00:00:12:09 - 00:00:13:24 Hello and welcome to The

00:00:13:24 - 00:00:18:07 Amazing, a weekly livestream recording of a podcast series

00:00:18:07 - 00:00:22:22 devoted to acquisition entrepreneurs, search funds and how co builders.

00:00:22:25 - 00:00:27:22 This week we are diving into the next in our series of interviews

00:00:27:22 - 00:00:32:04 with successful search fund entrepreneurs and acquisitions opportunities.

00:00:32:11 - 00:00:38:17 We have with us today Amit Rai, who is co-founder of Astra Holding Group,

00:00:38:19 - 00:00:41:23 a holding company that has done two acquisitions

00:00:41:23 - 00:00:44:28 in quick succession in recent months, which we'll learn all about shortly,

00:00:45:00 - 00:00:49:00 and who provide a long term home for British industrial SMEs.

00:00:49:02 - 00:00:51:26 It has incredible global experience spanning top tier

00:00:51:26 - 00:00:57:02 consulting with big McKinsey senior roles at tech giants like Microsoft and Nokia.

00:00:57:05 - 00:01:00:16 And the roller coaster of the startup world is including

00:01:00:16 - 00:01:04:23 founding machine Max, which was successfully acquired by Shell,

00:01:04:26 - 00:01:07:27 and he's now applying his wealth of strategic and operational experience

00:01:07:27 - 00:01:09:32 to building a portfolio of industrial businesses.

00:01:09:32 - 00:01:13:13 Amit We're honored to have you with us. So welcome.

00:01:13:16 - 00:01:15:30 Thanks for having me as a guest.

00:01:15:30 - 00:01:18:13 Well, thank you for giving up your valuable time.

00:01:18:13 - 00:01:19:21 With a growing portfolio.

00:01:19:21 - 00:01:22:30 You're in incredible demand, I should imagine, as well as trying to get

00:01:22:33 - 00:01:24:11 additional portfolio

00:01:24:11 - 00:01:28:03 companies into the group, which we'll certainly get onto in a moment.

00:01:28:06 - 00:01:30:19 Before we do, before we dive into the questions for you today,

00:01:30:19 - 00:01:36:09 I just wanted to share a little bit of a celebration for the launch of software by.

00:01:36:12 - 00:01:41:20 Yes, it is a search focused on buying businesses in Poland.

00:01:41:23 - 00:01:45:06 Lovely to see more search funds kick off in Eastern Europe.

00:01:45:07 - 00:01:48:07 So we wish Logic and his team the best.

00:01:48:14 - 00:01:52:24 So let's get stuck in to your history if you like.

00:01:52:24 - 00:01:54:15 You didn't mind giving us a bit of a background

00:01:54:15 - 00:01:56:14 on your path to becoming a serial acquirer.

00:01:56:14 - 00:02:00:08 Your CV reads a bit like a who's who of global businesses

00:02:00:08 - 00:02:03:27 top consulting firms, big tech start ups.

00:02:04:01 - 00:02:06:05 This is a diverse mix.

00:02:06:05 - 00:02:09:31 And so how have the sort of experiences that you've gleaned there and the strategy

00:02:09:31 - 00:02:14:08 and corporate operational skillset, if you will, that you've built

00:02:14:10 - 00:02:17:11 helps you in this in this journey?

00:02:17:13 - 00:02:17:32 So there has

00:02:17:32 - 00:02:21:27 been two sort of primary drivers behind founding Astro.

00:02:21:29 - 00:02:25:20 The first one is actually a personal one, and in some ways it's the biggest driver.

00:02:25:23 - 00:02:28:33 My dad ran a successful industrial SMB in India,

00:02:29:02 - 00:02:32:02 but he had to shut it down because of lack of succession, i.e.

00:02:32:03 - 00:02:34:23 me and my brother deciding not to join him.

00:02:34:23 - 00:02:36:31 But watching that unfold, you know, I saw

00:02:36:31 - 00:02:40:11 firsthand the toll it took on him, his employees and even his customers.

00:02:40:11 - 00:02:42:10 And that sort of stuck with me.

00:02:42:10 - 00:02:45:02 The second is sort of the macro opportunity in this area.

00:02:45:02 - 00:02:49:15 In the UK, SMEs drive half of the private sector GDP,

00:02:49:18 - 00:02:52:18 half of them, because of the aging population, will be on sale

00:02:52:21 - 00:02:55:20 in the next decade or so, and yet 70% won't find a buyer.

00:02:55:20 - 00:02:59:21 So there's a big problem with succession in a huge part of the economy,

00:02:59:21 - 00:03:00:21 which is Assamese.

00:03:00:21 - 00:03:02:20 And within that SME sector

00:03:02:20 - 00:03:06:33 there is a massive opportunity to bring tech to boost productivity.

00:03:07:01 - 00:03:10:14 Within my time at machine maximum and in strategy consulting,

00:03:10:17 - 00:03:13:09 I've seen how even little bit of tech

00:03:13:09 - 00:03:16:18 in really helped boost productivity, especially in the industrial sector.

00:03:16:26 - 00:03:19:29 So that's really the reason, you know, decided to found Astra.

00:03:19:29 - 00:03:22:06 It sits at the intersection of two things.

00:03:22:06 - 00:03:25:11 I care about helping great businesses with succession

00:03:25:19 - 00:03:30:10 and using tech to unlock their full potential.

00:03:30:13 - 00:03:32:25 Yeah, Tech's played a big role in your life.

00:03:32:25 - 00:03:34:08 How have you reported to Bear?

00:03:34:08 - 00:03:36:17 Just just to sort of talk a little bit about the businesses

00:03:36:17 - 00:03:41:27 that you have acquired recently bought into DOR and ACORN,

00:03:41:30 - 00:03:44:02 to businesses

00:03:44:02 - 00:03:47:13 that sort of fall under a common thesis or things that are fun.

00:03:47:13 - 00:03:52:05 But how have you been able to bring sort of digital transformation

00:03:52:08 - 00:03:55:08 into sort of value creation in those portfolio companies so far?

00:03:55:11 - 00:03:55:31 Yeah.

00:03:55:31 - 00:04:00:00 So just to give listeners a quick reminder of what those two companies are into,

00:04:00:00 - 00:04:04:31 DOR is an industrial specialist, door maintenance and repair company.

00:04:04:32 - 00:04:09:24 They're based out of an ACORN is a mechanical engineering company

00:04:09:24 - 00:04:14:29 that specializes on pipework refurbishment in hospitals and universities.

00:04:15:03 - 00:04:18:12 So what you see is, you know, both of them are very engineering driven companies.

00:04:18:15 - 00:04:20:18 They're super niche and market leaders.

00:04:20:18 - 00:04:24:03 Now, going back to a question about tech, there are two ways we think about tech.

00:04:24:06 - 00:04:25:33 One is essentials.

00:04:25:33 - 00:04:29:02 You know, how can we bring basics to these businesses?

00:04:29:03 - 00:04:31:07 You know, we have gone in and updated the website.

00:04:31:07 - 00:04:33:00 We have introduced CRM for them.

00:04:33:00 - 00:04:36:33 We are putting in tools that can do monthly financial reporting.

00:04:36:33 - 00:04:39:04 You know, it might sound quite simple,

00:04:39:04 - 00:04:41:33 but these are things which a lot of these successful enemies

00:04:41:33 - 00:04:44:33 miss because they've never had any reason to invest in tech.

00:04:45:04 - 00:04:47:17 So that's one really fixing the essentials.

00:04:47:17 - 00:04:51:20 The second is really looking the business and saying, what customer pool

00:04:51:22 - 00:04:56:08 can we build or bring to the market that could give this company an unfair

00:04:56:09 - 00:04:57:13 edge in the market.

00:04:57:13 - 00:05:01:14 So we are in the process of building one into door, which is a door company.

00:05:01:20 - 00:05:06:09 And what we are building is a door management platform that the end customers

00:05:06:09 - 00:05:10:01 have into doors, which are usually large grocers or warehouse operators,

00:05:10:04 - 00:05:13:25 can see the status of each door from a simple app.

00:05:13:25 - 00:05:17:06 They can see what is the current status is it then Amber Green

00:05:17:08 - 00:05:19:04 then was the last time maintenance was done

00:05:19:04 - 00:05:21:14 and when is the next time a service is due?

00:05:21:14 - 00:05:26:09 And it will start off by by entering the data in a manual way.

00:05:26:09 - 00:05:29:11 But over a period of time we would put sensors into these doors as well.

00:05:29:18 - 00:05:31:23 So this data is automatically updated, right?

00:05:31:23 - 00:05:33:24 So that is what we're trying to bring to the market,

00:05:33:24 - 00:05:39:06 which hopefully will give these businesses an unfair edge in the market.

00:05:39:09 - 00:05:40:26 You mentioned the two strands.

