Host: Alex Glasner acquired a workforce training and skills provider in the uk. This is a kind of double bottom line business where its performance can be measured in terms of both profit and social impact. Something that was important to Alex. A couple parts of his story that really caught my attention. First, Alex is himself British, but he actually conducted his search all the way from the US where he was living before moving back to the uk. Also, before embarking on his search, Alex interviewed dozens like 50 people who had searched themselves, including search, who ultimately failed at finding a company to buy. So he shares what he uncovered about why searches fail. That and so much more about the successful search of Alex Glassner. Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs. And on this podcast I talk to the people who do it. The Entrepreneurship through Acquisition Summit at MIT is coming up. As we all know, success in entrepreneurship through acquisition ETA is all about people and specifically your leadership of the employees that you inherit when you acquire a business. And that is the theme of this year's summit at mit. Leading high performing teams. I'll be there. I'm actually moderating a panel about how and when to make changes at a business you've acquired. A topic that regular listeners know comes up again and again in the interviews here on Acquiring Minds. So highly recommended you come. It's a virtual event. Friday, March 11th. To learn more, go to mitsearchfunds.com you'll see a link at the top of the page to the summit. It's going to be a great event. Last year there were hundreds of attendees. Friday, March 11th mitsearchfunds.com Alex Glasner, thank you for joining me today. Tonight, your time on Acquiring Minds.

Guest: Hello, it's great to be speaking with you.

Host: In September. So just about four months ago you acquired workpays, a workforce training firm in Chesterfield in the uk. A lot of interesting elements to this story, to your search and to what is now your business. So let's, let's dive right in to kick us off. Alex, tell us about yourself today. Tell me a little bit about yourself and your bio and specifically how you arrived at this decision to go out and buy a business.

Guest: Yep. So really it begins with my father. He actually runs his own business. He's an accountant. He runs a small practice in London, although I said that before to someone and my mother gets very upset when I say it's a small firm, but neither here nor there. My sister and I always used to say that My father has three children. He's got me and my sister, and he's also got his business. And there's definitely one company, you know, when you could see from the conversations around the dinner table, there's definitely one of his children that he loved more than the other two and who he still counts as his baby. And so, really, from a very young age, I wanted to be, I say an entrepreneur, but I wanted to be. I wanted to be an entrepreneur and running my own business and helping run a company successfully. When I went to business school, that was honestly my aim. So I. So most of my career before business school was in finance. I did a bit of politics, which I'll speak about in a second. But when I went to business school, honestly thought that I was going to come out and my job title was going to be entrepreneur. And I had no idea what that actually meant. And I came out and I wasn't an entrepreneur. I was working in banking. But when I was at business school, I saw these two guys who were. Sorry, a few guys who were. They started doing this thing called a search fund. I didn't know that's what it was during. I was thinking for a number of years after business school, what can I do? What will actually finally let me be an entrepreneur? And I discovered that book, the ones by these two Harvard professors. And I read it and I thought, this is what I want to do. This is going to allow me someone who doesn't have a clear idea of what kind of business I want to run, just knows that that's what I want to do to be able to do that. So that's what kind of what led me on the path to search more from a personal side. My professional life has been mostly. My professional life has been mostly in finance. And I did a bit of strategy as well. I have a bit of an American accent, some people tell me in the uk, because I spent six years in the us, I went to business school up in Boston. But the first thing that I did actually after undergrad was Parliament. I worked for. I worked for a member of Parliament as a speechwriter. And that gave me what. That did. Kind of lit a fire in me to want to be able to have a job. It lit a fire in me to have it. To want to want to work in a career where I felt like I could actually be helping people and find a vocation, not something that was simply just earning money, but where actually I thought we were doing something for the greater good. And actually, when I was doing my search that was something I was really focused on as well.

[5:03] Host: Okay, yeah. Well, that obviously the business that you chose touches on that and we'll get into that. But a couple follow up questions. So you went to hbs, Harvard Business School, and there are courses at HBS that are given around search. Did you take those courses or did you just hear through your social network about these guys doing a search fund and really that's how you learned about it? And having read the book.

Guest: Yeah. So two things. So one, did I take those courses? No. Massively regret it because I think it's Professor Yudkoff and Royce. Is that right?

Host: Yeah.

