The Secret Investor on why fund managers don't often do buyouts
PE and VC guys are inherently financially motivated… (greedy)
Hello Rainmakers,
The Secret Investor is back with his unique insights from inside investment committees, funding rounds and deal completions, and a tribute of his own to Abi Godfrey, who’s passing has rocked the corporate finance community.
Don’t forget, the Rainmakers Summit discount code is on this newsletter, but keep reading the rest of it before you get there.
Rainmakers subscribers get two unique pieces a week, but also full access to our back catalogue of investigations, scoops, and insights, including updates from The Secret Investor, interviews with entrepreneurs, and the leaders from VC and PE investors like Endless River Capital, Foresight, Mercia, Puma and now YFM Equity Partners.
I have always tried to keep a venture / private equity slant on this column, and with that in mind I think the most notable deal for most people since you last heard from me would be the YFM management buyout. Whilst we saw a bit of M&A activity in the fund manager space a year or two back, it feels like it’s been a while since we’ve seen a deal of this size and shape in the VC / PE world. I put that down to a number of reasons…
Firstly PE and VC guys are inherently financially motivated… (greedy). They don’t give anything up easily and none of them have paid the team below them enough in carry and bonuses for them to stump up the cash to buy them out. Having said all that, to see a deal of this magnitude get done for what is now a mainstay of the regional VC / PE world speaks volumes about everyone involved. The team buying in, the team bowing out and the quality of both the business and track record they have built between them.
I am certainly a big fan of YFM and it was no surprise to me whatsoever that David Hall is one of the few in recent years to deliver what appears to be both a great deal for him and David Bell, as well as a tremendous opportunity for Jamie, Eamon and Marcus to take the business forward from here. A deal of that nature can only be delivered through incredibly careful succession planning and whether through a long term exit plan or by simply doing the right thing by everyone involved along the way, it sounds like they’ve landed in a great place.
Congrats to all involved - and I did enjoy Sheryl Moore’s interview with David, I’m surprised she got a word in edgeways!
The other deal that caught my eye in the venture space was the close of the fundraise (and follow up interview by TheBusinessdesk.com’s Michael Taylor) into Modern Milkman. I’ve met Simon very early on in his journey and I loved what he was doing. I’d be lying if I didn’t say I had some reservations about how he would scale a mainstream consumer brand. He was pretty raw at this point, and had rebounded pretty swiftly from what sounded like a messy end to the Roaming Roosters journey, but his passion and belief in what he was doing was very impressive. There are many similarities between Modern Milkman and the Brewdog stories in that sense and I believe Simon has a bit of what James Watt has in him (and I’m not talking about copious pints of ale). He believes that customers deserve better and in doing the right thing… but also in sticking it to the incumbents who have such a stranglehold on a market they seem to serve very poorly.