00:05:40:26 - 00:05:45:20 They will look like the rudimentary hygiene things that I guess we will

00:05:45:22 - 00:05:49:11 quickly, the folks doing an acquisition of ownership from finance,

00:05:49:14 - 00:05:52:14 they would probably expect things like zero

00:05:52:21 - 00:05:58:18 cloud based, we are P or if we type software to be

00:05:58:21 - 00:05:59:29 to be rudimentary.

00:05:59:29 - 00:06:02:08 And there

00:06:02:08 - 00:06:04:28 have you found that really that's not the case though

00:06:04:28 - 00:06:09:22 that actually simple simple transformation and that same thing at a lot of better

00:06:09:28 - 00:06:12:28 financial control or better margin control.

00:06:13:00 - 00:06:14:04 Yeah, absolutely right.

00:06:14:04 - 00:06:18:17 And in two areas where we tend to find businesses not adopting technology

00:06:18:17 - 00:06:22:21 is on the customer acquisition side and the customer management side.

00:06:22:21 - 00:06:24:20 And second is on the financial side.

00:06:24:20 - 00:06:28:23 On the customer acquisition side, you know, things like CRM or website,

00:06:28:26 - 00:06:32:05 we routinely find people are not investing in it

00:06:32:07 - 00:06:33:16 just because they don't need to.

00:06:33:16 - 00:06:36:04 You know, their business is growing year on year.

00:06:36:04 - 00:06:38:25 They have more work than they can handle.

00:06:38:25 - 00:06:42:13 And you know, they're not trying to grow 20, 30%, so they don't really invest

00:06:42:13 - 00:06:45:27 in even updating their website again because they don't need to.

00:06:45:29 - 00:06:47:11 Many of them are not even on LinkedIn.

00:06:47:11 - 00:06:48:16 They don't know what LinkedIn is.

00:06:48:16 - 00:06:50:20 If you have to tell them what LinkedIn is and why.

00:06:50:20 - 00:06:53:20 In the B2B world, it's an important place to be.

00:06:53:28 - 00:06:56:28 Again, that all goes to the fact because these are successful businesses.

00:06:56:29 - 00:07:00:12 Similarly, on the financial side as well, you know, a question we often get asked

00:07:00:12 - 00:07:04:24 is why do you need financial reporting, you know, outside of statutory reporting?

00:07:04:30 - 00:07:07:17 And you very quickly start going into things about, you know, well,

00:07:07:17 - 00:07:10:17 how do you know you're managing your cash and you might run out of cash?

00:07:10:23 - 00:07:14:16 Well, the more successful businesses are sitting on a pile of cash,

00:07:14:19 - 00:07:16:05 they know at the end to make a profit.

00:07:16:05 - 00:07:18:21 And that pile of cash year on year just keeps on increasing.

00:07:18:21 - 00:07:21:17 So they don't really have any reason to invest in it.

00:07:21:17 - 00:07:24:04 Of course, with us coming in and putting a bit of leverage on it,

00:07:24:04 - 00:07:28:32 we need to manage cash slightly more in a nuanced fashion than these guys do.

00:07:28:32 - 00:07:30:07 So we have to bring these technology.

00:07:30:07 - 00:07:34:07 So yeah, maybe we find this quite often that basic rudimentary tools

00:07:34:07 - 00:07:36:00 have not been adopted.

00:07:36:00 - 00:07:38:27 And I guess your pursuit of growth is

00:07:38:30 - 00:07:40:05 rightly ambitious

00:07:40:05 - 00:07:43:06 and therefore managing cash

00:07:43:06 - 00:07:48:03 to be able to invest in growth, but at the same time

00:07:48:06 - 00:07:51:13 finding capital efficient ways of achieving growth

00:07:51:16 - 00:07:56:08 at a at pace in order to grow the bottom line, grow the multiple, etc., etc..

00:07:56:10 - 00:07:56:21 There's a

00:07:56:21 - 00:08:00:14 probably a different set of disciplines now or a different set of conditions

00:08:00:14 - 00:08:03:33 that you brought to the businesses that maybe they didn't have the floor.

00:08:04:02 - 00:08:06:14 Yeah, and you know, the two things that we bring in.

00:08:06:14 - 00:08:08:01 So definitely digitization.

00:08:08:01 - 00:08:11:09 But the other thing we also do is what we call professionalizing

00:08:11:11 - 00:08:13:16 the operations, where the biggest question

00:08:13:16 - 00:08:16:16 sometimes we do is we step back and say, you know, what's a one year plan?

00:08:16:17 - 00:08:18:07 Three year plan and five year plan?

00:08:18:07 - 00:08:20:26 And what we find is most people have no clue.

00:08:20:26 - 00:08:22:24 Right? And again, they don't think like that.

00:08:22:24 - 00:08:26:08 They have know often thinking, not often thinking in that kind of horizon.

00:08:26:10 - 00:08:27:27 Yeah, they just don't think like that.

00:08:27:27 - 00:08:30:05 And, you know, the question is, again, if you're not thinking about Horizon,

00:08:30:05 - 00:08:32:14 then you cannot make investments today that will help you

00:08:32:14 - 00:08:35:00 three years down the line or five years down the line.

00:08:35:00 - 00:08:38:03 So, you know, we do a lot of those sort of soul searching right at the beginning.

00:08:38:11 - 00:08:42:12 We give them the confidence that they can go and achieve bigger things

00:08:42:12 - 00:08:45:07 and they are willing to invest in it makes sense.

00:08:45:07 - 00:08:49:27 And then they back it up with digital investments as well.

00:08:49:30 - 00:08:52:13 So let's get a bit more into Astra's thesis, if we can.

00:08:52:13 - 00:08:56:14 You mentioned the sort of high level and the types of businesses

00:08:56:14 - 00:09:01:03 that you've acquired so far, but you're a bit different because

00:09:01:06 - 00:09:04:15 you are, instead of being a sort of typical search fund

00:09:04:18 - 00:09:09:03 aiming for one acquisition and later exit, you are deliberately a serial acquirer

00:09:09:03 - 00:09:13:19 and the long term permanent capital kind of home for these businesses.

00:09:13:22 - 00:09:16:10 You have talked about your core philosophies behind that.

00:09:16:10 - 00:09:20:01 But but when you're speaking to sellers, what kind of a proposition

00:09:20:01 - 00:09:24:26 as an alternative to sort of private equity do you emphasize

00:09:24:28 - 00:09:28:20 the biggest thing is really legacy and keeping their legacy.

00:09:28:23 - 00:09:31:24 A lot of private equity firms in such as might talk about it,

00:09:31:32 - 00:09:34:27 but the reality of the core model is the only way as such is going to

00:09:34:27 - 00:09:37:05 make money is by selling this business at the end.

00:09:37:05 - 00:09:39:19 Now, they might end up selling it to another.

00:09:39:19 - 00:09:42:27 So you have private equity house who might decide to continue

00:09:42:27 - 00:09:46:02 with the band, the legacy, the team, or they might not.

00:09:46:05 - 00:09:50:25 So the really don't have that flexibility in the model to think

00:09:50:25 - 00:09:54:12 long term beyond say a seven year period whereas in the serial acquirer model

00:09:54:12 - 00:09:59:14 we have that flexibility and the luxury really to think in a perpetual timeframe.

00:09:59:16 - 00:10:03:00 And that is something that really, really appeals to sellers.

00:10:03:00 - 00:10:04:32 Not all of them want the highest cash, of course.

00:10:04:32 - 00:10:07:02 Everybody wants to get as much cash as they can,

00:10:07:02 - 00:10:10:17 but they're are also asking questions and how would we take care of the team?

00:10:10:17 - 00:10:12:02 How would we take care of the customers?

00:10:12:02 - 00:10:16:19 They plan because they want their businesses to outlast them

00:10:16:19 - 00:10:21:05 and that's a promise we can make because a model allows for that.

00:10:21:08 - 00:10:21:23 Does that does

00:10:21:23 - 00:10:23:28 that mean that the sellers in both businesses

00:10:23:28 - 00:10:27:24 so far have been of that sort of generational wealth transfer,

00:10:27:24 - 00:10:31:27 kind of silver tsunami era, the baby boomer generation?

00:10:31:30 - 00:10:32:29 Yeah, exactly right.

00:10:32:29 - 00:10:34:19 And in both cases, we've had sellers.

00:10:34:19 - 00:10:38:18 In one case, the person was late seventies, the other case early seventies.

00:10:38:21 - 00:10:40:14 In one case, you know, he has two sons.

00:10:40:14 - 00:10:41:23 Both are professionals.

00:10:41:23 - 00:10:43:23 One is actually in U.S.

00:10:43:23 - 00:10:46:29 He's he's a partner in a professional services firm.

00:10:46:32 - 00:10:50:23 In the second case, the seller had two daughters, one in NHS,

00:10:50:23 - 00:10:53:30 one in police and is not interested in entering companies.

00:10:53:30 - 00:10:57:23 So that's the case where the children are not interested in the business.

