Simon Brown - Growing a recruitment business & everything you’ll need when considering an MBO

Welcome to the Recruitment Mentors Podcast. My name is Hishem Azzouz. Today I'm really excited to be joined by Simon Brown, who is the founder of Digital 51. Digital 51 are a startup consultancy specializing within product design and development. Simon has worked within the industry since 2014, uh, 2004, um, within that time he's worked for multiple brands from Reed, Morgan Hunt, Cooper Lomas, and Digital Gurus. He has always managed to progress his recruitment career within these brands, and in his last 3 positions before he started Digital 51, he was in a director position and sat on the board. However, in March 2021, Simon thought it was time to, to go on his own recruitment entrepreneurial journey. So he launched Digital 51 with his co-founders with one clear mission, which I think is really unique and, and great about this when I spoke to Simon. So that clear mission is for the business to be employee-owned and for Simon to give away the business in its 11th year to all of the people that have helped it become a success. So that's by 2032. There's no small print, there's no catches. You can see on their website, Simon is committed to, to making this happen. So right now they're in their first year of business. They currently have 6 people in the company. Um, Simon was just telling me that they're very close to hitting their first year target. They're 8 months in. So, uh, yeah, have had a good start and have big plans for 2022. So Simon, welcome to the pod.

Thank you.

Awesome. Now I'm really looking forward to this. So there's loads that we can go into, um, there's a few things that we're gonna focus on, but where I always like to start is the million-pound question, and that is, in your opinion, what characteristics and traits do you think make up a highly successful recruitment consultant of today? What does that look like for you?

It's so funny that how it— for me, it's, it's changed.

Yeah.

Over, over the time. And, um, obviously listening to the pod, I had a feeling obviously you'd kick off here. And do you know, right now, um, if I could have anything, I'd have, I'd have curious people. I'd have a curious mind in, because I think that historically I'd hit you with you know, drive, determination, resilience. But I think that it's— I think it's gone past that for me in terms of I think you really need to have that curiosity of what's happening within business, what's happening within people, what's happening within the wider economy, digitally for us. And therefore, like, top thing right now is curious. The other reason is most people aren't looking for that. So therefore, If you look for that, you find people who stand out. So people who are curious in that way, I think that you definitely have to, you have to have a passion and you have to have a passion for what you're doing and why you're doing it. And your reason can be completely different. And it should be that, you know, if you're starting out, your reason should be different to me at this point in my career. And I shouldn't be trying to put mine on you, but I think you've got to have a passion for what that reason is. So on a cold Wednesday night away at Stoke, you can get up for it and you can really get it done, which in recruitment is the day after maybe a deal that's not gone your way or the Monday after a week before when things just haven't panned out. And it's that passion is, in my opinion, most important to keep you going.

Yeah.

So for me, curiosity, passion, we teach you the rest.

Yeah, I love that. So obviously being in recruitment for some time, right, so there's obviously loads that we could unpack here, right? But as we're just saying, where, where I really want to focus on is, yeah, just talk a bit about why Simon has always managed to progress, because most people listen to this will have aspirations to achieve promotions, achieve top real estate is, wherever it may be, maybe even start their own company. Um, so we're going to talk a bit about that, but also, uh, really sort of, um, keen to dig into, uh, the MBO journey that you experienced, which didn't obviously quite happen. So we're going to talk a bit about that because I know there's— let me just mute myself. Sorry about that. Yeah, I always forget that there's a fire alarm on Fridays. But yeah, as I was saying, do you live in Student Pigs? No, they just do it every single Friday in the office. It's fucking annoying. So, um, no, what I was saying was, yeah, I want to talk about the MBO piece just because I'm speaking to a lot of young aspirational leaders in companies right now, and that really seems to be the most common carrot that they're getting is like Simon, you're an associate director, you're a director, and we want to sell the company or we want to achieve this. So yeah, keen to dig that into with you. And then we'll then really talk about, yeah, last, last 8 months or so, Digital 51, you obviously finally took your own, took the leap to start your own business. And we'll talk a bit about what that's been like in, yeah, the, the climate that we're, we're all operating in or have been in the last 18 months. So that's what we're going to work through. All right, so let's, let's start with then, like, when I say, when I say to you, like, why was Simon Brown able to get the promotions, get the director position, get at the board seat? Like, why was you able to— I know obviously it was from Reed you then managed to sort of achieve that. What, why was you able to get those? Because as we know, right, recruitment is competitive externally, but it's also bloody competitive internally. So like, why do you think— what comes to mind when I say, why do you think you was able to get those promotion opportunities maybe over the people sitting next to you that were trying to go for those as well?

I think, um, you know, first of all, it's a bit of an out-of-body experience to hear someone else talk about your journey and then and sort of reflect it positively, because I don't think we do enough of that. Um, yeah, and, and yeah, so, and I think at the time you're on the journey you don't— you're not always thinking about it. You're just, you're just doing, and you're in go mode, and you're just moving forward. Yeah, it is, it is competitive, it is busy, and you know, therefore you don't think about it till afterwards. But for me, I made a conscious decision to go to, to go to Morgan Hunt. I, I did just under 5 years at Reed, and it was, it was brilliant. It was the best place for me to start. I start— I started in the Liverpool branch on the desk, part-qualified accountancy, with a sort of team of 6 or 7 who were just experienced around me and that they sort of beasted me and got me moving. And plus the training was phenomenal, if I'm being really honest, and it was just they set you up in the right way. However, it took me on a bit of a journey around all things business development. I wasn't on a desk for that long, you know, it was only 12 months and then I actually applied for an internal promotion because one of the reasons I chose Reed was they had this national account portfolio. Yeah, I wanted to test that and say, right, well, does that exist? And I did apply for it and I was lucky and I got my first national account manager's job after, well, within my first 15, 16 months. That gave me a real flavour for pure BD, not job-based BD, but contract-based BD in terms of winning bigger contracts, pitches, tenders, presentations, national agreements. and that took me on a journey. And that journey took me to a point where, as much as I loved working at Reed and I loved what I built there, I wanted to be in a more entrepreneurial environment because it was a machine. It was a machine that worked and it worked at a very high end. But I wanted to work slightly differently at times. And that sort of, obviously, that's not how certain machines work. So I think the reason I was able to get just first of all on the path was I made the conscious decision. I, I chose to leave something that was good. And to be honest, I've always done that. I've always left wanting more. I've always left each position.