Guest: They are like the doyens of this. And I wish I'd known about it. I think when I was at business school, again, I wasn't quite sure what I wanted to do, so I took a bit of a course, a bit of everything. And I also did. I've got a big interest in politics, so I took a lot of political courses. So, no, I didn't take that course. However, actually, the guys who were doing it at business school started running their search. They were acquiring lots of vets, actually, across the middle of the US they started doing it in their first year. But I didn't know what they were doing. I thought this was only something that people who I didn't know how they were getting their funds. I thought it was something that if your parents gave you money to buy a company, obviously that's not the case.

[6:19] Host: So you learn about search from these guys. You read the book, you say, this is what I want to do. I haven't actually read the book yet. Shame, shame. I need to. I have it actually sitting next to me here on the desk.

Guest: Desk.

Host: But what did you learn about how viable this was for somebody that you didn't actually need to already be rich to do this? Does the book. I assume the book goes into that. Tell me how you worked out, actually the mechanics, the financial mechanics of doing this.

Guest: Oh, my gosh. Every single page is like gold dust. Every single page is absolutely amazing with this book from start to finish. I must have kept that book on my table while I was running Coniston Peak, the name of my search fund throughout, I would reference it at every single stage. So before I sent my first ioi, before I sent my first elo. Why before? You know, actually the day that I acquired WorkPayz, I think I reread the last few chapters. When it talks about, you know, now it's. Now it's up to you. Your question was about the financials and how I, how I thought about that. So it does. So the book actually firstly, the book lays out how much it costs. I also did my own. I was trying to work out how much money I needed and how much Runway I would give myself. And I knew that really a general search takes I think it's 26 months, I think is the average number of months research. So I made sure that I had enough money for at least 36 months. So I gave myself three years. At which point I thought okay, I need to. That's when I'd probably if I wasn't successful by then maybe I'd give up. So I was just, I just worked out how much money I had in my bank account and how much money I need to spend and was very careful. On the other hand, I was also very lucky. I am very lucky. I am. My partner works in private equity. We met at business school and so I was, you know, I was immense spent that I didn't need to spend quite as much money as if I was kind of renting by myself in a kind of place in Manhattan.

Host: Sure, sure. And you did a self funded search.

Guest: That's right.

Host: As opposed to traditional search. Okay, and how did you make that decision? Did you consider a traditional search?

Guest: Yes, yeah, it was actually a really. So I was, I was just thinking about, I thought of every single permutation whether I do it a partnered search, whether I do it in the US or the. Whether I do traditional or self funded. Ultimately I, I spoke to a lot of people while, while thinking about doing this search and the feedback I was getting was that doing a self funded search gives you a lot more flexibility and that. And so yeah, that was, that was the key decision for me. I didn't need the money given that I already had saved from my current job. I was working pretty hard investment banking so I had no time to spend any money. And also I had Andrew, my partner who was, you know, if worse comes worse, he could support me. So just I didn't need the money. And I also realized the flexibility that doing a self funded search gives you in terms of the sort of companies you're looking at. The fact that you're not constrained geographically made just made it a bit of a no brainer for me.

[9:11] Host: Yeah, I think you told me in our pre call that you spoke to something like 50 people as you embarked on this journey and so it sounds like they oriented you toward a self funded search. Were there any other things that you remember emerging from those 50 calls that were like really key in how you structured your search.

Guest: Yeah. So actually I have copious notes from every single call and man, there's a book right there. No, yeah, exactly. I'm not. What I was trying to do, I was actually trying to look at trends for things that would work and things that didn't work. So I tried to speak to a number of different people I spoke to. I spoke to a couple of investors. At first I spoke to people who had, who were searching, people who had found a company. And then the most important people I spoke to actually were people who had not been successful.

Host: Yeah.

Guest: And that was by far understanding why they weren't successful then was really influential for my search. And so there were a couple of themes that I noticed, and I think the most prevalent one was just there was a lot of indecision I noticed. And so making sure, just being as decisive as possible was really, really important. That was one. And then second, almost as importantly, was making sure that you have a really good structure to run your search fund. So making sure that I spent. Even though I set the search fund up, I had to look this up today for my partner. Even though I set the search fund up in mid November, I didn't reach out to the first company until December 27th. I spent way over six weeks setting up all my material, setting up how I was going to run the search, thinking about coming up with a list of companies, making various presentations that I would send to people, making even a script. And all of that was things that I'd been told previously on the call. Yeah.

Host: So the six weeks of preparation that you took, you don't regret that that was, that was six weeks well spent, you're saying?