00:10:57:25 - 00:10:59:28 And, you know, people are thinking about retiring.

00:10:59:28 - 00:11:03:11 They want to unlock that cash, not so much for themselves,

00:11:03:17 - 00:11:06:30 but actually for for their families.

00:11:07:00 - 00:11:07:12 You know,

00:11:07:12 - 00:11:08:25 this is something that they have created over

00:11:08:25 - 00:11:10:13 a period of time and they want to make sure

00:11:10:13 - 00:11:12:11 they're passing on something to the next generation.

00:11:12:11 - 00:11:13:09 So that's number one.

00:11:13:09 - 00:11:16:21 Number two, they also want to make sure they're taking care of the team.

00:11:16:28 - 00:11:18:08 In some ways,

00:11:18:08 - 00:11:21:13 their teams are even closer to them than the children

00:11:21:13 - 00:11:23:29 because they've been working with them for 30 to 40 years,

00:11:23:29 - 00:11:25:04 you know, on a day to day basis.

00:11:25:04 - 00:11:29:26 So they do want to find a succession solution that would really help the teams.

00:11:29:29 - 00:11:34:29 We find that so often that sellers are very conscientious about

00:11:34:31 - 00:11:38:32 not only their person or legacy, but the continuity of employment

00:11:38:32 - 00:11:40:29 for the people that have served them

00:11:40:29 - 00:11:44:05 and worked alongside them for so many decades in office.

00:11:44:07 - 00:11:47:07 Often the case so interesting to see that playing out.

00:11:47:11 - 00:11:50:23 So what specifically attracted you to each of the two businesses

00:11:50:31 - 00:11:54:15 with their common traits, or did you assess them each on their merits?

00:11:54:15 - 00:11:57:01 Like what? What

00:11:57:04 - 00:11:59:04 motivated you to acquire these specifically?

00:11:59:04 - 00:11:59:16 Yeah.

00:11:59:16 - 00:12:04:16 So there's sort of a broader theme we're going after, which is industrials in UK

00:12:04:19 - 00:12:08:31 are the reasons to go behind industrial is it's a huge total addressable market.

00:12:08:31 - 00:12:13:10 A lot of these businesses are unsexy and they're outside of London.

00:12:13:13 - 00:12:16:33 Nobody wants to go live in the places with these businesses operate out of,

00:12:17:02 - 00:12:20:13 which essentially makes it not a great fit for surgeons,

00:12:20:15 - 00:12:23:00 which also means that the valuation is much more reasonable

00:12:23:00 - 00:12:26:07 than, for example, buying a SAS business that is based in London.

00:12:26:07 - 00:12:26:15 Right?

00:12:26:15 - 00:12:29:15 So so that's one I think the time is huge.

00:12:29:21 - 00:12:32:12 The second thing is having worked with industrial companies

00:12:32:12 - 00:12:35:01 and having bought technology to industrial companies,

00:12:35:01 - 00:12:38:01 I know here is the case with even a little bit of technology

00:12:38:03 - 00:12:41:21 and digital, it can make a massive impact to the bottom line.

00:12:41:24 - 00:12:46:01 And yet it's not an existential threat to the industry.

00:12:46:01 - 00:12:48:04 So if you think about it now, you know, it

00:12:48:04 - 00:12:51:04 may or may not be an existential threat to accounting, to coding,

00:12:51:09 - 00:12:53:31 but when it comes to fixing doors, you still need humans, right?

00:12:53:31 - 00:12:56:18 So that's that's the second reason.

00:12:56:18 - 00:12:58:18 And then within that, we are looking really for asset

00:12:58:18 - 00:13:01:30 light businesses and more service oriented businesses.

00:13:01:30 - 00:13:04:18 People tend to be scared of service oriented businesses

00:13:04:18 - 00:13:09:12 because your IP, your asset walks out the door every day.

00:13:09:15 - 00:13:12:32 But what we feel is that if we provide good technology behind it,

00:13:13:05 - 00:13:17:01 we can lock in not only the engineers but also lock in the customers.

00:13:17:03 - 00:13:20:02 So that is why we've decided to focus on engineering businesses.

00:13:20:02 - 00:13:26:08 And even within engineering, you know, we lean more towards asset light businesses.

00:13:26:10 - 00:13:28:19 Yeah, I think

00:13:28:19 - 00:13:32:17 there's that Richard Branson saying, isn't there with regard to talent around

00:13:32:20 - 00:13:36:02 train them so that they're attractive to the competition

00:13:36:05 - 00:13:39:04 but treat them so they don't want to go and work for the competition.

00:13:39:04 - 00:13:43:02 I've butchered that phrase, but the word being, it's a combination of set

00:13:43:06 - 00:13:44:21 the conditions to make them want to stay.

00:13:44:21 - 00:13:48:19 But part of that being make sure they're the best they can be at the job 100%.

00:13:48:23 - 00:13:51:15 And there's a very nice, virtuous loop that you can build.

00:13:51:15 - 00:13:55:25 And honestly, the most successful services businesses do that, which is if you do

00:13:55:25 - 00:13:58:03 good work, your customers will pay you more,

00:13:58:03 - 00:14:00:00 which will allow you to have bigger margin.

00:14:00:00 - 00:14:02:25 If you're bigger margins, you would pay your people better.

00:14:02:25 - 00:14:05:16 If you pay your people better, you will get better people, right?

00:14:05:16 - 00:14:06:29 And on and on and on it goes.

00:14:06:29 - 00:14:10:16 And that is what we really want to do, is we only have that in place

00:14:10:16 - 00:14:11:26 in the businesses we bought.

00:14:11:26 - 00:14:15:13 And with technology, hopefully we can make that look even better.

00:14:15:16 - 00:14:16:22 Yeah, 100% agree.

00:14:16:22 - 00:14:19:13 And then you've got your talent pipeline piece as well in regards

00:14:19:13 - 00:14:21:08 to making sure you're forever bringing, you know

00:14:21:08 - 00:14:24:18 you thought through the organization so that you've got that constant sort

00:14:24:18 - 00:14:28:25 of availability of engineers, particularly if you're looking to scale,

00:14:28:28 - 00:14:32:31 that's often a kind of a bottleneck moment for many businesses in the service space

00:14:32:31 - 00:14:38:22 is finding good technicians, good trade skills to to help support that growth.

00:14:38:25 - 00:14:39:33 But of course, if you're making the business

00:14:39:33 - 00:14:42:33 more efficient and enabling them to do their job more efficiently, then

00:14:42:33 - 00:14:46:12 you know, you can actually grow capacity without growing overhead sometimes.

00:14:46:19 - 00:14:47:09 Yeah, Yeah.

00:14:47:09 - 00:14:52:20 And one of the most interesting things I found is engineers love technology.

00:14:52:23 - 00:14:55:02 You know, you think there might be a perception

00:14:55:02 - 00:14:56:30 that you go in and try and put in technology

00:14:56:30 - 00:15:01:14 which will improve the efficiency and they would not like it quite the opposite.

00:15:01:14 - 00:15:04:08 They love innovation, they love growth,

00:15:04:08 - 00:15:05:28 and they love the fact that somebody is trying

00:15:05:28 - 00:15:08:06 to bring all these new technologies to the business.

00:15:08:06 - 00:15:11:18 And that actually becomes a huge way of attracting new engineers into

00:15:11:18 - 00:15:13:09 the business as well.

00:15:13:12 - 00:15:15:25 Yeah, really nice to hear of that.

00:15:15:25 - 00:15:17:12 The lived experience there.

00:15:17:12 - 00:15:20:19 Going back to life experience, I suppose we wanted to spend a bit of time

00:15:20:19 - 00:15:24:15 on your sort of journey before you launched Astra.

00:15:24:18 - 00:15:29:06 We took you, you had an exit machine next to Shell.

00:15:29:06 - 00:15:32:07 Maybe you might be able to speak a little bit about, about, about that.

00:15:32:07 - 00:15:35:11 But you also in our pre kind of call, you've talked

00:15:35:11 - 00:15:38:23 about some of the failures along the way, the sort of picking yourself

00:15:38:23 - 00:15:42:30 up, dusting yourself off and going on to the next opportunity.

00:15:42:32 - 00:15:46:09 How is that kind of prepared you for this challenge?

00:15:46:12 - 00:15:48:27 Yeah so machine Max you know thankfully work out

00:15:48:27 - 00:15:52:08 and the built in industrial telematics platform

00:15:52:11 - 00:15:54:04 we scaled it to presence in 30 countries

00:15:54:04 - 00:15:57:31 at the peak we were managing assets worth almost $1,000,000,000.

00:15:58:00 - 00:16:01:23 And you know we managed to exit the shell and it was sort of successful.

00:16:01:26 - 00:16:03:02 But I've had enough failures.

00:16:03:02 - 00:16:07:07 And you know, the couple of lessons you learn from going through those failures,

00:16:07:10 - 00:16:10:10 the biggest one, whether you want to learn it or not, is humility.