Where's that come from?

Well, I think, I think you've grown up, I think family. Well, I think you've got back yourself first of all, in terms of I quit Reed, I quit Morgan Hunt. Makes me sad, this makes me sound like a quitter. Uh, both of them happened around 4.

Sound a bit job hopping, mate.

Yeah, I'm a hopper. Yeah. Look on my CV, between 4 and a half years and 5 years, I'm itchy, I'm out. But it's a cycle for me. It's a cycle. I've always said this, you know, recruitment, it is monotonous. It is the same thing over and over again. And therefore you need to be stimulated and you need to be in that environment. So I quit. What I was saying is I quit those things and Cooper Lomas, to be honest, all 3 of them with nothing to go to. Really? Yeah. I backed myself when I was at Reed. I was a very good national business development manager winning sort of multimillion pound contracts across managed service. And I had a sort of decent name and brand and I thought I'll get something. I also, I still lived in Liverpool, but I covered nationally and I was like ready to move to London and sort of see if the streets were really paved with gold. So I went to an environment at Morgan Hunt which for the first 6 months I personally found really difficult. You know, that business was entrepreneurial to its core. It had the most boisterous, the most brilliant sales floor in London. It had 2 brilliant regional offices in Manchester and Birmingham, and it was high-performing individuals. And for the first 6 months, I didn't really enjoy it because it was so, it was so sort of entrepreneurial. There wasn't a structure and that's what I was used to.

Yeah, he was used to that.

Yeah. And I remember sitting down with the director who I'd sort of followed there and my pitch to them had been, let me come, let me come. They had a, like a brilliant business development function, but it was really a bid function and I wanted to make it more client services, more proactive selling. Yeah. And after 6 months I just wasn't sure. I sat down with the director and I said to her, you know, I just don't think this is for me. I don't think I'm enjoying it here. I don't think, you know, I don't think it needs someone like me. And she said to me, we, we need someone like you, but not just for what you can bring from a BD perspective, but we need someone who's going to like shake the tree and unsettle things because it was going well, but it was contingent recruitment going well.

Right.

You know, they had a couple of bigger contracts, but really it was a contingent machine and it really was a machine. So I just thought, look, I'd moved house, I'd left Liverpool, gone to London, I'd put everything on the line really. So I wasn't gonna just quit again.

Yeah, you committed, you know.

Yeah. So I thought, um, pardon me, I thought, fuck it, I'm gonna give it a go and let's see what happens. So I just went on like a 3-month mission that I set myself, and at the end of 3 months, I wanted to— they had this brilliant quarterly awards, uh, ceremony where like high achievement was really, um, acknowledged, and I won the award as the best newcomer at the end of it. And that was it. I was in and I was really— that was turning point of people were responding. It was still difficult, you know, getting them to take me on meetings, getting to log stuff on the system so that I could see it, seeing some of the rates that were being charged and thinking, oh my God, you know, it's easy. It's easy for me to sell a contract against this and wipe every other supplier out because we're charging so much that, you know, we can undercut ourselves. But that's a bold decision. So it was difficult, but I was also starting to get buy-in. Okay, that buying went on for 2 or so years. Then there was a change at the top. MD left, and that was a really critical time for me. One MD left, new MD came in, and the mindset I'd always had was the risk I'd had by going down a BD-only route, not running a sales team, not being on a desk, not having a bill in line. I was always told I'd never be able to get to a board seat because you've got to have a revenue line, you've got to have a team. New MD came in, she was from within the business, so it was like a step up. So she knew the machine, she knew me, and she said to me, I can get you to board without taking a sales team because I believe in you. And to be honest, it was that belief in that environment. And even that was, you know, we had some hurdles to come across.

Yeah.

Things didn't maybe work the way I thought they should have. I've got a bit of a temperament. I threw my toys out the pram on numerous occasions. She was, she was the right foil. So I think the reason I like talk about that story so long is it all started there, to be honest.

Started there.

Yeah, yeah, yeah. Reed was where I learned recruitment, and I, you know, I knew that I could sell. I've been selling for a long time. I've been selling since I was like 14, so I knew I could sell. Um, Reed taught me that recruitment and the sell and the, and the consulting that goes with it Morgan Hunt unleashed like the, the belief that I actually wanted to make that my career. I wanted to climb the ladder and I wanted to, you know, to do it within that sort of environment.