Guest: 100%. Yeah. So I actually did my search. I was pretty quick about it. So from sending out the first email, December 27, speaking to the first company, January the second or so or some time after New Year to acquir the company was about nine months, which was pretty quick. And I think that came purely because of all that, that, that first six weeks where I was setting up a company. And it also goes back to the what you asking, what you were saying about when I spoke to those people, all the searches, you could see the ones who. One thing I noticed was that it's about being a search. It really is very binary. You either are successful or you're not successful. And obviously, of course, you don't get into a search unless you want to be successful. And so just trying to understand what they were doing, what people who Perhaps hadn't acquired a company, had done. And so that's why. Just going back to that, just being as. I thought the one key takeaway for me was being as decisive as possible.

[12:03] Host: Yeah. And just. Can you elaborate on that? Decisive about like what? Like I am doing this. Like I will not fail in this process or just every little decision that comes along, you just make quickly and power through the process. What, Decisive how?

Guest: Yeah. So you, you know, was it that the good perfect is the enemy of the good?

Host: Yeah, yeah, yeah.

Guest: No company. And let me tell you, I will wax lyrical about how workpays is the best company in the entire world. And I really do believe that. But of course it's not perfect. And the number of people I spoke to who had found companies which were. There was just like one little niggle. And they said to me, I just didn't want to buy it because there was something wrong with it. My EBITDA threshold was, let's say, $750,000, but this EBITDA was $740,000. You're thinking, does that matter? Or, you know, one of my investors asked a question. Does this sort of, does this company, you know, it's only got 60% recurring revenue, not 80% recurring revenue?

Host: Yeah.

Guest: Okay. That's something that you can come in and change. But just being decisive, being, you know, being decisive about buying a company, thinking, actually, though, I'm doing this to buy a company and doing everything kind of for that. The other thing I would say is moving, moving as quickly as possible. And one thing that I was told a lot was being slow is the worst thing that you can do for sellers. So being as decisive possible to sell it. So the second I signed the IOI with workpays, I sent them a calendar of this is what's going to happen over the next few weeks. And we kept. And we really, really kept to that and we made sure. And that meant that A, the process moved quickly and B, they always understood what I was doing. So being very decisive and actually having these stage post throughout. I actually spoke to a searcher or a potential searcher a few days ago who said to me, I want to. Before I've even signed the ioi, I want to know absolutely everything about this company. And I'm thinking that's great for private equity where you're earning a lot of money and it doesn't matter. You can do one deal every few. You can do one deal every couple of years for one person, but you have 20 people, so it's fine. But for research, it really is make

Host: or break for you and the folks who didn't buy. And we're talking about, you know, The EBITDA was 10,000 less than it should have been, or the recurring revenue was 20% shot shy of their 80% threshold or whatever. Were they talking about this in regretfully, like, with the benefit of hindsight, they wish they had pulled the trigger? Or was this your conclusion that, like, oh, maybe they shouldn't have, like, they shouldn't have been so picky, or were they themselves saying I was too picky?

Guest: No. So actually I asked people who hadn't been successful in their search. I was really surprised by the response to this question. I would ask people, why weren't you successful? And the people I asked, all the people I asked, I must have spoken to, like two or three people who failed only because it was difficult to get hold of them. Actually. They said, wow, you're the first person that's asked me this, which I was really quite surprised by. I think people, I don't know if people actually regret not being successful, only that for some people it might be like a waste of, they might see it as a waste of two years. So I think that people don't regret where they are. I don't think those people regretted where they are now, but I think they might have regretted spending so much time on a search.

[15:25] Host: And did you speak with anybody who successfully completed a search and then during the transition or thereafter, it was a disaster or was it somehow a failure? Yes.

Guest: Yeah. No, this is great. And what you realize is that Jim Sharp said to me, he's got this, he's got this great website. He said to me, this company is not, Any company you buy is not going to be the same company three, four years down the road. So I actually spoke to some guy, a British searcher, who bought a company day one, and they had a huge concentration. And day one, I think 40% of their revenue was lost. They lost one of their customers. Oh, absolute disaster.

Host: Now that is the nightmare scenario.

Guest: Right? But, but it's fine now. And he's turned it around. And so it was just, you know, with a lot of hard work, with everything. He was also at hbs, but a few years above me, and everything that he had learned, fine. You just, you, you work hard. So, yes, I, I, the stories I'd heard, the stamp, the study, the Stanford study, says that only 70% or 60% of the searches actually, once you've bought the business, are successful. That wasn't my experience of people who hadn't been so successful actually.