00:16:10:15 - 00:16:15:14 You know, it takes a long, long time to build a successful business

00:16:15:14 - 00:16:16:12 from scratch.

00:16:16:12 - 00:16:19:12 It takes time, it takes grit, and it takes luck.

00:16:19:20 - 00:16:24:03 The second one is it becomes quite clear that for long term success,

00:16:24:06 - 00:16:28:06 you need to focus on what I call software, which is people, talent,

00:16:28:06 - 00:16:32:06 culture as opposed to hardware, which is, you know, the addressable market

00:16:32:06 - 00:16:33:16 or the product.

00:16:33:16 - 00:16:38:05 And again, you know, it's very difficult to Xavier culture, which is not working.

00:16:38:05 - 00:16:41:27 And so those have been the critical lessons that you bring to Astra.

00:16:41:30 - 00:16:44:00 We're not trying to build from scratch.

00:16:44:00 - 00:16:46:19 We buy great businesses and help them grow.

00:16:46:19 - 00:16:48:22 We avoid distressed assets.

00:16:48:22 - 00:16:51:19 If the current owner couldn't fix it, what gives us

00:16:51:19 - 00:16:54:19 the right to go in and think we can fix it from outside?

00:16:54:25 - 00:16:56:26 Right. And that's been the biggest lesson.

00:16:56:26 - 00:17:00:23 And once we buy these companies, we continue to overindex on the team

00:17:00:23 - 00:17:06:24 and culture because that will what will keep them great over the next few decades.

00:17:06:26 - 00:17:08:23 Love that, love that it's people centric businesses

00:17:08:23 - 00:17:09:11 and you're looking at ways

00:17:09:11 - 00:17:13:24 in which to augment and empower those people to grow those businesses.

00:17:13:24 - 00:17:15:02 That's that's really great.

00:17:15:02 - 00:17:18:29 I think just to your point about not buying distressed,

00:17:18:31 - 00:17:21:25 given the way that you're structured and maybe you can go on a little bit

00:17:21:25 - 00:17:25:03 to sort of the capitalization piece of Astra,

00:17:25:06 - 00:17:27:12 it's not the sort of risk

00:17:27:12 - 00:17:30:23 you can necessarily take with it with Investors Capital, is it?

00:17:30:23 - 00:17:32:02 Let's be honest.

00:17:32:02 - 00:17:35:16 Tell us a little bit about about that and how that steers your thesis.

00:17:35:19 - 00:17:37:26 Yeah, I mean, so a bit about our structure.

00:17:37:26 - 00:17:43:10 So we're not structured as a fund, be structured as a private, limited company.

00:17:43:13 - 00:17:45:31 We bring equity into the holdco

00:17:45:31 - 00:17:48:14 and then we take that on a deal by deal basis today.

00:17:48:14 - 00:17:49:32 And as far as the equity is concerned, you know,

00:17:49:32 - 00:17:51:11 as we buy more and more companies,

00:17:51:11 - 00:17:54:05 the value of the holdco increases and the share price increases.

00:17:54:05 - 00:17:58:08 So it gives incentive for investors to come in early rather than late.

00:17:58:08 - 00:17:59:04 Right.

00:17:59:04 - 00:18:02:04 But we really have investors who are thinking about long term exit.

00:18:02:08 - 00:18:05:13 And, you know, it is truly patient capital.

00:18:05:15 - 00:18:06:00 And then going

00:18:06:00 - 00:18:09:00 back to, you know, how do we deploy that capital in a good way?

00:18:09:00 - 00:18:11:02 Again,

00:18:11:02 - 00:18:12:21 buying a cheap asset

00:18:12:21 - 00:18:16:27 is not necessarily going to bring good risk adjusted return.

00:18:16:27 - 00:18:18:14 And to that equity capital,

00:18:18:14 - 00:18:22:02 you know, something that is expensive is probably expensive for a reason.

00:18:22:05 - 00:18:25:17 And as many smart investors have said over and over again, you know, it's

00:18:25:18 - 00:18:28:18 it's better to buy the right asset as opposed to the cheap asset.

00:18:28:18 - 00:18:29:20 And we totally believe in that.

00:18:29:20 - 00:18:31:02 You know, we are looking for the right assets

00:18:31:02 - 00:18:34:26 to add not necessarily cheap or distressed assets.

00:18:34:29 - 00:18:38:02 Some of the trained ears and eyes amongst

00:18:38:02 - 00:18:42:21 our viewership will have picked up on that discipline and that that focus

00:18:42:21 - 00:18:48:03 on the sort of accretive acquisitions, the permanent capital base, the it sounds

00:18:48:03 - 00:18:52:24 almost akin to some of the Scandinavian permanent codes that we see.

00:18:52:24 - 00:18:58:14 I mean, I personally sold my company to and worked for for a few years in Detroit,

00:18:58:17 - 00:19:01:22 so I'm a big fan of that model, which as you can just see from there,

00:19:01:22 - 00:19:05:21 price to earnings ratio, you know, it does pay off

00:19:05:21 - 00:19:08:32 because you're trading at that kind of multiple publicly

00:19:09:06 - 00:19:12:22 every deal you do even like six, seven, eight X

00:19:12:24 - 00:19:16:07 on a on an acquisition multiple is still accretive to the company

00:19:16:07 - 00:19:20:28 and you recycle the cash from the dividends to the holdco into more

00:19:20:31 - 00:19:21:16 acquisitions.

00:19:21:16 - 00:19:24:16 So it's a beautiful self perpetuating model,

00:19:24:23 - 00:19:27:21 drawing some some inspiration there as we go.

00:19:27:21 - 00:19:29:10 100% right.

00:19:29:10 - 00:19:31:26 I think they are the North Star.

00:19:31:26 - 00:19:33:32 We were in Stockholm earlier this year as well.

00:19:33:32 - 00:19:36:17 We made a presentation at a civil press conference

00:19:36:17 - 00:19:38:04 and we met a lot of those folks.

00:19:38:04 - 00:19:40:07 So we love it what they're doing.

00:19:40:07 - 00:19:42:30 They really championed this model, this notion of having

00:19:42:30 - 00:19:46:27 a decentralized portfolio and really trusting in your management team

00:19:46:30 - 00:19:49:26 and that's showing in results is is insane.

00:19:49:26 - 00:19:53:12 You know, a lot of time and I talk to my friends who have been potential investors,

00:19:53:14 - 00:19:56:08 they can't believe that those serial acquirers

00:19:56:08 - 00:20:00:04 have given better returns than even buckshot over a 20 year period.

00:20:00:04 - 00:20:02:23 So this is not a flash in the pan. It's a proven model.

00:20:02:23 - 00:20:05:23 And we really want to take inspiration from that model.

00:20:05:30 - 00:20:07:16 The only thing we want to add to that in

00:20:07:16 - 00:20:11:19 some ways is really bringing the digital and the tech angle.

00:20:11:22 - 00:20:14:08 Digital and tech is one thing, which is probably not a big thing.

00:20:14:08 - 00:20:17:29 You know, 20, 30 years ago, these guys are still relatively scared of it.

00:20:18:02 - 00:20:21:29 But it's also one area where a pure, decentralized model might not work

00:20:21:31 - 00:20:24:31 because these individual companies don't have the necessary skills.

00:20:24:33 - 00:20:28:13 And for them to adopt digital, you might have to give them a bit

00:20:28:15 - 00:20:29:27 more help than normally.

00:20:29:27 - 00:20:31:22 These cities requires too.

00:20:31:22 - 00:20:35:12 But for sure, you know, they they are an inspiration.

00:20:35:14 - 00:20:37:33 Sweden is one for the size of UK

00:20:37:33 - 00:20:41:09 and has more than 30 plus listed serial acquirers.

00:20:41:11 - 00:20:41:18 Yeah.

00:20:41:18 - 00:20:45:00 And a new one recently with with with Rocco

00:20:45:03 - 00:20:49:13 3 billion exit fantastic sort of outcome within six years.

00:20:49:16 - 00:20:53:20 So I definitely think you know 1015 years down the line we are going to have 3040

00:20:53:23 - 00:20:58:17 you know successful serial acquirers in UK as well and ASTA would be one of them.

00:20:58:20 - 00:21:00:04 Yeah, we're very bullish very long on that.

00:21:00:04 - 00:21:03:18 We think exactly the same that the conditions are aligning for

00:21:03:18 - 00:21:08:13 permanent holdco's serial acquirers to grow in the UK.

00:21:08:16 - 00:21:12:26 You saw Simon Orange recently with Corp back exiting to TDR.

00:21:12:27 - 00:21:13:30 You think, well there

00:21:13:30 - 00:21:17:25 you go, there's a progenitor, there's a there's a case in point that you can build

00:21:17:28 - 00:21:22:10 a portfolio of companies even if they are decentralized largely,

00:21:22:13 - 00:21:24:29 and you can get a, you know, a unicorn exit from them.