Oh yeah, fair. Okay, so just a quick one, interested. What, what, what has been like, obviously, because you then obviously, so you, so it seems like it was a bit of a struggle at the start, then you got, then you obviously built some trust, credibility, like won that award, and then obviously obviously wouldn't have been plain sailing, but you had more buying, as you said. Then obviously Cooper Lomas, you went in at a senior level, then Digital Gurus, you went in at a senior level. So my question is, I think sometimes a lot of people listen to this who are like senior can be quite worried about going into a recruitment environment at sort of a leadership position or in a senior position. So what's your advice for people who may want, like you said, one, feel like they need to be stimulated, need a new challenge, but don't want to end up in an environment where they may end up being a leader who people don't like or they don't get. I don't know. What's your advice to them? People don't go into a new company and just are like a dickhead of a leader, to put it another way, basically. Do you know what I mean? New guy comes in trying to implement his own way of doing things. What's— because you've done that a few times now. What's the approach?

Yeah. Well, I mean, first of all, there's definitely going to be some people listening to this thinking, well, he is a dickhead leader, so I don't know what he's about to say at this point. And I guess maybe, you know, that's for everyone else to decide. For me, there's nothing worse than a stale director. There's nothing worse than a stale leader in this industry because you have to drive your teams so hard every day. And if you're lethargic with it, you know, after all of that struggle that I just talked about at Morganhorn, I got to the board, I got in the boardroom, and fundamentally I was gone within a year because I was disillusioned by what the boardroom represented. And I guess, you know, you could argue you need to have a grit to see that through and turn it and shape it. But for me, you have to have that belief. But I never wanted to be stale. I was always that director that went to the pub on a Friday and I was sort of like chatting to the teams, listening to what people were saying. And for me, I heard how others referred to other directors and other leaders and other senior management within that business. You know, that business had been phenomenally successful. And then that's someone trying to buzz in at my door. Sorry. That business had been phenomenally successful and it near enough doubled in size. So obviously a lot more seniority, a lot more people and what have you. So I never wanted to get stale. And then when I went to— so ultimately I went for the opportunity to shoot for an MD seat. I was on the board. It was a board of 6. It was a brilliant board at Morgan Hunt. But I went to Cooper Lomas because the opportunity was clearly there for an MD's job. Very, very, you know, I was 36 at that point. No, maybe 35, 35, 36. It was arguably too early, but the opportunity was there and I'd always been ambitious. So, but even when, even there, I never wanted to be stale. I always want to be fresh. So my advice is if anyone sat there, you know yourself, if you're going through the motions, it's hard enough going through the motions on a desk in this job, but you can, I think as a director, if you're going through the motions, your team will know that. And I never ever, I guess maybe I cared too much what people thought as well. I never wanted them to call me out as, you know, Simon's lost his passion, Simon's lost his drive.

And then if, if so, so I guess what would your advice be for Simon that goes, you know what, I do need a new challenge. I'm going to go to a new company. What would your advice be for me to make sure that, yeah, we don't go into, um, don't go into that new environment trying to like, I don't know, just because I'm sure you've got better at this, right? Where you go into a new company and you've got to approach it in quite a tactful way, right? You don't want to go in there and go, right, everyone, I need you to do it a whole new way of doing things. But what would your advice be for a leader transitioning to a new recruitment business? Maybe things to avoid, or what would you say to them? Be like, maybe don't do this, or do this first, or really like double down on doing this. What would your approach be or advice be?

Well, I think, I think do go in and shake the apple tree. You know, when I first went to Kubilomas, I went as the commercial director. There was an ops director and it was clear that we were going to need an MD at some point. And, you know, that was very much how it was sold to me. The MDs, that the owners were removed from the business. So effectively, you know, we were 52 heads, 35 of them or so were sales. They all sat with me, you know, go for it. My old MD had then said to me, don't do anything for 100 days, just like sit and watch and let it go. And then for 100 days, that's really good advice. Sit there for 100 days, do 3 management meetings, do 3 board meetings, see how essentially a quarter.

Um, yeah, yeah, get the lay of the land, see where you're at, and then, yeah.

I lasted 3 days. I didn't make it 3 months. I didn't make it. I probably lasted 100 hours. I, I, I had a— there was a management meeting that I was due to shadow with about day 4 or so. You got involved and it just wasn't me. Yeah, I did, I did, I did. And I think that someone once told me, um, someone once said to me when they'd hired me Well, I guess if things were perfect, we wouldn't be hiring. And I've always had a problem with this. I've never liked this thing. They said if things were good, we probably wouldn't have hired you because we don't need someone, you know, you're going to come in and shake it up and change it. And I think that's part of it. I think we should move when we're at our best. So my advice to whether it be someone who's looking to hire us, thinking about a senior person, or whether it be about senior person looking to move, move at your best because that's when you're full of confidence. That's when you're full of juice. That's when you're full of let's go. So I went into Cooper Lomas and thought that, you know, I could take on the world. Now, arguably, you know, maybe that bravado and that belief system played against me, but that company had been through a challenging period and it needed someone to grab it by the scruff of the neck. You've got to take the people with you. There's no doubt about it. But it depends on your personality. If you, if you have the patience to sit and watch for 3 months, I reckon you'd probably have the longevity to get past me. However, I just was super competitive, super determined, and super just keen to get stuck in. I didn't have the patience for hanging around for 100 days because there was sort of things to achieve.

Yeah, fair enough.

So my advice, I guess, is go when you're good and also be you, be whatever it is you are. Yeah, yeah. If you're patient, be patient. If you're eager, be eager.

Yeah, yeah, sure. So let's talk about, before we get onto Digital 51 then, let's talk about, as you've sort of framed up quite nicely, joined Cooper Lomas. And as you said, like, there was a real genuine opportunity there to become the MD.

Yeah.

And I'm assuming part of the drive for you was, wow, this is, this is actually a business that I could end up part owning or, or having shares in, etc., right? Is that fair?