Host: And I assume, and this is a big digression, but this is too interesting to not go into. So we'll bring it back to your story here in a second. But I assume these 50 people were all part of the HBS ecosystem, kind of HBS grads and so on. So there's a little bit of selection bias there because these are going to be, these are going to be capable people. But just to be clear, no, definitely

Guest: not for exactly that reason. No, I did not want to just speak to HBS people. So maybe 40 to 50% were because that was my kind of search fund network. But no, actually Jim Sharp actually has loads of people on his website and I literally just went through, I must have read his website equally as many times as I read that book. And I just actually emailed all those people from his website saying, I saw you on Jim Sharp's website. Do you mind if I have a chat? Looked at Search Funder and spoke to loads of people on Search Funder as well. I didn't want to speak to only people from HBS because I wanted to understand because I don't think, you know, they say when you get into hbs, you always believe your admissions mistake. So I was thinking, well, hold on, if I am the admissions mistake, which is not unlikely, what would anyone else? And I also don't think HBS people have all the answers to everything.

Host: Yeah, yeah, great. That was great, Alex. Okay, let's get back to you and your search or let's move down the search a little bit. Okay, so you've talked to all these people. You've spent invested six weeks up front just putting together a really a nice infrastructure for your search. And so you're doing, are you doing any brokered looking at any broker deals or is this all proprietary, all cold emails to business owners?

[18:12] Guest: Oh, no, I did. So one thing I learned was there are a couple of ways of doing the search. If you do a proprietary search, there are two ways of doing it. There is the spray and pray, speak to as many companies as possible. There is the do a very deep dive into a sector that you think is really interesting and select maybe 10 companies. Or there is a brokerage search. I tried to merge all of those together. So yes, I had set myself targets every week that I had to speak to at least one. I had to reach out to at least 20 brokers a week, new brokers. I had to reach out. I had to have at least one chat a day with a broker and I also had to reach out to a certain number of companies a week. I can't remember how many that was. So, yes, I was doing both, actually.

Host: Okay.

Guest: But my. I will say, though, that the companies I got from brokers were. The process, obviously, words was a lot more competitive and so therefore I wasn't. You know, it was. Generally, I would bow up pretty early on.

Host: And to add a further wrinkle to this, you were searching. You were in the US as you conducted your search, but you were looking solely in the uk. So tell me a little bit about that.

Guest: Yeah, that meant. But I was working UK hours, so I had some visa issues. So, as I said, I'm dating someone called Andrew. We got married sort of, kind of at the beginning of January last year. And so I was waiting while. It turns out while you have. While you're applying for a green card, you're not actually allowed to leave the country or you abandon your application. So, yes, I was searching from the uk, so I was searching from the us, but in. But only in the uk, working UK hours, which was pretty painful, especially when we spent some time in la. It also meant that when I kept on telling Helen and Anne, who were the previous owners of workpays, that I'm coming back, I'm just waiting for my visa, and I wasn't sure whether they actually believed me because they'd never met me. And then, of course, I actually had to ask for an emergency. I had to get my congressman involved in Florida to be able to leave the country so I could actually go and meet them, which I. Oh, so

Host: you were able to. They made an exception, the USCIS or whatever made an exception for.

Guest: That's right, yeah. Uscis. Yeah, no, exactly. I had to get something called an advance parole. That's right. And, yeah, I got my congressman involved. I went to their local office to beg them to let me go. You have to prove that it's going to cause economic harm. I thought it meant to me, but actually meant to the us. So I had to give details of all my American investors and how much they were investing to show that actually by me not going back. Sorry, my not going back to the UK was actually going to have an impact on the American economy, but. That's right. I did most of the search from the us. Yeah, it meant UK hours, but I will say thank goodness for. It was one of the good points of the pandemic that everyone moved online. And again, I spoke to this searcher last week who said to me, but hold on, I want to go and meet all the businesses. I know it's going to be really expensive to meet the businesses. I put zero in for my budget for traveling, because even when I spoke to some people who were in their 80s, everyone in, at least in the UK, was able to use teams or zoom.

[21:20] Host: Yeah. Were they not somehow skeptical, though, that you're in the us? It just, it just like, I feel like so many sellers look at the likelihood that the buyer that they're talking to could actually get across the finish line. And there's so much friction to getting across the finish line and being on another continent. Even though you are a British citizen, even though you have every intention of going back, you're conducting a search. I mean, you have a lot of arguments to say, no, I'm serious about this, but you could just see how it might spook sellers that, no, this guy, he's in la, he's not gonna come back here to the Midlands and buy my business. Did anybody kind of have a mental block to talking to you because you were conducting the search from the us?

