Mark Tomley Head of CFO practice, talks to Ian Mullen, CFO at Acuity Knowledge Partners on how he prepared for a successful exit. With economic uncertainty affecting valuations, borrowing costs, and risk, investments and acquisitions are being scrutinised even more than usual. Learn how Ian Mullen overcame all obstacles and challenges to ensure Acuity completed its exit.
Mark Tomley - Interviewer
Great to see you, Ian. Thanks for joining us this afternoon.
We were very keen to talk to you about your recent experience at Acuity Knowledge Partners having played a significant role in a very, very successful exit recently, having sold the business to Permira. I believe that this was your first private equity exit as a CFO, and therefore, from our perspective, we're really fascinated to understand a bit more about your experiences and how you found that whole process, having not done it before. So, I'll hand it over to you, but maybe if you just start with a little bit of background on yourself and Acuity, and the situation that you joined the business in, that would be fantastic.
Ian Mullen
Yeah, sure, Mark, happy to help and good to chat.
So yeah, look, I'm a qualified chartered accountant with Price Waterhouse. I've spent 20 years working in investment banking. I worked internationally and I left banking in 2015, and over the last eight years, I've worked in the corporate world, so as you said, you know, private equity exits which took place on Jan 27th. I'd been in the seat as the CFO for circa 2 years and it was my first role as a CFO within the private equity space. So, you know, prior to Acuity, I had worked within private equity but not as a number 1, it was a very different dynamic.
So, I worked at LeasePlan, the largest automotive leasing business in the world, I was the CFO for the UK division, which was the largest of the divisions globally. There were 33 divisions headquartered in the Netherlands. The Netherlands had the primary contact with the private equity house and mine was very limited.
Acuity is, the leading provider, of high-value research and data analytics to financial institutions. So, we have circa 500 balance financial institutions with our customers household names most of them, those customers are segmented across eight different business units with investment banks, credit institutions, private equity houses, and hedge funds. We have circa 6000 people globally, the people that are working on our customer mandates are largely in India, Sri Lanka, Costa Rica and China and our sales functions are in the UK also multiple places in the States. We have a sales presence in Hong Kong, Toronto, Sydney and Dubai
Mark
Ian from when you joined the business and out of interest how quickly did you start to move into potentially prepping the organisation for a sale?
Ian
It was about 12 months is the answer to that Mark. So, I joined in May of 21 and we started the prep for the sale in June of 22. Now the business had been and continues to perform exceptionally well. So, to put that into perspective, the EBITDA of the business has grown by circa 300% from November 19 to the end of 22. So, you know we always even when I joined, I thought that the exit may happen in relatively short order just because of the success of the business and you know there was quite a lot of interest in the company anyway, but we didn't start preparing in earnest until June of last year
Mark
And maybe also interesting to understand, you know the background of the business, this was a carve-out from Moody’s, wasn't it? So, I would have thought, there was a huge amount of sort of transformational work that was needed even prior to prepping for exit.
Ian
Now that that's correct, I would say that a large part of that was done prior to my joining. So, you know it's very sad circumstances for me, even starting the role and then my predecessor died of COVID, so I joined mid-cycle, but you know he had done a very good job with the team of that integration. There were still various parts of finance that needed to be strengthened because historically they have been done by the corporate function. So, you know they didn't exist as a standalone within Acuity. And just talk to us about the exit process itself, I believe that maybe from start to finish it was around, it took around seven months
Mark
Talk to us a little bit more about that whole process.
Ian
It started in the summer with two vendor assist pieces of work that we did which you know went on for, well one of them for nearly three months, the other for about a month. And you know vendor assist is basically us preparing around two things. Firstly, was around tax. So, it was looking at our tax exposure, our tax risks globally and anything that we could do to mitigate anything that was highlighted within those reports there. You know there were things that I wasn't necessarily aware of at the start of this journey that we would have to be, that would be a relatively big part of for instance the financial reports such as run rate, EBITDA, and the importance of that going through this process. There were there things that I suppose when I started the journey I wasn't aware that would be required, but once we've completed all the reports we then worked on some at a high level, that we provided to a limited number of buyers that we'd had inbound interest from
Mark
Having not done this full process up until now, what do you think from your past experiences that have allowed you to be able to manage this process and be successful?
Ian
Having someone like Richard who I could bounce ideas off, discuss things with as we're going through this process, I'd speak to him every week, but you know, I'd say most importantly discussing with him what's next because what’s next is something I didn't necessarily know. So, what was in front of me was relatively easy to deal with. But I would say also Equistone were very supportive throughout the whole process. So was the chairman of Acuity. Both said that you know, I could use them as a sounding board and ask some questions on anything that I didn't understand. So also, a very important, part of the exit process was having the right team in place and that's where DRAX had a very important part to play. So, you know if I go back to the middle of 21, when I started, I had a team entirely offshore, no one in the UK. So, I work closely with DRAX to first make sure they understood the business, but then make sure that they could source, quality people in the market that could come in and add value straight away in the exit process. And you know what, what ultimately happened is, we brought in a long-term structuring change within the business, but also that would add value going through this process. And it was people with specific private equity experience that have been through this process before.
Mark
What have you learned? Difficult question, but is there anything you would have done differently looking back now?
Ian
What would I do differently? I mean, there are certain things - knowing what the bidders and the buyers are now looking at in our business, we will do things differently internally and we have already started to do things differently internally.
Mark
A lot of people say until you've done it, you just don't know how hard work it is. Was it seven months out of your life?
Ian
It was the most intense work I've done in my entire life. And so, yes, it was, it was a huge amount of work and effort. But you know, what I would say is that it was extremely interesting dealing with so many different people, so many different parties. It was intellectually stimulating, but you know, it, shines a light on your business that you would never normally get right because you've got literally hundreds of advisers and consultants looking at your business and highlighting things that they think could be done in a different manner and giving their opinions, you know, you might not agree with them all, but it's very interesting.
Mark
Fantastic and thank you, Ian. I think it's a great, great example of a real success within private equity and I'm sure that the business will continue to thrive under Permira moving forward. So well done and thank you so much for sharing your insights, Fantastic. Thank you, Ian have a good rest of your day and great to catch up.
Ian
Pleasure!
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If you're interested in learning about how we can maximise the potential of your leadership team contact Mark Tomley at mtomley@draxexecutive.com for an in-depth discussion about how our CFO practice can assist your business’s leadership change requirements.