Well, that's— to be fair to the owners, that's why they took me there. Okay.

Yeah. So they told you that from the very beginning?

Yeah. They came, they came for me twice, um, And the first time when I was at very maybe a couple of years at Morgan Hunt, and I was really, that leadership change was happening at that point. And I was happy and things were going well and I wanted to stay, but I'd been impressed by what they'd done with the regional business. And also they were clear they wanted someone to lead an MBO and the existing leadership team wasn't really set up that way. So when they came back again, they came, I was in a different point in my career and they were at the point where, right, come in, you know, if you're good enough, you'll be the MD. And then the plan is within, you know, 5 years, we'll sell the business to you and the leadership team and you'll take it on. So to be fair, they set it up in that way.

That was actually the intention. Okay.

Yeah, yeah, yeah. And that was, you know, that was very much— again, people thought, you know, people thought I was nuts. I left London to move to East Anglia. To run a regional business, which was, you know, 50% engineering manufacturing. It wasn't where my background was, but the opportunity was, I mean, one, it was a fantastic business in my opinion. And two, the opportunity to buy it and be MD was there.

Yeah, it was genuine. Like they told you about from day one. So, so could you, could you, could you just start then? Could you just describe, like, so you mentioned there, so could you describe for people listening what, what the sort of, like what the opportunity was like if we just break it down simply? So what did they say to you then? It was like, Simon, if you sort of basically do these sort of things well, what you'll be able to do is basically buy us out and then you and the rest of the leadership team will be able to carry on with it. Like, what did the actual potential opportunity actually look like? To spell it out.

Yeah, it didn't really pan out in that way. And to be honest, it got— we had to go through a major bump. So essentially we did 2 years and by the end of the first year I'd become— I'd pitched to BMD And I'd been awarded that opportunity and we were reshaping the business based on that. And then at the end of the second year, it was clear financial performance was good. However, the underlying value set of the business had changed. It had been privately owned for so long. However, it had been through a series of MDs and a few shakes and shakeups along the way and some bumps and for a whole host of reasons. All the things that you see in recruitment businesses that, you know, it's a 30-year-old business at the end of the day. So my belief was, right, we haven't really spoke about it from that, from when I first went in, you know, it was, you know, come in, get, get settled, yeah, get it, get it really growing because it started to stagnate. Um, two of the, the previous leadership team had set up rival businesses and they were actually being really successful and there was a lot of poaching and stuff going on. So settle all that down. And then let's get on a journey. And it was probably about halfway through, about 2.5 years. And this, this is really what happened. So we used to have a board meeting and I managed the board meeting, so I managed the agenda and all that went with it. And I'd had a feeling for a while that we couldn't get on the journey to an MBO without fundamentally changing the underlying shape of the business, ripping it right down to its value set, rebranding it, redefining the values, and that they had to be mine. They couldn't be a group, they couldn't be a collective, they couldn't be me and the owners going on a journey. They had to really— if I was going to drive it to that point, then I had to drive it that way.

So how many owners were there?

There was two. Just two. Okay. Yeah, two owners, as I say, established a fantastic business and to be fair, gave me complete autonomy, stepped away and what have you and let me run their business. And then we had board meeting. So, you know, it's probably one of my proudest moments, but also one of my most challenging. I set a board meeting and didn't tell them that I was going to turn up at the board meeting and proposition to buy the business.

To buy it.

Okay. Yeah. So normally the senior management team, everyone, they would all come. So I told no one else to come on that day. The two owners and we had a non-exec director. So we sit down and obviously everyone's like, it's slightly different. The agenda. I was sort of bluffing a bit over an agenda and board pack and everything. It's slightly different. Anyway, we sit down, everyone has their coffee and I'm like, right, we're not here for a board meeting. I think we've got to drive to an MBO now. I think we have to start the journey. Well, this was 12 months earlier than we'd ever planned to do it. And I said, so I then kicked off the ball rolling. So I said, I think we should start now. These are my reasons. I presented that on the day. I was like, this is why I think we should start now. These are the risks, I think, if we don't do it. But I just don't think we can wait any longer. The money was fine. The problems were coming at a people level and a value level. And for me, those things have become more and more and more important. So I was like, I want to get on this journey. I want to make it my belief system, my values in conjunction with my team, and that will drive us to be the success, to get the numbers that we need to trigger, what have you. However, financially, we were in a different position. The business had fundamentally shifted from where it was when I first started, and therefore some of the numbers that had been spoken about over time, that wasn't where we were. So I then offered a new price, which was declined. And all this is in one meeting. One meeting, to be fair.

How did you come up with the price?

Well, obviously it's, but you know, you're basing it on an EBITDA and you're basing it on a multiplier. It was predominantly a perm business. Um, and also I didn't want to over-leverage the business. I wanted to make sure it was a number that I believed I could raise.

Um, yeah.

Yeah.

How did you get that information though? Did you reach out to your network? How did you, because this would have been new to you.

Well, no, cause I, I was the MD, I was running the P&L anyway. So, so yeah. And, and I, when I was at Morgan Hunt, and I became a director there. You know, I had a very, very strong board governance.

Okay, fair enough. So you had that context, that experience.

Yeah, that business. Talk about a journey. So I had that context. Also just plugged into the wider recruitment community in terms of listening to when deals happened and things like that. So essentially, and then also like anything in life, recruitment's no different. Everything's got a price, but also everything it's worth what someone's willing to pay for it. So I fundamentally, I offered the price that was linked to a multiplier off the EBIT, but I also offered a price that was linked to what I thought it was worth. And, and that's what we put down. That was actually declined on the day. The whole thing was declined. It was a pretty—

how'd they take it? Was it like, what the fuck's going on? Well, surprised.