00:21:24:29 - 00:21:27:20 So yeah, more of the same.

00:21:27:20 - 00:21:31:19 I'd love to see, you know, you leading from the front with that one.

00:21:31:19 - 00:21:34:05 I mean, no pressure. Of course. Steve It's okay.

00:21:34:05 - 00:21:35:21 So let's, let's get it.

00:21:35:21 - 00:21:39:16 You spoke you talk specifically there about some of the vertical specific tech

00:21:39:16 - 00:21:40:01 that you've added.

00:21:40:01 - 00:21:44:30 And to think in those terms with a door company which, you know,

00:21:44:33 - 00:21:47:33 might look a bit prosaic to the untrained eye, but actually

00:21:47:33 - 00:21:52:04 to add some vertical specific tech, what particularly were you looking?

00:21:52:04 - 00:21:53:25 Was it improving the customer experience?

00:21:53:25 - 00:21:56:25 Was it improving the efficiency of the manufacturing?

00:21:56:25 - 00:22:01:08 You know, what did you did you set out to achieve with that vertical specific tech?

00:22:01:11 - 00:22:04:18 So, you know, one is in terms of vertical specific

00:22:04:18 - 00:22:07:25 tech, there is huge opportunity in industrials and industrial services.

00:22:07:25 - 00:22:11:19 You know, there's opportunity in design, in coating,

00:22:11:22 - 00:22:14:12 in field force management, in asset management, right?

00:22:14:12 - 00:22:16:01 So there are some recurring themes

00:22:16:01 - 00:22:19:01 that applies to pretty much all industrial services companies now,

00:22:19:02 - 00:22:23:01 when it comes to our approach, you know, we really start from customer first.

00:22:23:01 - 00:22:25:25 That's our first

00:22:25:25 - 00:22:28:15 sort of set of customers that we're going after and asking,

00:22:28:15 - 00:22:31:04 you know, what is the problem that we can solve for you?

00:22:31:04 - 00:22:34:30 But the second set of stakeholders are the employees and in the door company.

00:22:34:30 - 00:22:37:23 Once we bought it, we went and spoke to the customer and spoke with the employees.

00:22:37:23 - 00:22:41:12 And what we figured out was an interesting opportunity.

00:22:41:14 - 00:22:44:16 The operators of the Doors were saying, Look, I have so many doors.

00:22:44:16 - 00:22:47:27 I know your guys come in and out all the time across all my sites,

00:22:48:01 - 00:22:51:04 but at any given day, if somebody calls me from Field and says,

00:22:51:09 - 00:22:54:05 What's happening to this door, I just don't have the answer right.

00:22:54:05 - 00:22:58:01 And we bought that feedback and we took it back to the door company and we said,

00:22:58:01 - 00:23:00:15 you know, your customers are saying they don't know what's going on.

00:23:00:15 - 00:23:02:32 And there was a lot of emotion. They said, What do you mean?

00:23:02:32 - 00:23:05:32 You know, you're constantly telling them over phone.

00:23:05:32 - 00:23:08:24 We are constantly sending them PDFs and emails.

00:23:08:24 - 00:23:11:14 They're spending a lot of time telling them what we have done

00:23:11:14 - 00:23:13:23 and how come they still don't have the information.

00:23:13:23 - 00:23:16:04 And that just told us there's a huge opportunity.

00:23:16:04 - 00:23:20:31 You know, everybody is dying in a deluge of data and what you need is a simple

00:23:21:00 - 00:23:24:15 platform where both and pushed out and can look at it, right.

00:23:24:15 - 00:23:28:04 So so that's it's a real problem that can be solved

00:23:28:04 - 00:23:31:04 and it's something beneficial from both sides.

00:23:31:07 - 00:23:35:00 So you in that case, are you providing like an asset lifecycle

00:23:35:00 - 00:23:37:21 kind of tracking platform, if you will, for the door

00:23:37:21 - 00:23:40:30 Because you see that being done with with like industrial electronic equipment

00:23:40:30 - 00:23:44:17 and yellow goods and, you know, fax and things like that.

00:23:44:17 - 00:23:46:09 But you're doing that with doors.

00:23:46:09 - 00:23:46:28 Exactly.

00:23:46:28 - 00:23:49:11 And I used to do something very similar with Machine Max.

00:23:49:11 - 00:23:52:28 We provided a telematics platform to manage diggers.

00:23:52:31 - 00:23:56:12 And this in some ways is simpler if these doors don't move.

00:23:56:14 - 00:23:58:32 So, you know, there's a simple technology.

00:23:58:32 - 00:24:01:11 If yeah, that's

00:24:01:11 - 00:24:04:08 that's really, really interesting.

00:24:04:08 - 00:24:05:24 I, I guess we couldn't talk about tech

00:24:05:24 - 00:24:09:04 and digital transformation without talking about the role of AI

00:24:09:07 - 00:24:12:07 and maybe it feels a little bit like a culture clash

00:24:12:09 - 00:24:14:33 if you think about it, too high a level like, you know,

00:24:14:33 - 00:24:18:30 these traditional businesses that perhaps haven't even embraced cloud

00:24:19:05 - 00:24:23:29 accounting software or CRM being potentially asked to adopt

00:24:23:32 - 00:24:26:26 AI and use that, you know, deep in their back office processes.

00:24:26:26 - 00:24:29:16 Have you gone there or is it too early?

00:24:29:16 - 00:24:33:05 What's fascinating been and it has actually surprised me is

00:24:33:08 - 00:24:37:27 instead of pushing AI from top VC, a lot of adoption from the bottom

00:24:37:30 - 00:24:40:20 if you just a tell them about AI

00:24:40:20 - 00:24:44:23 and give them space to experiment with it, then the updated the website.

00:24:44:23 - 00:24:48:30 We asked the guys to come up with the content that goes on the website

00:24:48:33 - 00:24:52:14 and even before we could tell them that their AI tools to do these things,

00:24:52:17 - 00:24:54:18 they had only used it.

00:24:54:20 - 00:24:57:33 There was an intern on one of the companies which has actually built

00:24:57:33 - 00:25:01:04 an app for managing engineers, and he was showing it to me

00:25:01:04 - 00:25:04:30 in absolutely surprise that this guy had built an app in-house.

00:25:04:30 - 00:25:07:02 And I asked him, you know, do you have a background in computer science?

00:25:07:02 - 00:25:07:20 Do you have a degree?

00:25:07:20 - 00:25:09:11 He said, No, I just went to an AI tool,

00:25:09:11 - 00:25:11:01 and this tool helped me, you know, make something.

00:25:11:01 - 00:25:14:02 I had taken one class in school and it's amazing.

00:25:14:02 - 00:25:17:17 So there is a lot of pull for these tools

00:25:17:25 - 00:25:21:10 as long as you give them the space that it's okay to give it a try.

00:25:21:13 - 00:25:23:05 What amazing element.

00:25:23:05 - 00:25:27:08 I like that the you can find it's a that you can find that innovation

00:25:27:08 - 00:25:28:32 within your workforce where you maybe

00:25:28:32 - 00:25:31:04 didn't think it might come from it which is which is wonderful.

00:25:31:04 - 00:25:32:23 I'm sure you did, but you know

00:25:32:23 - 00:25:35:20 it comes from the oddest places sometimes isn't where you least expect it.

00:25:35:20 - 00:25:36:20 But also

00:25:36:20 - 00:25:40:18 the tools now in this day and age exist to empower somebody in the workforce

00:25:40:18 - 00:25:44:31 to engineer their own solution to something and deliver their own,

00:25:45:00 - 00:25:46:04 you know, efficiencies.

00:25:46:04 - 00:25:49:16 And that's that's I don't think we have ever been in a world

00:25:49:19 - 00:25:52:08 in the business where that's been a possibility until now.

00:25:52:08 - 00:25:52:31 Yeah, absolutely.

00:25:52:31 - 00:25:54:21 And I think it's all about giving them the space.

00:25:54:21 - 00:25:56:06 You know, instead of saying I'm the owner,

00:25:56:06 - 00:26:01:06 I have all the answers, we go in and say, we're the new owners with no answers.

00:26:01:09 - 00:26:02:18 We know nothing about the business.

00:26:02:18 - 00:26:04:05 So why didn't you guys figure it out?

00:26:04:05 - 00:26:07:24 And that empowerment is massive and we're just seeing so many interesting

00:26:07:24 - 00:26:09:20 anecdotes coming because of that.

00:26:09:20 - 00:26:14:22 There's that humility again that you spoke of earlier, you know, in your software

00:26:14:25 - 00:26:18:00 and, you know, thinking about the need for humility and time

00:26:18:00 - 00:26:21:15 and the people skills, the IQ is often underestimated.

00:26:21:15 - 00:26:25:02 You know, people think they can fly these businesses by wire and it can all be IQ.

