think a lot of people listen to this will be within a recruitment business where if they progress their recruitment career, that, that may be something that's on the table. It may be a carrot that's been dangled in front of them by the owners of the company that they work for. And then also at the same time, there'll be people listening to this that have their own recruitment business that, um, would see this as either like a great option for them to actually sell the company, um, or an option that they actually really like the idea of because the story can continue, uh, and they've given their leadership team a great opportunity to, to carry on, um, with the business. So We're definitely gonna like go into that in detail. So, um, but where I just wanted to very quickly start was just early days of your recruitment career. So you started in the high street environment, um, is that fair?

Yeah, yeah, yeah, yeah. I, I walked into their business one day, sold them some ad copy, and, uh, the branch manager turned around to me and said, oh, ever thought about doing recruitment? And I had no idea what recruitment was. I'd worked for agencies when I was a kid, you know, stuffing envelopes, factories. I thought that's all what agency was. And at the time I thought, yeah, why not? I mean, it's something different. I think, I don't know about today's recruiters, but certainly I think a lot of my generation of recruiters, that's how we got into it. You know, we went to register with a recruiter or you sold something to them and someone somewhere went, oh, you can do this. Um, so, uh, so yeah, and, and, you know, I started in— it was a pretty big, um, high street. They're not around anymore. They, um, they got purchased and then sold a couple of times. But yeah, I, um, I, I really enjoyed it. It was fast-paced. It was just the people element was, was what helped me.

So let's just, I guess, if we can, try and maybe try and condense those first 4 years. Like, what— obviously, you clearly— what, what's, what's always happened, it looks like, is you've really taken the opportunity to progress your career. It looks like obviously you've worked in two companies, but both times you've really been someone that hasn't stayed stagnant and sort of taken opportunities internally. That's, yeah, like becoming a branch manager, becoming a director, these things. So like, how, what, what were some of the things that you were talking about, some of the things that you learned from other people that you still use now? What were some some of the things that you learned in those 4 years that have really remained or stuck with you, do you think, that could be interesting for people to learn from or hear about?

Yeah. Oh, you're making me give away my trade secrets. Is that what you're saying? Come and work for me and I'll share everything. We're growing. Yeah, best advert ever. But it was the freedom Well, you earn the credibility to gain the freedom to have a go. I was never afraid of having a go. We were talking about this yesterday. I took my first ever job on, on my second day. I had no idea what I was doing and called this company. They said, oh yeah, we're looking for— I can't remember what it was. I said, and I passed my, I passed my handset to my branch manager and said, oh yeah, let my secretary take the details and then I'll come back to you. Who does that? Um, it was bizarre. We— I can't remember if we filled the job or not, but, uh, she gave me a clipper. That was when you were allowed to get a clip around the ear, by the way, as well. So, um, she said, don't ever call me your secretary. Um, but it was, um, a phrase that I use a lot, and that I was told back then that I use now, is if the marriage breaks down, you don't blame the vicar.

Tell us more.

Right, and as recruiters We are putting two people in a room, you know, we can't take any credit. If I placed you in a job and you were amazing, I can't take any credit for how amazing you are post-placement. That's down to you and the company. And if it fails after 9 months, 12 months, I'm not taking you to work every day, I'm not coaching you, training you. So that phrase of, you know, if the marriage breaks, it's the two people in the marriage that make it work, not the vicar. Um, you know, the vicar is pretty important all the way through, but But ultimately, day one together, you know, you're there. And that just stuck with me to understand the role that I played as a part of the recruitment process. And then the second thing was, or the second really important thing was, it's not personal. It's never personal. You know, people don't want to— people are saying no to you not because they know you and your family and your beliefs and your morals. They're saying no because they haven't got any vacancies, or they don't want that job. It's, you know, this is people's careers. And again, as soon as that clicked, that, you know, this is someone's career you're talking about, um, you know, it made a big difference. And it— I stopped taking things so personally.

So, so I hear that. I think that— I'm sure you've seen this show up in people that join your— join, um, What Is Time. But like, what's your advice for people that maybe are finding themselves— maybe they might be earlier on in their career and they're finding themselves, taking a lot of the things personally. That person accepting the counteroffer, or that person not showing up for an interview. Like, what, what's your advice to me if you find— if I'm in your team and you're just seeing these things really affect me and take it personally? I know it sometimes doesn't just happen overnight, but what would your advice be for me?

And it can be lots of little things and they just niggle away at you. Well, what we can do is, is look at your process, look at what you're doing. Can you do everything that's in your control? You know, now if you can control the things that are in your control, fantastic. But unless you are picking Dave up and taking him to his interview and dropping him off, you can't control if he goes. You know, with those of us that have been in recruitment a long time, the volume of granny's and auntie's funerals that have happened on the day of an interview, uh, for reasons for people not to attend is, is incredible. But You've just got to, you know, this is someone's career. If you can look back at, did you check the interest of the job? Did you call them to wish them luck? Did you know that they had other things going on? And if someone takes a counteroffer, they feel it's right for them, not personal to you. If you've done your job properly, then you can hold your head up high. I mean, that was one of the— we switched to a retained model 10 years ago, and that was one of the big things that also help people not take it personally. Because in the nicest possible way, you get the job, the next candidate gets job, I still get paid.