Um, yeah, uh, yeah, I was— yeah, one pissed off, one surprised, one sort of shocked, but also it made sense. But to be honest, This was on, um, this was on, I think it was a Thursday or Friday. It was going into the weekend. I'd planned it specifically that way.

Yeah.

Um, and then we had a call on a Sunday and they were like, yeah, we agree, let's do it. Really? Yeah, yeah, yeah. We agreed at the price. Um, but what they did say is this can't affect— so it can't affect the running of the business. Um, and ultimately you've set the price, so you know, you have our permission to engage whoever you need to around equity, you know, raising the money, etc., etc., which was good because that allows you to share the books, which is what you need to do. Yeah. But essentially it's your party, Simon. You've caused this. Go and see. Go and see what you can do.

Yeah. Let's just, let's just talk about this for a second and then we'll move on. So yeah, so got to that. Kudos to you, mate. Like, like just putting out there and like being like, as you said, like back yourself. Creating opportunities. So, so I guess what I just want to just find out, you don't have to give me the numbers or anything, but yeah, could you just spell out for people, just make this really simple for people, what, what did that sort of, what a high level, what did that deal look like? So putting figures away, so let's just say it cost X amount, and then what would that mean? Would it mean that you would, they would then all sign a contract that said over 3 years if this happens, Simon would then own the majority of share?

Like, what, what was like So I could buy all of their shares straight by out. Yeah. So, you know, you're talking, um, okay, second, second, seven-figure-plus deal. So, you know, we're not talking, you know, um, pocket change. Depends how big your pockets are, I guess. But I think because I'd offered a different price than we'd originally spoke about, because I had fundamentally offered less than, than they thought, yeah, value that, um, that. And also, I guess I had done it in a slightly more hostile way.

Um, yeah, but the deal was you're gonna buy them completely out, because that is the conversation I've had. Sometimes it's like, uh, over a period of time, or whatever.

It was, it was a mistake. And to be honest, the ease in hindsight, the easiest bit was, um, having the balls, the ambition, and the drive to get that meeting and get to that position. What I should have. However, the harder bit then was to move it and get it over the line. And what I actually should have done in hindsight was I should have presented a partial deal. I should have presented X amount, like 75% buyout now, because fundamentally that's why it fell through. It fell through because of my ability to raise the full 100% of the money as needed and then also run the business at the same time and juggle those things. And yeah.

Yeah. Okay. So thanks for sharing that. So does that make sense? So let's just, let's just talk about the finance journey because I think this is sometimes from the conversations I've had, sometimes people can be, I don't know what people's assumptions are if they're going, yeah, my boss had talked to me about an MBO. I don't know what their assumptions are around finance, but I think sometimes people can underestimate like how difficult it may be to raise funds to make that happen. So obviously just, just for really simple terms here, like let's just say you listen to this and yeah, there's a carrot in front of you right now that you could go on an MBO journey. There is a good chance that for that to happen, you will have to, to raise money because you're— they're going to need X funds. And it could be like you said, a partial deal, or like you went down like the complete full whack. So in order to do that, you needed to get X to the table. So what— so where, where, where did you even begin to look for these funds then? Did you like— did you go to— did you go to bank straight away? Did you already— like, what, what was the the finance plan.

Yeah, so I had 3, I had 3 revenue plans for like my, my journey on to make this happen. So the first thing first is, if you're in a, if you're in a temp business or an interim business or a contract business, um, if you, if you don't factor your debt and if you don't invoice discount and things, essentially if you manage all of your own cash flow, then, then the business has got a very— the business has more than likely got a good financial cash position. So going into this decision, I'd worked with the finance team to really tighten up our debtor situation so that our debtor debt was in a position where it was X amount and we were comfortable with that because that affects future lending. But also at the same time, I tried to drive the temp revenue as hard as possible because the higher the temp revenue is, I was then going to lend against that. So 50% of my buyout was lending against the existing—

against the existing.

Okay, that makes sense. Which to be honest is a tried and tested route if you don't want to put a large chunk of your own money in or raise more from the bank.

I feel like not many people will actually be able to do that. Like, if it— because most people I speak to are, I don't know, late 20s, early 30s, in director positions. And I don't know, they might have done all right money-wise and saved, but really, how much— if you're in the board, if you're in directors 2, 3 other people. How many of you are going to have 50, 100 grand plus to put into the deal potentially? I don't know, do you know what I mean?

Yeah. So I think that if you just take, for example, for ease of maths, if your contract book is worth £1.1 million a year, for argument's sake, and you've got, like, I mean, obviously there'll be lots of specifics to your own business, so you need to take all this with a pinch of salt. But if you've got fundamentally a good business and you're on top of your debtors, and you've got long-term running temps, contractors, interims, again, whatever you want to call them, and you've been with your own bank for a period of time, the likelihood is they'll lend you 90% of that. So they'll lend you a million quid against the existing temp. So that bit's actually, you know, that doesn't cost you anything to do that. That will cost you interest and obviously arrangement deals and so on and so forth. But it's not that bit that fundamentally costs. So for me, as I say, 3 revenue streams. The first one was the easiest one, was to lend against the—

lend against them. That makes sense.