00:26:25:02 - 00:26:30:00 But actually IQ is so, so important in having the hearts and minds follow you

00:26:30:03 - 00:26:33:01 in this new direction and overcoming those uncertainties

00:26:33:01 - 00:26:36:18 for the change curve when you buy a business,

00:26:36:20 - 00:26:40:22 it sounds to me like, you know, your workforces have responded well to

00:26:40:27 - 00:26:42:08 this approach.

00:26:42:11 - 00:26:42:33 Absolutely.

00:26:42:33 - 00:26:44:07 You know, they love it. Right.

00:26:44:07 - 00:26:48:30 And we actually take away some of the traditional owner things.

00:26:48:30 - 00:26:50:30 You know, we move a big chair.

00:26:50:30 - 00:26:54:00 If you have to talk to somebody, say you don't come to us, we come to you,

00:26:54:07 - 00:26:55:23 we don't need parking.

00:26:55:23 - 00:26:56:33 We don't drive to these businesses.

00:26:56:33 - 00:26:59:30 The little things, those little things make a huge difference.

00:26:59:30 - 00:27:00:04 You know,

00:27:00:04 - 00:27:01:16 I can still get the fact that,

00:27:01:16 - 00:27:03:11 you know, if you go in, somebody has to make a cup of tea for

00:27:03:11 - 00:27:05:09 you and it's like, no, I can make a cup of tea for you.

00:27:05:09 - 00:27:07:14 I've just come on a train, I'm going to make a cup of tea.

00:27:07:14 - 00:27:08:26 Can I make a cup of tea for you

00:27:08:26 - 00:27:11:23 and those little things make a massive, massive impact.

00:27:11:23 - 00:27:13:14 They go a long way. Most certainly.

00:27:13:14 - 00:27:17:08 So speaking of going a long way to acquisitions in relatively quick

00:27:17:08 - 00:27:21:29 succession before we jumped on this call, you were saying this deals, deals, deals.

00:27:21:29 - 00:27:27:03 Is the the word the watchword for 2025 for astral holding?

00:27:27:06 - 00:27:29:03 What are you doing on the sourcing front these days?

00:27:29:03 - 00:27:31:29 I mean, industrial B2B industrial businesses

00:27:31:29 - 00:27:35:12 are notoriously elusive and difficult to find.

00:27:35:12 - 00:27:38:12 Those those perfect ones

00:27:38:20 - 00:27:41:29 obviously don't give your secrets away, but like, where are you going for that?

00:27:41:31 - 00:27:45:23 I wish I had, you know, you know, trade secrets that would help us

00:27:45:23 - 00:27:49:02 because at this point, it's really about using all tools at our disposal.

00:27:49:02 - 00:27:51:18 You know, we of course, have buy side brokers and sell side brokers.

00:27:51:18 - 00:27:52:32 We work with accountants.

00:27:52:32 - 00:27:54:12 We're using lots of modern tools.

00:27:54:12 - 00:27:57:20 I mean, we've started using this crunch and I'm really, really positive

00:27:57:20 - 00:27:59:31 it's going to solve all our sourcing problem

00:27:59:31 - 00:28:01:16 and we will never have to worry about sourcing.

00:28:01:16 - 00:28:03:00 So that's coming in.

00:28:03:00 - 00:28:07:23 But yeah, at this point it's really reaching out to to our network.

00:28:07:26 - 00:28:09:16 The other thing which is beginning to now

00:28:09:16 - 00:28:13:10 help us is the credibility because of the deals we have done

00:28:13:13 - 00:28:17:02 and also the network of the owners from whom we have bought the business.

00:28:17:09 - 00:28:19:25 You know, if you treat them well, then they go and tell their friends

00:28:19:25 - 00:28:21:29 that these guys are reasonable and you can work with them. Right?

00:28:21:29 - 00:28:24:18 So at this point, it's a multifaceted approach.

00:28:24:18 - 00:28:27:32 If anybody has a secret and they've cracked it, please come talk to me.

00:28:27:32 - 00:28:29:27 But we surely have

00:28:29:30 - 00:28:30:24 that social proof.

00:28:30:24 - 00:28:32:08 I bang on about that.

00:28:32:08 - 00:28:35:31 But that social proof of proving that you're a good home, that you live

00:28:35:31 - 00:28:40:10 your values, that it's not all, you know, just marketing speak,

00:28:40:13 - 00:28:43:12 hearing it from the workforce and from the exited sellers

00:28:43:12 - 00:28:46:12 that they you know, they're happy that it was a good move.

00:28:46:12 - 00:28:47:29 All these things actually.

00:28:47:29 - 00:28:49:01 They're an exponent, aren't they?

00:28:49:01 - 00:28:51:17 They create this momentum of their own, right.

00:28:51:17 - 00:28:55:20 Where you know, I found when you are busy acquiring in a space,

00:28:55:26 - 00:28:58:22 it doesn't take long for people to start approaching you.

00:28:58:22 - 00:29:01:22 As I say, time as you're out there looking for opportunities,

00:29:01:24 - 00:29:03:00 not an abundance of deal flow,

00:29:03:00 - 00:29:04:31 abundance of opportunity will be a good problem to have.

00:29:04:31 - 00:29:06:27 I think 100%, 100%.

00:29:06:27 - 00:29:07:29 That's what we are hoping

00:29:07:29 - 00:29:10:06 and we are hoping you are going to be part of the solution.

00:29:10:06 - 00:29:12:19 Well, we're doing our level best and we will continue to do so.

00:29:12:19 - 00:29:15:08 And we and we're very grateful for your trust.

00:29:15:08 - 00:29:18:19 So let's hope that we can be instrumental there.

00:29:18:21 - 00:29:20:12 So let's assume that we are.

00:29:20:12 - 00:29:24:26 And fast forward ten years and let's let's think about, you know,

00:29:24:27 - 00:29:30:16 how Astra looks as a as a group or as a holdco in ten years time.

00:29:30:16 - 00:29:34:18 What's your ambition for the size and private slash public

00:29:34:18 - 00:29:37:18 nature of the business in that decade?

00:29:37:19 - 00:29:41:10 So our aim is to try and go for an IPO seven, eight, nine years down the line.

00:29:41:12 - 00:29:43:05 I think we need to get to the point where we are

00:29:43:05 - 00:29:45:28 making a successful acquisition every second month.

00:29:45:28 - 00:29:48:28 So a portfolio sort of at least 30 to 40 companies,

00:29:48:31 - 00:29:52:17 some of the acquisitions might be bolt on, but mostly they're going to

00:29:52:17 - 00:29:56:08 be independent and we will run them in a decentralized manner.

00:29:56:10 - 00:29:59:09 That said, hopefully organized in a couple of verticals, you know,

00:29:59:09 - 00:30:01:33 whether it's warehouse logistics, whether it's building materials.

00:30:01:33 - 00:30:04:06 So, you know, 30 or 40 companies organized.

00:30:04:06 - 00:30:09:02 And if you verticals growing organically at 8 to 10%, that would be the dream.

00:30:09:02 - 00:30:12:12 And if that's the case, then, you know, hopefully we can do a good exit.

00:30:12:20 - 00:30:14:25 And much like Oracle.

00:30:14:28 - 00:30:15:02 Yeah.

00:30:15:02 - 00:30:18:15 And to do that on the journey to IPO

00:30:18:17 - 00:30:21:16 requires you sucking in some additional capital along the way.

00:30:21:16 - 00:30:25:27 So structuring it as you have, how have you found the appetite?

00:30:25:27 - 00:30:29:10 I mean, I guess, again, exponentially as you as you grow the asset base

00:30:29:10 - 00:30:33:04 by acquiring more entities, you probably get a few more people

00:30:33:07 - 00:30:36:12 inbound to you exploring the opportunity.

00:30:36:12 - 00:30:41:08 But yeah, what are you doing on the on the fundraising side at the moment?

00:30:41:10 - 00:30:43:31 Yeah, I always look at fundraising in two ways.

00:30:43:31 - 00:30:45:08 On the equity side, you know, one,

00:30:45:08 - 00:30:49:19 there is a huge group of people who have never heard about CEO acquirers.

00:30:49:22 - 00:30:50:30 They just don't know about it.

00:30:50:30 - 00:30:53:32 I mean, to be honest, not to give up my ignorance.

00:30:53:32 - 00:30:56:28 But four years ago, if you have come to me and asked about Constellation,

00:30:56:28 - 00:30:59:08 I would have drawn a blank.

00:30:59:10 - 00:31:00:20 You know, having spent my

00:31:00:20 - 00:31:03:23 life in tech and consulting, I never really heard about Constellation.

00:31:03:23 - 00:31:07:31 So there's still a whole lot of people who just think that this model of buying

00:31:08:00 - 00:31:10:26 SMG assets and running them in a decentralized manner

00:31:10:26 - 00:31:11:23 just doesn't make sense.

00:31:11:23 - 00:31:11:30 You know,

00:31:11:30 - 00:31:15:12 because traditional traditional knowledge says you should take all these assets

00:31:15:12 - 00:31:15:24 and merge.