So I'm not—

I don't have— I'm not biased on whether you get it or someone else because I'm— I've been paid. So I'd say if you can— if you haven't done something that's in your control, own that. Make sure you don't do that. Don't make the same mistakes over and over again. If it's physically outside of your control, accept that it's outside of your control, because otherwise this job will drive you mad.

Yeah, no, I think that's it. And I think that the sooner you can have cultivate that mindset, the better. Because I think, yeah, that whole idea of like, like you said, being willing to look in the mirror and go, right, what— firstly, understanding what parts of the process do I control, or that. And then once you understand that, it's then like, okay, let's actually— obviously, one of them, the guys that we have involved with Recruitment Mentors, one of the sessions that he done, which you— is probably quite common, is he just calls it like the post-mortem of like a deal, or a deal that fell out, and then you, like you said, you break down that process and go, right, what, what, what was it on my shoulders that I didn't maybe do so well with, or I can improve? That's what you should be focusing on rather than this, this such-and-such has happened which was out of your control.

Yeah, the only thing I'd say to people is do the post-mortem on everything. Yeah, okay, because when it's gone well, what have we done well? We focus as sales professionals, people focus on the negative far too much. You know, we've got a 95% success rate with filling our vacancies, every single company I pitch to would go, oh, what about the 5%? Now I've got to come back to that, but my point is, if you can look through a process and think, oh, do you know what, I got away with one there because I forgot to call him or her, or, you know, I forgot to call the candidate to wish them luck, or I forgot this, I forgot that, then, you know, it makes you— makes sure you don't make those mistakes next time. So postmortem the bad stuff, absolutely. Postmortem the good stuff. Let's pat ourselves on the back when we get it right, because like I say, 99% of the time it's no, we've got no vacancies, no, I'm not interested, no, I'm sorry, I can't progress you, Hishem, you're not right for the job. It's one vacancy, and if you get 400 applicants, you're saying no 399 times.

Yeah, it's a really good point. Yes, it's a great, it's a great, it's a great, um, thing to be doing on a consistent basis. Look at what you did well. Again, you will then cultivate like a reflective mindset. Like most high performers that I've interviewed, they sort of incorporate this in their weekly, monthly sort of reviews of like, right, what has been working, what hasn't been working. Because it can be very easy to get complacent, do what has been working, but, and then you're just like, I'm going to keep trying to do the things that have always served me. Do you get what I mean? So I think it also sort of encourages that self-awareness and sort of self-reflective mindset, which most high performers have or are willing to do.

But most training programs will talk about a reflective element, you know, and don't focus on— yeah, there's elements of breaking it down, but ultimately what happened, you know, and that's the post-mortem thing that your colleague's talking about. What have actually— what happened? And then you can say what was, what was good, what was bad, what can I improve, what was out of my control. We've all made placements where it's, you know, you thought, crikey, how the hell did that happen? But, you know, it makes up for the ones that you absolutely think that you've nailed everything and something goes wrong, something out of your control.

So let's, let's take this into what is Hymn then. So really excited to sort of dig into this MBO journey. So let's just sort of frame this up for people. So like, what did you join the business in 2004? What, what did the, what did the company look like when, when you joined it?

So Wallace Hind has always been a, a boutique recruiter. The guys that set it up, you know, were ex, um, you know, they all were for big national, a big national recruiter that again people of a certain generation would know. Those, that, those names aren't around anymore, so you know, you wouldn't know them. But, and, and they just thought this can be done better. You haven't got to work till 9 o'clock at night. You can earn a good— you can earn good money, provide great service, but you can go home at 5 o'clock. Um, and particularly in Northampton, again, we're, you know, we're going back sort of 15, 20 years, but, you know, before job boards were, you know, a huge thing, if you wanted a job, you either went through a recruiter or you looked in the paper on a Thursday or a Sunday or whatever it was. So, um, you know, Wallace Hind had a fantastic reputation locally. You know, if you come up again— I used to come up against them all the time and lose because they were better, they were more credible, better experienced, and they were just always, for me, this business that were up on a hill. And I always thought if I left the company I was with, I was never going to go to another high street because it's just the same job in a different brand. Um, I had a, I had a, I have a 22-year-old daughter now I'm very proud of. But, um, yeah, so I had her, I was very young, and I was finding that she was in, she was asleep when I got up in the morning, she was asleep by the time I got home at night, and I was missing out on her growing up. So, uh, I thought I was never going to go to one of the cities, um, so I joined this place and it was it was like my eyes opened to what recruitment is, because I was filling credit control jobs and receptionists and this was different stuff. Yeah, I did the— I did the— well, it was commercial high street, you know. So the biggest salary I think I ever worked on— and again, we're going back to 2000.

Yeah, yeah, yeah, inflation.