The temp book. So if you've got an interim book, then that is what drives the price of the business, which is why you pay more in the first place. But it also is your biggest asset if you don't have like lots and lots of money floating around that you can lend against it straight away. So again, if it's against a straight perm business, you've not got that. You haven't got the temp revenue to lean against, but also your multiplier will be less. Because I was running a contract business where our average contract tenure was over 6 months. So longstanding revenue that your bank can see. So first of all, so to do that, you can either go to your existing bank for that or you can go to a whole host of people and they'll lend against you. So I had that conversation and then it sounds really simplistic and stupid. I went to my actual our bank. So every business has a bank, obviously, who they're with. So with the agreement again of the owners, I said, I need to have a conversation with our bank. I obviously had a relationship with them anyways, as the MD, although the FD had run everything. But I went to see them and essentially said, this deal is now on the table. I want you to lend me the other half. Essentially, that's what I went in with. And then at the same time as doing that, I reached out to a broker. So the most terrifying meeting I ever went to is I went to a meeting in Paternoster Square, real high-end brokerage organisation that specifically looked at mergers and acquisitions for recruitment businesses. They brought along their lawyers. I mean, I turned up on my own with a notepad and a pen and some scribbles of what I was doing and I had my printout lots of my Excel sheets and all this. I had like my board pack and these like guys would literally sat around a table. But to be fair, they were brilliant. I got loads of advice from that. And that was my third revenue choice. So yeah.

So what would they do? They would take, get with it, gather all the information and then look to get lenders, buyers for you.

Yeah. So they would, you know, they would give you a whole host of options. Now I ultimately decided not to go down that route because as brilliant as they were, and to be honest, I had two sessions with that group of individuals. Which taught me more. My regret was I should have done that before I even got to the point where I pitched that point.

Yeah. For those listening, maybe look at that route if there's an MD in front of you.

You've got to be careful in terms of the benefit of doing it the way I did meant that I had the blessing of the people who fundamentally, even as the MD, you might think it's your business. It's not. It's whoever's name is officially on that door. And they gave me the blessing to share that information. So You know, you shouldn't, you shouldn't share that information if you've not got the blessing to do so. But I did have, which was the benefit. However, those two meetings made me realize I didn't want to do it in that way because I wanted to know. And this again, in hindsight, was a mistake that I wanted to know exactly where the money was coming from. And I wasn't really interested in angel investors and VC and private equity and all those bits and pieces.

Why was you protective of that? What was you worried about?

Do you know what? Probably a bit of inexperience first and foremost.

You're a bit worried about taking other people's money, maybe?

Fear of the unknown. Yeah. And I guess part of my personal driver was control and ownership of the situation. And what I thought is if I ended up with another owner in there who, you know, equity or whatever, and they own 30% to get the deal over the line, is that really any better than where I am? And again, what I should have done at that point, it should have rescoped my conversation around a staged buyout. So because I decided not to go down that route, I essentially got 75% of the money agreed in place from the temp book and the bank. However, the bank wouldn't give me the full amount that I asked for. So at that point, you then go to your own personal resources and you're like, right, am I putting my house on the line? Am I doing this? Am I doing that? And I'd made the decision going in that I was willing. I think if you're going for a multimillion pound deal, if you're going for a deal that's over a million quid or so, you have to acknowledge that you're going to need to have some money.

Yeah. You're going to have to have some resources.

You're going to have to have resources. In my opinion, you're going to need to have 50 grand ready to go. Now you don't because you can leverage it against the business a bit like when you do a mortgage. You know, you can, you can just top all the fees on top of. But you know what I thought was it's just making the situation worse that on day one when it's all mine, if it's completely riddled with debt, um, well, you're under pressure from day one. And the reason I wanted to go down the route that I was, was I guess there was a slight disagreement around how much profit needed to be made by a business, and therefore that, that, you know, that was sort of niggling me all the time, that the push for finance is what, in my opinion, makes recruitment turn so many people away because it becomes too money-driven and that turns people off. So I didn't want to riddle myself. However, fundamentally, that cost me the deal at the end because then I, you know, holding my hands up, I had took my eye off the ball with the business.

And that's the values piece, the rebrand.

So the values piece, the rebrand and all of that was going phenomenally well get the team were probably the happiest they'd been in sort of 3 and a half years. It was going really well, but our figures had just started to tank a little bit.

And I think there was a bit of it, you know, I think that's what sometimes people forget though. I had a guy on here recently, Matt, who shared his journey and that was one of his bits of advice is like, one, don't like be serious about who you potentially doing this with as a leadership team. Like there's a difference between you being leadership, like both being leader in the leadership position and both of you being business partners. But two, Like also, yeah, don't underestimate that. Also, you're gonna have to go on this journey with them where you're gonna have to put over 100 hours on top of your actual job outside of work. Do you know what I mean?

Yeah.

So I think, cause you're still employed, you still, you still got a number, you still gotta drive that performance. So I guess to, to tie this together then, thank you so much for being super honest on all that. So I guess just final thing and then we'll go into Digital 51. What for people listening then, and I know there's nuances here, but for people listening, if we are sat down in the pub and I'm going, look, Simon, really, really interesting story that you went on, didn't quite work out. Right now, me and my leadership team, there's a couple of us, and an MBO is on the table. Like, our owners have said, like, they want to carry on the bit, they want to take a step back, they see us as the future leaders. That's, that's a serious offer on the table. Like, what, what advice would you give those people to go, right, maybe think about finding this out from them, this is maybe what I would do differently? What would you say to those people that generally have an MBO carrot in front of them, knowing what you know now?