Guest: Let me tell you, firstly, I think the Midlands rivals la. Like, there's no. I think the Midlands is one of the best places in the world. I'm just gonna say that yes and no. So. But there are ways to mitigate that. So one of the first things I would do, I'd be upfront. I started every single call by saying, oh, so where are you at the moment? Are you in your office? Was. Are you in, I don't know, Chesterfield or Derby or whatever? And I would say, look, if I'm honest, it is three in the morning in, I don't know, Austin. We spent a lot of time in as well, actually, it's three in the morning in Austin. But as long as you were open up front, I found that made it easier. That's one, two. I had, you know, I had read I'd built up links with a number of investors and some of whom were very happy to give me a letter. You know, I can't remember the name of this letter where they. Where it says, you know, I am supporting Alex, I will invest up to X amount. And so I would get. I had that from a British investor, I had that from American investor. So it. Then it made my case much more real.

Host: So you really didn't encounter any pushback. You just. You kind of nipped it in the bud at the outset and you were good to go.

Guest: I had absolutely no pushback whatsoever.

Host: Great.

Guest: The only difficulty was doing this workpay's deal, actually, from afar, it was frustrating because I think I was more mindful of it than anyone else was, actually.

Host: Okay, so let's talk about workpays. So that deal came as part of your purely proprietary outreach or was it brokered?

Guest: No, purely proprietary. So we were looking at training companies. So the UK has, firstly, I think it's a really interesting industry. Secondly, I really do care a lot about education. And thirdly, it has a real social good. And so WorkPay's is an amazing example of company like that. So, yeah, I was, yeah, we found it. I think it won an award. It was like up for an award. It's won a number of awards and so that's how we found it.

[24:07] Host: And so the social good angle, I understand, but tell me, you said that the industry just interests you. What about it interests you?

Guest: So I have had, I mean, in the UK it's a very class based society. I don't know, it's so foreign in America, I realize, but I hear that.

Host: But I always wonder if that's just an anachronistic characterization of the UK and that that's very. In 2022, you can still say that.

Guest: Yeah. No. And the second you meet someone in the uk, you can tell a lot about them, whether they went to a private school, whether they went to a, I guess what you guys would call a public school, you can tell that very quickly. And at least before I went to the US and my accent became Americanized, you could tell that I'd had every single opportunity thrown at me. I've been lucky enough to have really good education and a very supportive family that cares a lot about education, that has propelled me to go to not only good universities because that was always what my parents wanted, but also into good jobs and also ultimately to work days. I understood the value of that. I also used to do a lot of teaching when I left undergrad. So when I was working in Parliament, the salaries aren't amazing there. So I was teaching on the side. I spent a lot of time teaching people in, I think you guys call it social housing. We call it council estate. So I spent a lot of time doing. Doing teaching, not only kind of earning money to help me pay, you know, pay for my food, because I wasn't, as I said in Parliament, you decided you're not great, but also helping people who otherwise might not have access to someone who got a degree at Cambridge. And so I know the power of education to propel people forward. So that's what really excites me. About this.

Host: And as an industry, just now just putting on your entrepreneur hat, just purely capitalistically, did the industry interest you from growth prospects and all of the just cold hard numbers perspective?

Guest: Yes and no. So on the one hand, the industry hasn't been growing significantly. Our sources of income, so most of our income actually comes from the government. So that has not been growing most. That has not been growing since 2010. We had a lot of austerity actually in the UK that is changing around a bit. The private sector, which we don't really deal with right now, that is probably seeing growth alongside gdp. That said, so that is maybe like a negative. On the positive side, this is a great industry for a buy and build the opportunity to buy very similar players to us and then amalgamate to create a much bigger.

Host: And you saw that before acquiring workpays. That was part of your thesis.

Guest: 100 exactly. That's completely correct. And actually, since I've gone, since I've come here, firstly I've realized that actually doing another search while running a business is actually a lot more complicated and time consuming than you think. But secondly, I'm even more sure that's that's the right path. Also, when you look at work pays, our success rates are very high. So for example, on apprenticeships, I think the national average success rate is of people who complete your course successfully is 64%. We're at 89% plus. So we are doing very, very well. And I would love to be able to expand that to even more people.