Yeah, yeah, the biggest salary I'd ever worked on was 25k, and I thought I was the dog's wotsit in the office. Um, The first, the first job I, I worked on at Wallace Heim was a £42K national sales manager, um, and I didn't realize this because the info was wrong in the CRM system, but I got the company to travel, travel over from Ireland to interview here in Northampton, and I had candidates travel from Wales, uh, Birmingham. I saw 4 candidates travel from all over the country here because that was— it was the way I was— that they taught me to do it. I said, no, the clients come here to interview, candidates come here to interview, you don't go out anywhere. And it was like almost this bravado, um, and, and it, it, it almost snobbery. It wasn't snobbery, but it almost came, no, no, no, these guys need us more than we need them, so they should come to us, we're the professionals. So, oh, okay. And I just followed that. And as soon as you start pitching and selling that in that way companies, they buy into you and believe you, and they're right.

So, so, so how— so let's just— so let's just paint the picture then. So how big was the company when you joined it? Like, what, what did it look like?

Uh, it was probably doing a turnover of around a million pounds. We've only ever been one site. We employed— I'm gonna— I mean, yeah, we weren't holding to this, but like, rough guess, I, I guess it may be, maybe similar numbers, probably maybe 20, 22 people. You know, I remember them saying, you know, we want to get to what they— when I joined, their dream was to have $2 million turnover and, and 20 billing consultants and then support staff. Um, and it always felt like, it always felt like a you know, a reach because it was doubling their turnover. It was doubling the stuff that they'd done before.

And how many, how many, how many, uh, founders were there? How many people started the business?

3. So 3 original founders, uh, started the business back in '92, and they had a silent partner, um, who was in fact Mr. Hind.

I don't know who that is.

Wallace was, uh—

Oh, Mr. Hind. Sorry. Okay, got it.

Yeah. No, so he, so he invested half the money And the other 3 guys, and whether they'll see this or they'll be on golf courses or Marbella or wherever now, were John Gowen, Gerry Bell, and Mike Causley. And Mike still, Mike and Gerry actually, to be fair, are still involved in the business. But their original idea apparently was GBH Recruitment. Mira. Now those 3 initials stand for something else, so I'm not sure. You know, uh, I'm not sure. The story was they, they, yeah, they looked at, looked at dictionary, you know, what goes really well with Hind, and they came up with, with Wallace Hind, uh, and another colleague who joined very shortly sort of added the selection because, you know, we, we're not, we're not bums on seats. We're selection. We select people. It's, it's going out and finding them and, and it's a process, not, you know, not a churn, not a, not a batch thing. So it became Wallace Hind Selection.

Cool. So that, that's what the business looked like when you sort of first joined. So let's just go into the timeline of this. Let's just go into this MBO journey then, because I think that's what people will be most interested in. And I think what's also really exciting for what is high now and moving forward. So, so that's where it was when you first joined. Like when, when did it sort of, when did you start first, I guess? Start realizing or becoming aware that this was a business that you could potentially in the future be a part owner of? Or however it— like, when did that first, like— because obviously you've been at the company for over a decade, so like, when, when did it first start? Because I think some, some people will have these aspirations, some won't. I think a lot of people will, will have this carrot dangled in front of them, if that's like an employee share scheme, or like, like, that's a big sell, right? It's like you can come join Wallace Hynde, be part of the journey, you can end up owning part of the company, etc. So like, when did this first start becoming a potential reality for you, do you think? How long ago?

Okay, um, well, we, we do that, by the way. That's something that we do and, and the business has always done, and, and I'll absolutely pass forward. So I guess in terms of the actual MBO, we got to 20 We were absolutely flying in, in 2009 and then got smashed by the, the global crisis, and it took a few years to, to get that back. But probably 2015, 2016, we hit that number of staff. We hit sort of £2 million, um, rather than 3 founders doing little bits, you know. An MD had been— one of them stepped up as, as MD, so we became more professional. We had training. And, and that's really— to that point, because I was— I'm 10, 12 years younger than, than the founding partners, I suppose I always said I want the next step. I want to be a part of it. If you pay me more, great, but I'm not interested in that. I want to be a part of the strategic development and the stuff. And, um, so 2015, 2016, we started talking about exit strategy. You know, these guys are getting into their mid-50s and they wanted to, you know, call it— when can we call it a day and realize the 30 years hard work?

So how did that even— like, talk to us about when we started, like, what that conversation looked like. Was it down the pub and we were talking like candidly? Was it like quite professional? Did you sort of bring it up?

No, it was— I'd say it was a mixture. You know, we were sat in the boardroom— at the boardroom sounds very grand. We're in a beautiful— we are in a beautiful vicarage, but We're in the largest room that we have that we christened the boardroom, um, because Wallace Heim was set up as a partnership. So there were actually, when I first became a partner, there were, uh, there were 10 partners and only 25 staff. Okay. So, um, and that's when, you know, it certainly wasn't me, but I'm pretty sure, um, in one of those meetings somebody um, sort of talked about exit strategies because they'd always talked about maybe selling at some point, um, but nothing serious. And that started me thinking, started the MD thinking, and, and then the very next meeting we said, right, well, our exit strategy is X, you know. And, and it went around the room, how long people wanted to stay, whether they'd be interested in taking it on, how would they feel about a sale. Um, what that would look like. The three founders obviously had their own conversations because they had a bigger stake, uh, and we took the decision that, um, in one of those meetings took the decision that they would offer the opportunity for anybody to put their hat in the ring to do an MBO, um, that was from— yeah, um, yep, uh, and they were going to invite— they, they paid a a commercial sales business, recruitment specialist commercial sales business, to come in, audit the company, and take us to market. So, um, myself and a colleague sat down, looked at it, um, felt that we were the right age, the right experience. We had some good credibility in the business, had some— had loads of drive and passion to where we wanted to take it. Um, because the founders will openly admit, when they got to 2 million, when they got to that goal, it was like 'Yay, we've done it!' And, and you got me and a couple other people, 'Brilliant, what's next?' 'No, nothing's next, we've done it.' 'Well, I'm 40, what do you mean? I've got, I've got, I've got more to do.' Um, okay, so, so yeah, kind of that, that helped as well. But the, the, you know, the team here are brilliant. Um, you know, but I obviously never done an MBO before. Worked with lots of clients. So I started talking to HR directors, managing directors, owners, financial directors of businesses that I'd supplied people to, and people that I trusted. You know, what are the pitfalls of doing this? Where do I start? Um, what's involved? What was— and I got some great advice from some people that I trust, uh, you know, immensely. Um, okay. And we put a plan together and, and sat down and started doing the hard work.