I think first things first is you need to make sure that you need to make sure it's genuine. Yeah. Because sometimes it is a carrot. Do they really want to sell? And again, you know, I regret where we ended up, that I wasn't able to get that deal over the line. However, I think when push came to shove at the end, if both parties had wanted it, it was clear that there was an alternative deal available where we could have just phased the final part over a certain period. And therefore I always was slightly disgruntled thinking, well, maybe they didn't really want that deal. Now that turns out not to be true because they've just completed an MBO 2 years later. So they clearly did. So the first thing first is make sure it's genuine. Yeah, it really is genuine.

And test that in terms of asking for things that they need to look at to start the process, all that.

Yeah. The first thing is you've got to have an open book.

Yeah, that's what the guy said recently. If you don't have the full cooperation, it's a non-starter.

Yeah. And I think it also tells you if there's not that full cooperation, open book around where we're at, what's going on, finances. Yeah. Well, certainly around possibly the money that they're taking or possibly what you need to talk to bank. I was really lucky I had that complete transparency. So I think getting that open book, get some advice. Whilst those two meetings that I had with real professionals taught me a lot, probably one of the reasons I didn't go down that route was not just the VC, but it was also the extra fees that were involved in using these people. And in hindsight, I didn't have the experience to do the deal. You know, I didn't have it. And therefore, ultimately, that cost me. So although it might not have needed to be with them, there were so many other people out there who I probably could have reached out to who could have got me that support. So For me, get, get— if you've never done it before, it is— I don't care what anyone tells you, it is— every situation is unique and it's very, very stressful. It sounds exciting, but it, you know, it gets very detailed very, very quickly. You have to be really good with the numbers, which I was lucky I was. However, you know, you've got to live and breathe that all the time. And to be honest, a slightly more wiser head around someone who'd been through it before would have got me over the line because my passion, drive, determination and risk level was there, but it was just, it was just being cute enough to understand the deal. And I wasn't cute enough to understand the deal.

No, great advice. So let's talk about Digital 51 then.

Yes.

So talk to me about, see, before we finish here, last 10, 15 minutes, like talk to me about where, so I think this ties into the, to like what you're about now, right? So talk to me just a bit about why, why are you so passionate about giving this business away in 11 years? And two, what does that actually mean and look like for people listening to understand a bit about that instead of it— yeah, I don't want people thinking it's like a nice brand strapline and what you're about, but talk to us about why it's important to you and two, how that actually works, how that's going to work.

Yeah, well, I think sort of after, you know, I went to Digital Gurus after where I was, and that was a, that was a private equity-owned business. And these two things have shaped my mindset around how you should, how and why you should run a recruitment business. You know, fundamentally, I couldn't get the deal over the line at Cooper Lomas I've got to accept responsibility for that. However, I did have niggles that I thought the deal could have been made easier. And then secondly, going to DG, which is a phenomenal business but part of a bigger group, I guess I got to see what it looks like when you run a business off a spreadsheet. And that wasn't really my bag either. So I decided if I was going to do it myself, then how would I be different than those two offerings? And I think I also wanted the hard stop. I want to step out in 10 years' time. I want to step out in 10 years' time. I need that hard stop for me that I can do something else and enjoy other things and what have you. So I need that hard stop for me. Why? As we go on that journey, we're 6 people now, we'll be at 7 in a couple of weeks. Whatever that growth looks like, why should those people come here and run through walls for me if there's nothing in it for them? And I just think over time everyone's beliefs and drivers change. And mine has not become about the bottom line money as much anymore. I just think that the last 18 months has had that impact on me around. I just think so many businesses got screwed in COVID because they were run badly. I'm sorry to say that. We didn't have a long enough run. We didn't have a long enough run of our P&Ls to cover our own businesses for 6, 7, 8, 9 months. So everyone shit themselves, jumped onto furlough, got rid of their teams. So on and so forth. And that's because of the financial underpinning. Now there's loads of broad strokes in there and I'm sure there's loads of people that say that's not what happened. But, you know, for me, I just didn't want to like stress that new business in that way. So, so therefore, if you take away the fact that I'm going to run it for 10 years so I can make as much money as I can to, you know, go off to a sailboat in the Med, and you take that away and you're not doing it for that reason, then why are you doing it? And for me, I guess I've always wanted to be part of the team and to lead the team and to have that sort of shared goal. I, I guess fundamentally, this is going to sound like a line, fundamentally I believe that people are capable of anything. However, not everyone knows or believes that, so therefore I want to show anyone who walks through this door that they can own this business and they will own it if— as long as they are here in 10 years' time and they've been part of that journey and so on and so forth. So I, I never had that opportunity.

Yeah, you want to put that in front of people.

I want to create it for someone now. Yeah.

Well, um, and then how— I don't know if you like— this is still would be— I don't know, like, how would that actually work? Or is that not decided yet? Or is it—

I think, I think we'll start, you know, first of all, I'd be lying if I said it's completely down in black and white exactly.

Yeah, but you, yeah, but you've committed and Oh, it's there. Yeah.

It's like, that's what I mean.

Yeah.

Yeah.

It's there.

So, but either that one, she still works out how that could work. Yeah.

Yeah.

No, I think, well, I've got a plan. What I'd like to do is I'd like to be by the end of, um, by the end of our second year. So sort of really by the end of 2022, I'd like to be 5% employee owned already at that point.

Okay.

I'd like to have started the journey to have started, maybe, maybe start with an employee trust for 5% of the business. Yeah. Um, and, and, and get on the journey as, as quick as, you know, as quick as humanly possible. Yeah. Um, Okay. And then also that will, well, that is the plan. The plan is to have 5% employee-owned by the end of the second year to sort of really prove that we're serious about it. And then also to hold me to account to say, look, if you can't get to that point in the first 2 years, then like how on earth are you going to get there in the following 8? Yeah.