[27:30] Host: That's phenomenal. Without knowing anything about the industry, I would have assumed that one of the frustrations of the industry is that that the attrition would just be huge, that people wouldn't stick. But it sounds like it's just the opposite and that you guys are even outperforming the industry. So that's great. And we keep saying the industry. Let's define that more specifically. Workforce training is the industry that we're referring to.

Guest: Yeah, we call it employability and skills provision is how I describe what we do. So employability is actually supporting people into work that is not training. That is giving people guidance. We even provide clothes for people to go for interviews. That's one thing we do. The other thing we do is supporting people to upskill outside the workforce. And then the final thing we do is when they're in the workforce, we actually help people to upskill in the workforce as well. So we help people throughout their employment journey. It's all part of the employability and skills industry. But it's three very separate divisions.

Host: Okay, okay, okay. Let's get back. We still got a lot to go in your story, so I'm keeping my eye on time. But let's get back to Helen and Ann. You reach out to Helen and Ann. You come across Work Pays in your research. They've won an award. You reach out. So tell me about Helen and Anne and the history of Work Pays and how those early conversations went.

Guest: Oh, my goodness. Helen and Anne are two of the most incredible women. I mean, it's amazing. Helen has got. She just won. She won an award, actually, while we were doing the acquisition called an MBE. An MBE is actually a prize you win from the Queen. It's in wrestling recognition of. It's in recognition of doing something good for the country or just doing something good. So she won that for services to young people, particularly during the pandemic. We were one of the few providers that didn't close. And she has been. She is the person who started WorkPay. She has been the driving force behind it. And every time I meet anyone in the industry, everyone seems to know her and wax lyrical about her. She is very, very well known. And, yeah, this is very much kind of her brain put into a. So she set it up in 2011, I believe, as a consultancy. She had been working in other places in industry. I believe that she got some equity from a sale of a company that she had been working at and then she set up workpays. Ann joined the company as ops manager because by that point we had won some contracts. Ann joined in 2015 and I think then she then bought into the company a couple of years later. Yeah.

[30:05] Host: And why was she open to selling? Was she already thinking about selling or was she just at retirement age or what was your. How did your email land when she saw it in her inbox?

Guest: Yeah, I think so. When. So firstly, Ann and I are co MDs of the company and Ann has rolled over equity in the company. So we run. We run. We run workplace together. Helen, who was a majority shareholder before the acquisition, you know, even when we. When we put the loi, I put the end date as the kind of the. Maybe the first week of September. She said, no, I actually want it to be 27 August, because I want it to be before my birthday. I think she had always said in her mind it was a milestone. It's not the biggest milestone birthday, but it was a milestone birthday. And I think she said to herself, do you know what I want to. This is the age I'm going to retire by. Oh, she is, yeah. So I think in her head, yes, she definitely had been thinking about it. I think actually with a search, if the seller isn't. You're never going to persuade someone to sell if they don't want to sell. So there's, you know, know if you hear they're not going to sell, give up the phone call. But obviously she had been thinking about it, but.

Host: But a business broker hadn't gotten to her first. In other words, it wasn't publicly listed, she hadn't got started the process of selling. So you just happened to find her in that window of time before she started reaching out to brokers herself to talk about selling the business and after she had decided that, in fact she did want to start thinking about retirement.

Guest: Knowing Helen, I do not believe that she would have gone to a broker. I think that she is incredibly. This business is run. It's a very, very tight ship. It is run using KPIs. Everyone is cost conscious. We have. Our head of finance is if someone wants to spend five pounds, she's going to come to me and tell me about it. I believe that Helen probably would not have gone to a broker for that reason. So I think. No, I was. But I was lucky. I think it was. I think they might have done an mbo, actually. I think she might have. Ann might have acquired the company. Otherwise.

Host: Just tell us a little bit more about workpays. You mentioned what it does. You mentioned that the government is the primary client. So tell me a little bit more about that and any numbers you can put behind the business would be helpful as well.