Okay, cool. Thanks for sharing that. So, okay, so let's just break this down a little bit then. So, so that was around the time, yeah, as you said, you actually started to go on this journey. It's around 2016, as you said, then. So at that stage, again, just to paint the picture for people, because I want to try and make it just as easy as possible for people to relate or like compare it to where they're at in their teams and stuff. So like, what, what was it, what was the structure then? So are you all completely perm business? Did you do some contracts? Is it all permanent?

Yeah, no, we're— so Wallace Hinds, 100% perm business. It's split in 2016, and it still is today, it's split 75% retained, 25% contingent. Um, you can probably see the most of the, the categories behind me, but Yeah, um, the challenge— yeah, so sorry, I'll get ahead of myself, but yeah, different verticals. We have recruiters that specialize, we have recruit— you know, I've always pitched myself as a generalist. Um, I've got more experience in recruiting certain functions than others, but you know, I've turned my hand to most things over the years. Um, so yeah, it was 100, but 100%.

Okay, cool. 100% perm. I think the key part there which I'm interested to find out from you, like how much of an impact it had, was the 75% retained piece. So 75% retained work, 25% contingent. And then also at that point, you said that obviously like the MD and you like were really driving it forward, but at that point there was what, 10 partners that could also go down this path as well, could have been part of the journey?

Yeah, yeah. So there were 3 founding and then 7 of us. Yeah, but so 10 in total, but the way the percentages worked, you weren't percentages, or you could buy in if you wanted to once you'd hit a certain criteria of service and billings and all the rest of it.

Okay.

Um, and 1, 2, 3— 3 of those. So the 3 founders were always getting out. So it was from the 7— 3 of the 7. Um, actually, 2 of them have been involved since, you know, were basically recruitment number 1 and number 4, I think. So they were in a similar category. So were probably looking to get out. So it only left really a few others that were going to drive an MBO, right? Um, you know, if we had the appetite for it. Um, you know, so we, we sat down as a, as a, as a four, um, you know, and had some pretty frank conversations. We'd worked together for a long time, and, and there was lots of honesty in there, which really helped. Um, you know, and actually, as, as it turns out So two of their founding partners still here, and, and they'll be working for a couple more years at least. And then two from the seven are also still here but weren't involved in the MBO. So the actual MBO in the end was myself and, uh, at the time, uh, three employees, four employees.

Got it.

So they stepped up.

Yeah. So before we talk about you going to market and the learnings and stuff like that, just, just to like sort of talk a bit about this early part. So in, with hindsight, if I'm listening to this right now and the conversation's been happening, it started, the founders and owners of the company that I work for have said an MBO is on the table, we're open to it, um, we like the idea of it. And I'm, I'm someone, maybe one out of 3, 4 people who are directors, associate directors, and this is something that me as an associate director at that company, I'm really excited about and I want. So I guess what I'm keen to just get from you is, I know you said there's a lot of honesty, but like in hindsight, if I'm at that sort of stage, what conversations, questions would you be asking, knowing what you know now, to my peers, to the owners that you think could, I don't know, just help move it forward in the right direction? Or and also help shed light on, like, is this a reality that, that's achievable? I don't know, what are some of the things that people should be asking, finding out, that you think is really key at that stage?

So yeah, okay, great question. Um, the first, the first thing I probably— I would have done probably a bit more research into it. I was perhaps— I got I think I got caught up in the—

I can own the company.

Yeah, yeah, do this, we should do this. Yeah, um, that's a lot of work, that's a lot of due diligence, um, and if you've not worked in a corporation, if you've not been exposed, you know, again, I've worked— at that point I'd worked for a boutique recruiter in a little village that no one's ever heard of for 12 years. I hadn't been exposed to some of this stuff, so Absolutely do your research. There's lots of information out there on online. Um, have very clear goals about what you want and what you're prepared to give up and negotiate and what you're not. And, and that comes down to the people that you're going to do this with. Working with somebody as a director is one thing, working with them as an owner is a different kind of fish. You've got to be, you've got to be transparent and really clear about your priorities. Because if me and you are going to go into— you and I are going to go into business together, if one of your core values absolutely contradicts one of mine, this isn't going to work. And this is a conversation we would have never have had because we're directors that work in the same business.