00:31:15:24 - 00:31:16:19 I mean, the one.

00:31:16:19 - 00:31:20:05 So I think, you know, I find myself spending a lot of time

00:31:20:07 - 00:31:24:26 educating investors on the power of sale acquirers,

00:31:24:26 - 00:31:28:19 you know, whether it's Constellation or indeed the Nordic Nordic companies,

00:31:28:22 - 00:31:31:27 because they have given us growth points over two decades, which is quite helpful.

00:31:31:33 - 00:31:34:30 And then, of course, you know, within a small group of people who get it,

00:31:34:30 - 00:31:37:20 who have seen, you know, amazing returns and then we try

00:31:37:20 - 00:31:40:21 and sort of sell why you guys, an amazing place to be in the UK.

00:31:40:21 - 00:31:43:29 Industrials is a good sector to after.

00:31:43:32 - 00:31:45:25 Yeah it does surprise me this

00:31:45:25 - 00:31:49:09 assumption amongst the uninitiated that you can only do acquisitions

00:31:49:09 - 00:31:55:13 if you want to consolidate and integrate the acquired companies

00:31:55:21 - 00:31:59:04 that you couldn't possibly build a diversified portfolio

00:31:59:04 - 00:32:02:07 that doesn't necessarily have everything synergize.

00:32:02:16 - 00:32:06:05 I think where I've certainly learned it through through

00:32:06:08 - 00:32:10:15 watching the India trade with and studying the live shows, etc.,

00:32:10:18 - 00:32:13:13 where you can in the back office get some synergies

00:32:13:13 - 00:32:17:17 and where you can provide the economies of scale and great do so.

00:32:17:20 - 00:32:22:20 But actually the lifeblood of these businesses is the secure their

00:32:22:23 - 00:32:27:22 what makes them them and distort that at your peril

00:32:27:24 - 00:32:31:13 because you really don't want to you know,

00:32:31:16 - 00:32:32:18 stop the music.

00:32:32:18 - 00:32:36:21 And it's because in the industry and you know I went to a business school

00:32:36:23 - 00:32:41:06 and it's common wisdom in the business market is M&A destroys value.

00:32:41:08 - 00:32:45:05 And then if you go a level below and say, why is M&A destroying value?

00:32:45:05 - 00:32:48:02 Because what you do is you try and kill the unique culture

00:32:48:02 - 00:32:51:25 of each entity you buy by trying to merge them into one.

00:32:51:27 - 00:32:54:15 But the lesson that people have traditionally taken out of that

00:32:54:15 - 00:32:59:09 is don't do money as opposed to do M&A, but don't try and merge the businesses.

00:32:59:11 - 00:33:01:23 And I think the Nordics, you know, figured this out quite well.

00:33:01:23 - 00:33:05:01 You know, do M&A, it is value accretive, but don't destroy value.

00:33:05:01 - 00:33:07:06 We're trying to merge them into one.

00:33:07:09 - 00:33:08:27 Why it works

00:33:08:27 - 00:33:12:20 and certainly seeing the benefit of that approach already.

00:33:12:20 - 00:33:14:29 I think so, yeah.

00:33:14:29 - 00:33:17:03 If then I'm just interested.

00:33:17:03 - 00:33:19:23 One last question before we get onto sort of the wrap up.

00:33:19:23 - 00:33:24:32 But as there is a sort of an increasing landscape of acquirers in the UK,

00:33:24:32 - 00:33:26:33 we're still, you know, decades behind the US

00:33:26:33 - 00:33:30:16 in terms of the level of competition for the good deals.

00:33:30:16 - 00:33:32:07 But we do have here obviously

00:33:32:07 - 00:33:36:07 lower mid-market private equity coming down, the sort of food chain.

00:33:36:07 - 00:33:39:09 We have trade acquirers that have got their own

00:33:39:09 - 00:33:43:12 kind of corporate dev that are looking to grow through acquisition

00:33:43:15 - 00:33:47:05 and the schools are knocking out new ambitious

00:33:47:07 - 00:33:48:19 acquisition entrepreneurs

00:33:48:19 - 00:33:49:22 at increasing frequency,

00:33:49:22 - 00:33:50:02 which is

00:33:50:02 - 00:33:51:32 I think, great for the space because we do have

00:33:51:32 - 00:33:54:02 an abundance of businesses that need to be bought.

00:33:54:02 - 00:33:58:22 But how are you seeing that firsthand in playing out in deals?

00:33:58:25 - 00:34:00:21 Yeah, I still think

00:34:00:21 - 00:34:04:15 we are a long, long, long way away from the point where, you know, ten

00:34:04:15 - 00:34:08:25 searchers will show up for the same deal and they will try the value up.

00:34:08:28 - 00:34:12:11 If you look at even serial acquirers, which are in Nordics,

00:34:12:18 - 00:34:13:05 they still buy

00:34:13:05 - 00:34:14:25 majority of their business in Nordics,

00:34:14:25 - 00:34:18:04 and they've started sort of branching out into the rest of Europe and UK.

00:34:18:07 - 00:34:19:28 If you talk

00:34:19:28 - 00:34:22:11 about the kind of businesses that they will look at, a very,

00:34:22:11 - 00:34:23:23 very strict threshold.

00:34:23:23 - 00:34:25:21 They're very strict and there's a lot on the table.

00:34:25:21 - 00:34:29:32 I think surprisingly, all of them look at very sorts of businesses

00:34:30:01 - 00:34:31:06 in the same geographies.

00:34:31:06 - 00:34:33:23 And yet if you talk to them and look at the multiple services

00:34:33:23 - 00:34:36:07 they're buying, the business is in a much smaller part.

00:34:36:07 - 00:34:38:28 They're not competing that much against each other.

00:34:38:28 - 00:34:41:30 So when it comes to UK, I think we are decades away from the point

00:34:41:30 - 00:34:44:30 where this would become so competitive that has sucked out all the value.

00:34:45:01 - 00:34:45:22 Don't get me wrong,

00:34:45:22 - 00:34:48:22 it will become competitive and we do hope it'll become competitive.

00:34:48:25 - 00:34:52:00 But, you know, getting to the point where, you know, it's completely saturated,

00:34:52:00 - 00:34:54:15 I think we have multi decades away from that.

00:34:54:15 - 00:34:57:07 And I think that there would need to be some kind of a catalyst

00:34:57:07 - 00:35:00:25 like in the States, the Space seven alone has become this catalyst which has,

00:35:01:00 - 00:35:07:03 you know, put a rocket up the space and, you know, it's fueled

00:35:07:06 - 00:35:07:21 tens of

00:35:07:21 - 00:35:11:14 billions deal values in these SMB succession M&A deals.

00:35:11:14 - 00:35:16:08 But here, what do you think needs to happen to catalyze this space?

00:35:16:11 - 00:35:19:00 Yeah, I think one of the biggest things is you need

00:35:19:00 - 00:35:22:01 people who have made money in this model to be much more public.

00:35:22:08 - 00:35:25:04 You know, part of the reason why the tech industry works

00:35:25:04 - 00:35:28:03 really well in Silicon Valley. So I used to work in West Coast.

00:35:28:03 - 00:35:31:10 Everybody wants to do a startup in the tech world because they know

00:35:31:10 - 00:35:34:26 friends and family who have made a lot of money in tech.

00:35:34:29 - 00:35:37:28 You come to UK, you know, in I used to own tech companies.

00:35:37:28 - 00:35:42:31 I was surprised in UK an average software engineer couldn't care about options.

00:35:43:00 - 00:35:45:02 That is in Silicon Valley. They will kill you for that.

00:35:45:02 - 00:35:48:33 And the reason is in UK, nobody has really seen anybody make money with options.

00:35:49:02 - 00:35:51:21 So they would rather take a little bit higher salary than options.

00:35:51:21 - 00:35:54:02 Right. So I think success drives success.

00:35:54:02 - 00:35:57:12 What we need, what needs to happen in UK is for couple of

00:35:57:12 - 00:36:00:20 searchers and serial acquirers to make it big for it to become public.

00:36:00:26 - 00:36:02:13 So that should really increase the demand.

00:36:02:13 - 00:36:05:16 And then there are other things, you know, which would come in to simplify.

00:36:05:16 - 00:36:09:20 And I think both equity and debt is is very helpful that as you said,

00:36:09:20 - 00:36:12:12 you know, something akin to SBA would be brilliant to have it,

00:36:12:12 - 00:36:14:25 and the government should really look into that.

00:36:14:25 - 00:36:18:20 And then as more and more people make money, the equity flow will also improve.

00:36:18:22 - 00:36:22:09 So I think, you know, as more success shows up, things should become easier.

00:36:22:12 - 00:36:26:08 Yeah, so we should kind of encourage more success

00:36:26:08 - 00:36:29:24 and more talking about success and create the conditions for success

00:36:29:24 - 00:36:34:27 and always look for a kind of exponential pay it forward sort of cycle of capital.