Guest: Yep. So we are a. We have. We have three real arms, as I said. We have skills, employability and apprenticeships. So we support people throughout their employment journey. On the one hand, people who are outside the workforce, we help and they want to find a job, or even if they don't want to find the job, they still are forced to come to us by the government. We support them to upskill. Let's say they want to become a construction worker, we'll give them a course in construction. We then have employment. We then have our employability side that supports people who. We have weekly fortnightly sessions where we give people advice and guidance and help them find jobs. We work with local employers, employees, employers to help them find jobs. And then when they're in the work, we have this other arm which supports people once they in work. So those are the three elements of what we do. We are the apprenticeship arm. The third part is the smallest part, but our fastest growing. The other Two, we're about 50. Fifty, yes. Most of our money comes from the Government, nearly all of it. The exception is the apprenticeship arm, where the route to get us getting money is a bit more indirect. So the way it works is we tend the government releases could be anything from thousands to like one contract a year. So, for example, last year they had this. They did quite a lot and we won something called the Restart contract. The government will invite people to tender and then we win a contract of, let's say, £6 million or £12 million over four years. And so the contracts do last a long time. The Restart contract, for example, is four years and it has, I believe it has two possible renewals of two years each. So that contract could actually be up to eight years, up to nine years. We have pretty steady revenue. The problem is, and this is where it's really important to note that we have really great visibility, right? We know that we won a significant amount of the Restart contract. Like literally, we probably have just under, just about £12 million of restart. We know that said that money is not ours. I say the money is ours to lose because we have to reach certain targets. So the government says, okay, this is your contract. Let's say it's 10 million. To get that, you need to support X amount of people into work. And so the way we get our money is with restart, for example. But it's very similar for all our other contracts is when someone gets into work, the government will pay you a certain amount of money for our skills contracts. Generally, it's when you meet someone, you get paid, and then once you've got them in, when you're training them, you get another amount of money as well.

[34:48] Host: Well, which sounds like a logical model how it should be. It's basically performance based. You need to perform and show that what you're doing is having the effect on the population and on these folks that you're helping to continue to get money.

Guest: And it's a virtuous cycle, right? Because you win a contract because you have evidence that you're performing really well and then you perform really well, so then you win more contracts. And that is how we have been able to grow our revenue quite so dramatically, because really, we outperform in our contracts. We are often. We'll reach 100% of the contract value and then we'll go back to the government and say, hold on, we've reached the end of our contract. If we'd love to do More. Do you have any spare money you can give us? And so we've managed to do that in quite a number of our contracts. We have something called the European Social Fund, which is from the eu, which obviously is going to be changing now, but we've always won what we call a growth case on all those contracts as well.

Host: Well, you've talked about what a tight ship Helen ran, and that's sort of in the culture of the company now. But what are the other elements that make WorkPay such a high performer compared to its competitors?

Guest: Yeah, we are two things. So we are very nimble and we are driven by KPIs. So we, you know, I am currently sat in Chesterfield. Our biggest office is in Derby. We used to have an office in Sheffield that closed during the pandemic. We used to have, you know, when Helen started the company, I believe it was. We had an office in Mansfield, so. Which is just down the road from us. So we're very quick to move and we're very able to. We can move very, very quickly. The other thing is we have a very entrepreneurial management team. So, for example, our restart contract, we originally won two separate contracts, one with two different prime contractors. We were actually a subcontractor on the restart start contract, which means we have, let's say, jobs 22 work with the government and then we work with jobs 22 to deliver part of their contract. We'd originally run part of a contract. We realized that another provider wasn't going to be able to be able to give their part of contract. So we stepped in and said, we will step up and be able to deliver that contract that this other provider can't do. So we've always been. We've been nimble and entrepreneurial and then finally the whole company is very driven by KPIs, so everyone has, including me, we all have KPIs that we have to meet and everyone is well managed that. But at the same time, we call it the workplace family. Because I feel somehow Helen and Nan have managed to make sure that while people know they have to meet their KPIs, we have very much retained a family feel here.

[37:22] Host: Sounds like it's a great mix of both elements, the qualitative and the quantitative, 100%.

Guest: And I actually just offered a job to someone this morning and I said, I really want you to be part of our family. And I really think that is how we do it. And it was very clear that these are the expectations that you're going to have when you Come to workplace. Workplace. Sorry, but this is a. We are a family.

Host: Talk to me a little bit about having the government as your essentially or governments, but primarily the British government, I think as your sole client. And you have these various different contracts but ultimately it's kind of like the government is behind all of these contracts. And so in some sense you really have very, very heavy customer concentration. That's not so unusual. There are many entire industries that work to serve the government and that's always a feature there. But you're the first searcher I've talked to who has worked for, who has acquired a company whose revenue comes directly from the government.