You may not have those conversations, but they're necessary.

So you wouldn't have had those conversations. So Yeah, they're necessary, you know, looking at the team around you, um, and who you're going to do this with, who's going to play what role and why, um, and then making sure that that's something that you're prepared to invest 100, 120, 150 hours in outside of your normal job. Because whilst you're doing an MBO, you've still— I'm still an employee, I've still got a partner, I've still got a a number that I've got to produce. Um, so yeah, it's, uh, it's, it's—

I— oh, that's good advice because I think, I think it could be easy if I, again, trying to put our shoes in someone that has, has got this idea of owning part of the company they've absolutely grafted in. Like, it's exciting, right? It's positive. It's something to tell your mates about. I'm going to own this company one day. All these things. And you can get wrapped up in that But I think obviously the advice you're giving here, which you obviously have had to learn through challenges or maybe even the hard way, is, well, if I was to go back and start again, like, let's have these really honest conversations like now at this very beginning stage. And I think the good thing about that as well is that like if you're starting to think about who's going to do what, like what our values are, what's important to us, that also makes it even more real. When you're having those conversations?

Yeah, absolutely. Well, it starts as a pipe dream, right? Who's gonna lend, right? So who's gonna lend me £2 million to buy a company? How do I find somebody to lend me £2 million to buy a company? The next thing that you have to do is, is be very real about the price.

Very real about the price.

Of the company, about the commercials of what you're gonna—

yeah, yeah, yeah.

Because again, I'm buying the company from you. You— it's no different to buying anything else. You want as much as you can get, I want to pay as little.

Yeah. So let's go into this part of the journey then. So we've spoken a bit about like the beginning. So as you said, the obviously founders then obviously got, um, I'm assuming— I don't know if this is common practice, but they then obviously got like an impartial organization to then come in and go, like, obviously value the company basically, right?

Yep. Yeah, yeah, absolutely. And then to—

and then help take you to market. Cool. So let's just talk about this, like, going to market piece. So just to frame this up, so you are— as you were just saying, so if I'm going to go down this MBO path, we would then have to go to market and find investors, people, companies who are basically going to fund and support you and whoever else is involved in that MBO in purchasing, yeah, the majority shares, or however it's going to be structured, from the people that started the company, right? Which is why you're going to market and you're basically looking to raise investment and get that investment. Is that right?

Yeah, yeah, absolutely.

So let's just talk about this then, like, where, like, how— so how involved were you then as a company? Like, would you, like, was you pitching to banks? Was you getting in front of PE firms. Yeah, but how involved were you?

100% involved. It's, you know, it's, it was, it's me and a colleague, um, that, that did all of that. We're leading the MBO, we were the face of it. And then therefore, you know, the, like you say, the banks, we, we pitched to all of the major banks and a couple of the newer ones. We, um, pitched to, we met I think 2 PE companies and 3 VC companies. And then there was— we were introduced to one or two, um, I think they're called angel investors or business investors, and, uh, as well. So, okay. Um, and I'd like to think our first pitch versus our 10th pitch was—

so we'll go into that, but just quickly, because I think it's good for context. Yeah, I'm not trying to get you to like share everything that's in like all the details and stuff, but I think it would just be good It'd be a good context. So like, how much was you— how much was you looking to raise? How much did you look into investment?

And, and this is why getting the price is important. The first couple of meetings, we were looking to raise $2 million.

Well, and that was too little or too much?

Um, uh, it was when we started to learn more about how those things were structured. Because 2 million— yeah, we'll take 2 million. Well, we want 2 million on day one. We haven't got 2 million day one. Well, actually, what number do we want? Does that involve the cash in the back? You know, so it was— 2 million was fine, but it didn't buy the, the cash in the bank or the building because that's separate, right? So now we need 2.7. All right. We haven't, right? But we can't, but we can't get 2 million without the building and the cash in the bank because that's— so understanding the price and what's involved before you go pitching.

So what did you miss then? I'm just trying to just understand.

We, we made, we made too many presumptions through lack of knowledge, um, and lack of confirmation about what we needed and what it looked like. And again, you know, the guys that we did, you know, the senior guys, they were also very open. Well, we thought that would just be the case. So as we got more feedback from partners and from banks and, you know, and again, we were very open about the fact, and I like to think this helped us because we got lots of feedback and support. Actually, I'd say 70% of the people we pitched to gave us Right, because you said we haven't done this before, this is new to us.

Yeah, yeah, so you like owned that.

Yeah, absolutely. Yeah, yeah, really, that's, that's important to me in everyday life, right? Whether you're talking to a candidate for the first time or talking to a bank and asking them for 2 million quid, this is my skill set, this is what I know and how I know it. I'm gonna— the reason I'm talking to you is because you're an expert. Um, so understanding that digging. I know about our financials. Trying to talk to a non-recruiter about our financials and how it works, they just— we had to come— they just didn't get it. Okay, what happens if you don't fill the vacancy? Well, we, we do. That's what we do, and that's what we've done for 25 years. Yeah, but what if you don't? Well, then we We only get two-thirds of the money. Well, what happens if they don't pay that? Well, they do pay that. Here's all the evidence of them paying that. So with— if you're selling a recruiter and you've got lots of temps or lots of contractors, you've got a plan that you're selling and those people are in work. With perms, it's a lot harder because once you've done your job, that's it.