00:36:34:30 - 00:36:37:26 Yeah, I couldn't agree more.

00:36:37:26 - 00:36:40:20 So this podcast is obviously an opportunity

00:36:40:20 - 00:36:44:19 for participant interviewees to, you know,

00:36:44:22 - 00:36:48:19 make themselves more visible to their target stakeholders.

00:36:48:19 - 00:36:52:10 So I guess in your case, semi owners that might be interested in, you know,

00:36:52:13 - 00:36:55:10 exploring a sale and potentially investors that might want access

00:36:55:10 - 00:36:56:30 to the serial acquirer space.

00:36:56:30 - 00:37:00:24 Are there some particular core messages you'd like those types of stakeholders

00:37:00:24 - 00:37:04:19 to take away from this about partnering with Astra in some way?

00:37:04:22 - 00:37:05:13 100%, right.

00:37:05:13 - 00:37:08:13 So one, when it comes to semi on any

00:37:08:13 - 00:37:12:00 and every semi owner should have a succession plan.

00:37:12:03 - 00:37:14:04 They should not just think about it, they should have a plan.

00:37:14:04 - 00:37:15:13 And it's very, very important.

00:37:15:13 - 00:37:18:25 You know, we just saw an amazing business which was doing well.

00:37:18:27 - 00:37:20:19 They were at a million EBIT.

00:37:20:19 - 00:37:24:06 What they were hoping to get 5 million sort of enterprise value.

00:37:24:09 - 00:37:27:05 But then the EBIT dropped during the deal process 2.8.

00:37:27:05 - 00:37:31:00 Suddenly that deal fell through and now because it's dropped just a bit,

00:37:31:03 - 00:37:34:05 the new sort of people who are interested were willing only,

00:37:34:11 - 00:37:35:18 you know, could afford X multiple.

00:37:35:18 - 00:37:36:33 And so somebody who thought

00:37:36:33 - 00:37:40:14 that they could sell their business for 5 million was getting offers for 3.2.

00:37:40:20 - 00:37:42:03 And that's a huge sort of delta.

00:37:42:03 - 00:37:43:20 And now they don't want to sell it.

00:37:43:20 - 00:37:45:30 But then it just completely destroys their plan, right?

00:37:45:30 - 00:37:47:00 So I think it's extremely,

00:37:47:00 - 00:37:52:06 extremely important for every person, every CEO on to have a succession plan.

00:37:52:09 - 00:37:54:31 And, you know, I would really hope that Astra is part of the plan.

00:37:54:31 - 00:37:56:01 So, you know, come talk to us

00:37:56:01 - 00:37:57:22 and they can talk about, you know, what succession means.

00:37:57:22 - 00:38:00:16 But even if you're a 40 year old running a business, not thinking about it.

00:38:00:16 - 00:38:02:08 Right. That's lesson number one.

00:38:02:08 - 00:38:04:05 Have a succession plan. It's a bit like insurance.

00:38:04:05 - 00:38:05:26 You know, you can't live without it.

00:38:05:26 - 00:38:09:10 Number two, when it comes to investors, doesn't matter

00:38:09:13 - 00:38:12:33 where you sit, whether you invest in public markets or private markets,

00:38:13:02 - 00:38:16:02 you have to have serial acquirers or at least

00:38:16:06 - 00:38:19:04 semi as an asset class that you're putting money into.

00:38:19:04 - 00:38:21:11 The returns are amazing.

00:38:21:11 - 00:38:25:08 But if you look at the search fund studies that Stanford or ISC does it,

00:38:25:15 - 00:38:29:04 or if you look at serial acquirer, you know, public equity returns,

00:38:29:10 - 00:38:30:08 the returns are amazing.

00:38:30:08 - 00:38:35:15 So not having SMU acquisition in your portfolio just doesn't make sense.

00:38:35:15 - 00:38:36:31 So you make sure you're doing it.

00:38:36:31 - 00:38:41:31 And then if you want to invest in sort of private serial acquirers,

00:38:41:31 - 00:38:46:13 which can give you a tech company sort of upside

00:38:46:16 - 00:38:49:16 while the downside is quite protected because you're investing

00:38:49:16 - 00:38:54:04 in profitable assets, you know, come talk to us

00:38:54:07 - 00:38:57:25 succinctly, put I on a weekly basis.

00:38:57:25 - 00:39:00:25 I'm seeing folks from the venture world that are, you know,

00:39:00:27 - 00:39:03:27 if you like, waking up from the coma

00:39:04:00 - 00:39:07:32 and or the or the drugs or wearing off or whatever it is.

00:39:07:32 - 00:39:09:18 And actually they're starting to see through the mist

00:39:09:18 - 00:39:13:13 and see the sense of buying cash assets with,

00:39:13:16 - 00:39:17:16 you know, proven product market fit and established market presence

00:39:17:17 - 00:39:21:08 and and all of that for much, much lower

00:39:21:08 - 00:39:24:31 multiples than they've been paying in the venture game.

00:39:25:00 - 00:39:27:25 So beginning to move into this, I mean, I still think that approach

00:39:27:25 - 00:39:30:00 is slightly wonky. At least I don't get it.

00:39:30:00 - 00:39:31:18 You know, I'm beginning to hear a lot of noise

00:39:31:18 - 00:39:34:18 where people are saying, make an amazing tech tool,

00:39:34:18 - 00:39:38:02 then go buy all your customers, which are smart businesses.

00:39:38:04 - 00:39:40:32 And we still think that's not the way to look at it.

00:39:40:32 - 00:39:42:05 You don't go

00:39:42:05 - 00:39:45:32 buy a bunch of SMB businesses, then build a technical element for them.

00:39:46:01 - 00:39:47:06 Yes, quite.

00:39:47:06 - 00:39:48:30 That is a little bit on its head to that that model.

00:39:48:30 - 00:39:53:15 But you're right, you get the platform, then digitally transform the platform

00:39:53:15 - 00:39:56:25 and then rinse and repeat in with a diversified portfolio.

00:39:56:25 - 00:39:58:26 I think there's a lot of sense in that.

00:39:58:26 - 00:40:00:08 So great to hear.

00:40:00:08 - 00:40:03:06 How do these potential

00:40:03:09 - 00:40:04:11 partners, from an SMB

00:40:04:11 - 00:40:07:14 owner perspective and potential participants

00:40:07:14 - 00:40:10:10 when it comes to perspective, get in, get in touch with you.

00:40:10:10 - 00:40:15:16 It best ways to reach me through LinkedIn or go to a website and drop a message.

00:40:15:18 - 00:40:17:24 Okay, we'll put a link to Astral holding

00:40:17:24 - 00:40:21:22 UK in the show notes where you can learn a bit more about it.

00:40:21:22 - 00:40:23:29 It's it's one of the better,

00:40:23:29 - 00:40:25:30 I think, informational websites about your thesis

00:40:25:30 - 00:40:28:32 and it certainly emphasizes that legacy and humility piece.

00:40:28:33 - 00:40:33:19 So I'm sure it's a good deal flow engine for you also.

00:40:33:21 - 00:40:35:24 So great. Thank you so much.

00:40:35:24 - 00:40:40:23 It's been a really insightful conversation and I enjoyed every minute of it.

00:40:40:23 - 00:40:42:19 The time has flown by.

00:40:42:19 - 00:40:46:11 We are privileged to have you join us on the 18th June at the Serial Acquirers

00:40:46:14 - 00:40:47:01 Symposium.

00:40:47:01 - 00:40:51:01 I hope that you and Sergio, your business partner, could be there

00:40:51:04 - 00:40:54:16 and it's one of those great forum events where we're getting

00:40:54:16 - 00:40:56:12 we're taking it from the tactical to the practical.

00:40:56:12 - 00:41:00:08 So moving away from the sort of academic and more into the

00:41:00:10 - 00:41:04:23 the sort of lived experience and the real results post deal.

00:41:04:26 - 00:41:09:19 So it is a is a great example there of, you know, taking the theory into practice.

00:41:09:19 - 00:41:15:18 So do come participate learn, visit serial acquirer dot UK field day pass.

00:41:15:20 - 00:41:18:17 We'd love to have you there It's going to be you're going to be among

00:41:18:17 - 00:41:20:30 a good 200 people from this community.

00:41:20:30 - 00:41:24:15 So come and get involved. It's you don't want to miss out.

00:41:24:17 - 00:41:25:12 Thank you again.

00:41:25:12 - 00:41:26:15 It's next week.

00:41:26:15 - 00:41:30:06 We're back to our usual format and then we have some more interviews

00:41:30:06 - 00:41:30:32 over the weeks ahead.

00:41:30:32 - 00:41:33:02 So do continue to tune in.

00:41:33:02 - 00:41:36:01 But for now, everybody, keep on crunching.

00:41:36:01 - 00:41:36:09 Thanks.