Take time to gather knowledge as it helps provide an edge

Skyler Ver Bruggen talks to the ICAEW Corporate Finance Faculty about easing her way into the world of buy-outs, from knowing nothing about private equity to becoming origination manager at ECI and what that involves.

How did you get into private equity?

When I left university I knew nothing of private equity. I fell into it when I was offered a job at Skillcapital, an executive search and advisory firm that specialises in private equity, in 2014. I worked mainly with mid-large cap firms, and part of my role was building up a network, which I still use now.

A colleague moved to Sovereign Capital and poached me for their origination team in 2016. It was a nice way in – lacking a traditional corporate finance profile, I may well not have got through the door otherwise. Sovereign has a strong origination team and I did a lot of buy and build – it was a great place to learn. Then in 2019 I moved to ECI.

What was different about working at ECI?

The main difference was fund size. At Sovereign we were investing funds worth a total of £395m, while ECI is investing £700m. Sovereign started life exclusively around buy-and-build but had moved into growth investments.

ECI actually has a number of buy-and-build strategies within its portfolio. The distinctions are disappearing, and they are more around value-add and culture.

ECI is extremely collegiate, whereas Sovereign was more personality led.

Lessons from previous deals?

You probably learn the most from the unnamed deals you work very hard on but don’t win. If you didn’t move fast enough, or pay the highest price, you know better for next time.

One standout deal at Sovereign was Bristow & Sutor, a debt recovery business. There was a lot of stigma attached to the sector, but we looked at the market as a whole and spent a lot of time educating the investment committee on why the sector had changed.

I learned patience. It’s very easy to dismiss deals, but this was an off-market deal, and gathering the required knowledge took a long time.

What is your role now?

I’m in the origination team at ECI, covering financial services and TMT. Part of the role involves new deal flow, maintaining relationships with key corporate finance advisers and meeting businesses. I also work with businesses we’re invested in to identify new targets and manage their M&A strategy.

I’ve worked with Clear Insurance and Arkessa, an M2M managed services provider which is in our portfolio. Clear Insurance has made 25 acquisitions, and while the team are experienced, they no longer have the same capacity to consider M&A strategy.

Conversely, Arkessa has grown organically and is looking at whether it should make its first acquisition. I probably spend 70% of my time on new deals, and 30% on portfolio bolt-on acquisitions.

What skills are needed for origination?

As with any role in private equity, you have to be very self-motivated. You have to be prepared to ask what might seem stupid questions. I was lucky to have a good mentor.

In origination, you can see the returns of whether people are getting back to you or not, and so you learn what works and what doesn’t very, very quickly.

We’re trying to get to know businesses well ahead of investment. Either you’re able to build those types of relationship or you’re not.

Were there any challenges you faced in recent deals?

We recently invested in financial services firm KB Associates. We exchanged in September 2019, and with the COVID-19 lockdown, we have just completed, from home.

The deal was a competitive process. That’s a challenge as there is a tension between forming a meaningful relationship while trying to do diligence workstreams.

I was looking at the potential M&A strategy for the business. We spent a lot of time developing a pipeline of acquisitions that could have come to nothing. But doing that upfront was an indication of both our commitment and support and an opportunity to get to know the KB team better by having a conversation beyond the competitive process.