Yeah.

And there were lots of— lots of— we found lots of challenges, um, Less so with the, with one of the, one of the VCs was a recruitment specialist, so they got it straight away. And one of the angel investors had done a couple of bits with that recruitment context as well. But yeah.

Okay, let's talk, let's talk about, let's talk about this pitching journey then. Let's talk about, because I think, because this is, this is probably where one of the steepest learning curves is going to be. So you've spoken around the presumptions, the just, yeah, because you haven't done this before. Like get, get really under the skin of like, what, how much money do you need to raise and all these types of things. So let's just say that we've done that. What, what can people like, what was you firstly, maybe what was you like most surprised by when you did some of these first early like, uh, pitches when you did them?

Oh, good question. Um, Uh, actually, for me, and my colleague may be different, but for me, uh, I was out of my comfort zone. Um, you know, when I've gone pitching to customers or I've done, you know, talks at seminars or, you know, days or whatever, I'm in control, I'm the expert, I've got knowledge.

So you felt vulnerable?

So it was that out of comfort zone. Yeah, absolutely. Um, you get asked questions that you don't know the answers to, so then self-doubt comes in, especially in situations like that. So yeah, those early doors, and, and then that self-doubt, then, or do I really want to do this? Should I be doing this? 2 million quid's a lot of money, you know. So, um, what was really helpful, the, the fact that the founders were involved and all the way through, you're really open with information, you know. If you're going to do an MBO You've got to have access because it's in their interest to have access to any of that.

Is feeling difficult, then it's like a red flag for sure.

Yeah, I've heard some horror stories. And the problem is you find things you didn't know about because, because you didn't have access or it wasn't in your remit to worry about it before. You know, I was really lucky. Wallisign has always been pretty open, pretty transparent business. You know, and the MD was— I think his preference was certainly to do an MBO over an external sale because of legacy, because of some of the stuff we talked about. Um, some of the other founders, maybe, maybe not, because, you know, getting, getting half a million quid to, to stick in your bank account and say ta-ra was good. Yeah, it's a nice reward for 30 years.

So vulnerable sale, okay, I've got that. So Um, in, in terms of that then, so I guess let's just try and, again, hindsight is a great thing, which is what's great about this podcast. So if I'm— so let's just— I would try and get your advice for people that might be going on this like pitching journey then. So if I, if I've done my due diligence, I've hopefully really understood what we need to be raising, um, I've, I'm working with founders that, uh, being cooperative, they give me all the information that I need. Like if you were to speak to Matt before he went on that pitching journey, what advice would you give him to hopefully maybe just get more options, get more out of those pitching opportunities that meant you had different options to potentially achieve the MBO, get the investment? What advice would you give yourself and people that would start that?

I'd, for ours, because because it was retained and continued. You know, we'd have— and some of the verticals that you see behind me, and some of the— before we were just recruiters and we didn't, we didn't put ourselves in the shoes of the buyer enough to lay it out, to have virtual so they could see what they buy. When you're buying a recruiter, typically you're— well, lots of businesses, you're buying goodwill. So I just got to make sure you put yourself in the shoes of the buyer or the investor and be— and ask those stupid questions of yourself. Kick out presumption. What does that mean? How does it mean it? Could you— we should have gone and pitched to our wives, our mates, people who don't know about recruitment but, but are in decent jobs to understand it, so that if they don't get it, then to double-check that, that— if— yeah, absolutely. If they get the proposition, if you know— and we all know commercial people, right? Uh, so if they can understand the commercial proposition, then, then you're a lot better prepared. Um, it's not that we didn't know it.

No, I got you, man.

What we didn't know was what the other person didn't know, and that, that's what, that's what killed us in the first couple.

I like it.

I say killed us, it, you know, they were very— because I think because of the transparency, the humble humility, and the genuine nature of what we were trying to do, actually Um, definitely 2, 3, definitely 2 of the major, major banks were really helpful. You know, they pushed back, need to know this, this is how you break it down, this is— and, you know, they work with us to then go again.

So what ended up being— so 2 things— what ended up being the most valuable part of the business, like, or part of that pitch? Or I know there may not just be one thing, but like, what— because I think that, like you were saying, it's a recruitment business. So I think obviously you might tell retain piece, but I don't know, because it's a perm business, it is more difficult from what I've learned and the conversation I've had. So what ended up being the part that these investors were like, that's really good, or you felt like was one like the lead domino to go, you know what, this is actually something we'll consider? And then I'll ask you a question after, but that, that's the first thing that comes to mind. Now, what ended up being like the really core things that really got these people excited about the investment?

Once they understood the return piece, absolutely, that was, that was key. Because again, the presumptions around perm and how the payment structures work, um, was, was critical because it's about cash flow. Because we haven't got— constantly buying a business that doesn't make anything, it's all goodwill, and the laptops are worth X. As we found out, the building wasn't involved, and we're in a beautiful old vicarage that was worth X. You know, that turn, you know, there's no assets particularly, so I'm asking for a big chunk of cash for goodwill, really. So, um, getting across the retain piece, how it worked, introducing some of the PSLs that were on, which is, you know, and how that historical placements work. But it was, it was really, um, I think the retain piece was going because that, because perms is really challenging, really.