Guest: Yes. So we actually view it as. So I don't view it as concentration because I see it as our three arms skills, employability and apprenticeship. So I actually, the way I think about concentration is right now we have a lot of exposure to the employability over skills and apprenticeship and we're trying to rebalance that actually. Secondly, I'm really excited by the idea of commercializing a lot of our IP because you know, all this IP goes into all our. We have to come up with our own curriculum and I believe that we should use our online platform to think about commercializing it. So that's a way of getting away from the government. I personally don't see. We also have number of different contracts with various different government departments. The other thing about the UK is that we have a very stable government. With the exception of Brexit, there's very little disruption to British policy. And when one government comes in, they don't come in and then completely change, rip up the policy of the previous government. You generally have a very long lead time. So for example, with any of our contracts, if they are four years, actually that could be over two different governments, when the new government comes in, they're not going to renege on an old contract. So there's no worry there. Generally what happens is they'll actually go out to the industry and they will canvass all of us to hear what we think would work best. So I personally don't see that as an issue. The other thing I would say, and I only got this question from some certain European and all American investors, was hold on. But if it's government is your key counterparty, doesn't that mean that if you know someone, if you're a matrix someone doesn't mean you're going to win a contract? Never got that question from a British investor because it just wouldn't just not happen here. When it does happen and it did happen during COVID It is front page news. So that sort of nepotism just doesn't exist for us. But for me, concentration it's not such an issue. And also we have managed to grow in the industry despite the rest of the industry staying probably pretty stable or even in the beginning of the 2010. Sorry, coming down a bit on growth,

[40:36] Host: not organic growth, but growth through acquisition. This was I think also part of your thesis and you've already touched on it in our pre call. You also said though that getting into the business you now see that just acquiring rapidly is maybe not as that the rapidity with which you can do that maybe isn't as realistic as you thought it was, which is something that I hear a lot from searchers. So please elaborate on that. Now that you're in the seat, how are you feeling about acquisition?

Guest: Do you know? I had one investor who I had most investors. If they said no, it was because of my terms. I had one investor who said no because I think they thought or this, this investment group believed that I was thinking about having investments too quickly and I was being unrealistic, which now I realize I probably was. Yes. So in our industry you have seen a lot of players who have grown, who get vc, PE investment and then have these revenue graphs that look like this, right straight upwards. You give it two years, they fall over. We have to be really, really careful to manage our growth. And you are even seeing that as we've grown organically as well, that we've gone from. My head of finance was telling me that when she joined we had 80 people. That was two years ago. We're now at 122. We might go up to 150 this year just with the contracts we've currently got. And you're seeing growing pains as a result of that. So even just through organic growth over the last year you have seen issues and integrating another company with us I think is going to be pretty. Is going to be tough. There's no doubt. So I'm just very, very mindful of culture. But also if we do integrate, if we do have new businesses, what will actually be the. Are we going to grow quickly? Are we spending too much money? What happens if the worst does happen and the government does change their mind about a contract and we have to not give back money, but we're not able to perform on something or other.

[42:37] Host: One of my guests that his interview hasn't aired yet, but he talks about he has a vision also of growing through acquisition, but he's Just now done his first acquisition and he talks about building a chassis and that this, that this, this first acquisition is the platform. But he just, he learned from one of his PE mentors that you just really, really need to, to feel that that chassis, that first foundational platform company is just super tight, super strong. It's the foundation of everything. So, so, so which is a subtly but separate problem from just growing too quickly. It's just also like is, is that that foundation company strong in all the right ways to support bolting on? Do you feel that work pay is already or do you also just need to kind of like tighten up the chassis a little bit first?

Guest: Good question. I think I need a bit of time personally to understand the business a lot better. It's so easy from the outside and when you're coming up with a hundred page IM with all your great business plan ideas to say these are the list of companies that I want to acquire and I think would be really good additions that you get in the business and you suddenly think, oh hold on, if I acquire this company then this is going to be an issue. Or you realize that actually our business is made up of 122 people trying to do a job. They're not going to get on with someone at the other side of the country potentially. And so actually understanding that personality, even personality issues is really important. So yes, 100% I think the workpays could be an absolutely amazing chassis or platform is how I used to call it. But I think I need a bit of time as well to really understand the business better and actually understand the areas where I think would be best for an acquisition.

Host: Alex, this has been awesome. How can people reach out to you?

Guest: Oh yeah, I love talking to searchers actually or anyone. So I'm actually@alexworkpays.co.uk. great.

Host: And are you active on any of the social networks or mostly? Is email primarily that best way I

Guest: have I have LinkedIn but I generally use it as just as a marketing tool for workdays which not that successfully. So yeah, email or LinkedIn is always great.

Host: Okay, great. Alex, thanks so much for your time. This was a really fun interview.

[45:00] Guest: It's been such a pleasure. Sam.