Okay. So obviously you've started this business with other people, right?

Yeah.

How have you I'm always interested in hearing this, but like more and more people I speak to that do have co-founders, like, how have you made sure that you're all on the same page? And that is— that's important to you, but it's important to them. Like, how have you made sure that you're remaining aligned? Because there's— what is there, 3 or 3 of you?

There's 2 of us. There's 2 of us really that fundamentally drive the business in terms of the way it is, you know, day in, day out. And I guess that, you know, Adrienne, who runs the business alongside me, in reality is You know, she's younger than me, she's better than me, she's more determined than I am. So my plan is that ultimately, if I have my way, she'll lead the business moving forward. You know, she'll take it on. It'll be, it'll be employee-owned with her at the helm. You know, that was, that was always the sort of, you know, the plan going into the business was that, um, why we came in collectively as sort of a, as a 3, there was really a 2 sort of pronged attack to go out. And that, that plan was that I would take her on a journey to help her develop and become a leader of a business and learn how to run a business and so on and so forth. And fundamentally, she would then take that business off me and take it forward with the wider team because I just think that she is, you know, she's phenomenal. And therefore we've got a shared belief system on so many things. Yeah, don't get me wrong, some of our discussions can get heated because her temper is as bad as mine. In fact, if she's listening, I'd say her temper is well worse than mine. However, however, underneath that passion, underneath that, you know, that angst— I also think the angst is good— is a shared belief around people and growth. Yeah.

What you're about.

Yeah. Doing it, doing it. I guess like the businesses you want to work with right now, you could be working with anyone, can't you? You know, if you can't pick up jobs now, you're never going to pick up jobs We don't want that. We're trying so hard to stay true to the client and candidate base that we want.

Yeah. So look, before we finish then, what obviously, what have you, what would you say? Like, I know we were saying before, like you guys have really worked hard getting towards the end of the year. It's been obviously, it's been great, but at the same time, like it's been really difficult. What would you say? What have you learned most this year so far on this journey? Would you say about yourself or about—

yeah, yeah. I think what I've learned is it is, it's easier to start than it is to do. Um, I didn't at the start, you know, at the start I finished with Digital Gurus on the last day of, um, Jan and we opened on the 1st of March and I hadn't, we hadn't done tons of stuff to be honest in the background because of COVID and all that went on beforehand. So it was just sort of go, go, go. But in hindsight, it was easier now that we're going and there is 6 of us because again, we didn't start as a 1 or as a 2 and there's nothing against anyone who's going down that route. You know, I'm at a different point in my life and my career where I was like, if I'm going to go, I need to go in bigger from the start to give myself the chance. So I guess what I've learned was it was— there was nothing to lose at the beginning. It was all like, let's just do it. Let's just like— yeah, like the energy was driving us. That energy only— I think that my energy can keep me going forever. And the reality is it can't. And we've had a brilliant year. We are 2 deals away from hitting our goal. And when this might go out, I don't know. But the reality is it's coming towards the end of October and we're 2 deals away from hitting some of the goals that we set that we didn't want to hit by the end of December. So that's been brilliant. However, we're probably more frazzled than I think I would like us to be. You've still got that buzz every day. You've still got that buzz that this is ours. We're doing it in the right way. We're doing it differently. However, I think the last 6 weeks it's become more about the doing than it has the greater good. And I think it's quite hard to accept that when you've had that as such a strong driver at the beginning. So for me, it was all about doing it differently and the values and And in the last 6 weeks, we've probably just been doing the deals and doing the work drive. Yeah.

Sometimes you've got to check yourself back on that, haven't you? Because that's what really gets you going, isn't it? Is the what, like reminding yourselves why you're doing it. And as you said, when you're doing it, you can sometimes forget that because you've got the challenges directly in front of you that you've got front of mind. You've got the deals that should be happening right in front of mind. And yeah, I get that. That makes sense.

And don't get me wrong, anyone who's doing it right now is, you know, this is a— this is the— this is brilliant. This is like the best I've seen it in 15 years. It's absolutely phenomenal. But it's hard. It's hard, you know. Yeah, really, really hard.

Yeah, it's got different challenges in that. But you—

yeah, yeah. And it's— and it's relentless. It's never ever— it never ever turns off. And I think you've got to— I am awful at it. I listen to people on your— on this all the time, talk about, you know, their ability to turn off and I'm like, yeah, it's hard on that. Yeah. So I think what I've learned is that now we need to take a bit of a, we need to take a break. We need to have a bit of a reset. We need to have a reset. And there's also nothing wrong with biting down on the gum shield and doing what you need to get done at the time you need to get it done to move to the next stage.

Yeah.

I just think that you can't bite down on that gum shield for too long.

For too long.

Otherwise, you know, the stress takes over. It's not sustainable. Yeah. It's not. And like, it, you know, the adrenaline and the drive and whatever, it can only drive you so much because you've obviously— everyone's got their own stresses outside of work and all that.

Yeah, yeah, for sure.

You know, it sort of gets on top of you.

Look, Simon, that's, uh, that's the pod, mate. Thank you. Uh, thanks so much for being— thanks so much for being super honest, which I knew, I knew you would be. But I know that helped a lot of people, particularly around the MBO, getting your promotions. I think kudos to you, mate, on like Clearly, you can tell that you've really backed yourself in your career. And I think I'm really excited to see where you guys in the next couple of years will absolutely get, get you back on the pod in the next few years, mate, and see where Digital 51's at. But honestly, thank you so much for coming on. Really enjoyed it. Excited to share this with everyone.

Yeah, enjoy.