Yeah, I thought you'd say that.

To sell as a business, it devalues it it devalues it massively.

So the next thing then, which I guess segues into like how things played out and all of that, is, um, coming to sort of the end here. But this is what we want to do, right? I want to go— this would be so helpful for people. So, so thank you for like sort of being open and sharing all this. So then the, the next part really is then like, obviously, if I— if you're pitching to me and I'm looking to, yeah, fund this MBO, obviously then you need to be communicating in a quite sort clear way, like how I'm then going to make X back, or how I'm going to— so like, what, how did that then play out? How did then— how, how, what was the strategy around that? How are they going to make their money back?

Uh, so it was pitched over a period of time, and it was linked to profitability, obviously. Again, like, like any sale, it was linked to future investment and growth and being able to achieve some of the things we wanted to in, in the time scales. We got, um, we didn't get any offers from the banks, um, because we fell through the cracks. Yeah, they were looking to either lend more to capital equipment businesses or, or they were dishing out a lot of sub-million pounds, and it just wasn't— we were offered a million pounds by the bank, but it wasn't enough to get a controlling stake, so it wasn't worth it. Um, and we had one PE and one VC offer, um, and we rejected both of them Both. The first one because of— can't quantify— gut feeling.

It didn't feel right.

I didn't feel right. Didn't feel right. And I thought, this is—

you got to listen to that.

Just not— we're not using the same language. We're not— yeah, this guy. And the other one, the payment terms were horrific. It would have took us to the wall. Um, and we didn't feel that— we felt that we'd lose some of our heritage and our integrity. We don't have— so the only KPI a consultant has at Wallace Hind is the number that they've got to achieve over the year. That's it. If you do that with one placement, one phone call, happy days, take the rest of the year off. Yeah, if they do a million phone calls and a million placements about a pound each, well, you know, you're going to work hard, but fine. Um, and we thought— we, we just felt that we'd lose that element because we'd have to drive. So, you know, you wouldn't be able to have any give at all. It would be black and white, and, you know, we'd turn into one of those corporations. Yeah. So we ended, we ended up rejecting the offers we got, um, and the proposition that we actually went with was one similar to, um, one similar to accountants and solicitors, how they get, how they do it, which is where the business effectively buys itself over a a 5-year period, right?

Just, just talk to me about that in layman's terms. Sorry, what do you mean? So if we were— the stuff you can share, we've—

yeah, uh, so we created— so Wallace Hind Selection Limited is a brand new organization that started on the 5th of July. Uh, we purchased, uh, Wallace Hind Selection LLP, uh, for a nominal figure, which was a—

which is that— which is the money you raised or not? Oh no, no, no, no, no.

Okay, sorry, this is, this is a normal—

just to like— so it's all the paperwork, changing, you think changing your pocket?

Okay, right, because it's a sale, um, and then you sign, uh, we've signed, so we've got it lock, stock and barrel for that nominal fee. It's a bit how it's sometimes how football clubs are sold, uh, so we acquire all the good stuff and all the bad stuff. Um, creditors, debtors, what have you. And then we've signed personal loan agreements with the founders to make payments to them based on a set of criteria over the next 5 years.

Got it. And that's— and then that's the money that— so that's the money that you raised, and that's the money that—

so part of that is the money. So there's no— in, in this model you, you've got no outside investment to answer to. You've only got yourselves because it's an agreement between the new company owners to— and those founders as individuals, as personal individuals.

And then if you don't mind me asking, so it takes them—

they've, they've got— that's them really, because they don't get a big payout they want.

And if you don't mind me asking, like, what, what happens if you don't hit some of those things? What would happen? Would it, would it be like a cost on you and the The contract's 93 pages. Okay, fair. So like maybe like the layman's—

So there are, so, well, look, you know, it's so they can, they can force, so we've got a trigger point, a profit trigger point that at the minute we make X amount of profit, then that the next X amount of figure goes towards paying them and it's a set fee. If we want to pay more, we can. Bit like any personal loan that you have as a consumer. If you want to pay more, you can. If you— if we fall below that figure and have a tough year and we want to pay less, then we sit and have a board meeting and talk about it. They can force through their sum, but if they force through a sum that bankrupts us, they don't get payments in year 2, 3, 4, 5.

So it's still quite collaborative. It's still quite—

Yeah. Oh God, yeah, absolutely. And, and, um, you know, so one of the three is retired. Like I say, um, the other two are still here, but one, um, one's retiring probably in April, and then the last guy will stay for another probably two years because he loves it.

Okay, bless him. Got it.

Uh, so yeah, it definitely—

yeah, yeah, for sure. Okay, I love that. And then, so main positives, I guess, high level for them is Yeah, they're not just getting one sort of hit, it's over a period of time, um, which I guess is a nice thing for them.

Tax-free earnings of some, some nice figures year on year for the next 5 years.

Benefit for you is—

or, you know, well, but yeah, no, I was gonna say, well, the benefit to us is no, we've got no, no pressure from a, from a bank or a VE or a— sorry, a PE or a VC. Um, you know, well, I suppose they are, yeah, because they're still in the business, they've got visibility of what's going on. That might change in 3 or 4 years when, you know, they're just coming to the board meetings, but they've still got, uh, it's in their interest for you guys to do it.

Yeah, exactly, exactly. And that's key.

Yeah.

So who, who put up the funds then? Was it a—

so the business funds? So, so because, you know, if we fail— and I'm hanging on to a large table of wood, right? Yeah. So, you know, if everybody fails, nobody gets paid. So, you know, this is a massive leap of faith for them in doing it this way. But their alternative was they got, uh, they got two external offers to, to buy. One was a lowball which they decided to reject, and the other, the three of them actually felt a bit like I felt about the VC and said, 'He's just going to strip it and kill it.' And that didn't sit right with them. And that's a testament to their— and who could blame, you know, if you put your life into 30 years into something and then you got your payout and you left.

That'd be a horrible feeling, that, wouldn't it?

Some people will care about what happens afterwards, but some people will take their money and run. Uh, we were lucky that they were the 4. Yeah.

Okay. So just to make this crystal clear, and then we'll wrap up and just find out what the new chapter, what you're excited by. So like, just, I just want to make sure I understand this. So obviously, yeah. So basically they're getting that payout, which everything that you've agreed over 5 years. So actually you didn't actually take any external investment. This is all driven by Wallace Hind producing X each year over the 5 years, but what you've agreed. Is those founders will get X per year, and once all that hits, then you'll then become the majority shareholder, or the— yeah, they will no longer be the majority shareholders.

Uh, well, so because they are— because the way we've driven the contract, I'm the majority shareholder of Wallace Hind Selection Limited. It's just that their liability— there are liabilities, there are debtors we've got. Yeah, yeah. So I— so the day I signed that contract because of the stake that I've got, um, I was actually saying yes, I now own 50% of a £1.6 million debt.

Yes, but that's right. Yeah, well, I just explained. So then, yeah, okay, cool, got it.

So there's no external investment? There's no— my— the people that I have to report to, my board so to speak, or my investors, are the people I've worked with and employed me for the last 17 years.

So talk to us about the next chapter, mate. What, what have you got on, like, how are we taking Wallace going forward? What are you excited about? What, what's, uh, what was— obviously we're gonna have to make this money.

I was crapping myself all the way through. Yeah, well, look, it's— yeah, well, we, we've got to. And, you know, the difference is these guys had this, this picture or this ceiling of 2 million, and, and then, and then the balloon got deflated when we got there, or got popped and stuff. I want to do 3, 4, 5, 10. There's no limit to it. Um, You know what, what the last couple of years has proved that there, you know, you don't have to be— we are in a beautiful old building, but we don't have to be, you know. We can have— you don't need multiple locations like these corporate high streets who have, you know, 100 locations and then have consultants fighting, you know. You can have different sectors, different— I mean, I'm working on a job in Asia, for goodness sake, and it's just a time zone. So you The, it's limitless, you know. I want to grow our, our target for that 5 years, it's 50 people, 5 million.

Limitless.

I can't, can't get that beyond that at the minute, but, you know, we want to, we want to grow. We want more of these, yeah, every function you can think of. And something that I've said to the team here and, and, uh, the new starters that we've got coming on board in the next few weeks is that I was given this amazing opportunity. If in 10 years' time, you know, I'll pass that down. Now, if, if, you know, somebody comes along and wants to offer me an awful lot of money to buy the place, then maybe that's different. But my goal at this point is to, is to pass it forward and do exactly what these guys have done for me. Um, but I need the people to do that, and it won't be a, a 20-person team and and a couple of million quid, it'll be 50, 100. Uh, we'll have, we'll have Hishem as our podcast director of, uh, recruitment excellence. But that's my point, there's no ceiling.

Love it.

And I want to, I, I, and I want to get people into this business that, that think, you know, it's commercially, it's got to be right. We're not just obviously chucking money at stuff, but come up with an idea, want it, I sat in every single meeting with my bosses from the day I started that, you know, what's next? I want to do more, I want to be more involved. And, and that's what I want from people. And not everybody's like that, which is great. You need people who are a thing. But, you know, getting— just, just own what, what you want and, and don't, don't set yourself a ceiling.

No, I love it. Well, um, Matt, honestly, thank you so much for sharing that. I think that will— that would be so insightful for to so many people, which is why I was so excited to record this conversation with you and really excited to see where it is in, uh, the next few years. And I absolutely love your mindset. I think kudos to you, mate, on like— as I'm sure you've been around those conversations, I'm sure many people at Wallace Hind early on were down the pub going, I'm gonna own this company one day, or I'm gonna be this or that. And you've, uh, you've made it happen, mate. Um, and I know it probably feels like it's just starting, it's just beginning again, but it's, it's really exciting and really appreciate you, uh, sharing that all with us. And I know obviously you're always happy to chat to people if they may be going through similar things on a similar journey. So yeah, definitely connect with Matt on, on LinkedIn if, if this is a conversation that you'd really like to have with Matt. Um, but yeah, congrats, mate, and excited to see how it all unravels.

Yeah, no, absolutely. Well, keep in touch and watch this space.