We chat to Brett Pentz, Vice President, North America about the US private equity market, portfolio expansion into North America and life in New York. Find out more about a day in the life of Brett and how he’s helping our portfolio here:
So, what does a usual day look like for you?
I tend to start my day around 7:00 a.m., local time since most of my colleagues are five hours ahead of me timewise. That means I’m waking up to emails from colleagues and the portfolio, and I usually plan my meetings for the morning, leaving the afternoons for project work.
My work entails lots of market research, such as interviews in specific markets with customers, suppliers and other experts in markets. There is often origination work too, including bolt-on outreach work to potential U.S. targets for the portfolio. My desktop research focuses on trying to clearly size and refine the U.S. market opportunity for companies in the portfolio.
And then, usually at the end of my day I make the time difference work to my benefit a little bit and send a few emails of my own for my colleagues to wake up to. A bit of a dose of their own medicine!
As you are based in the US, it’s helpful you can do lots of those meetings in person. Is the US back to in-person now?
One of the outcomes of the pandemic is that people are a lot more comfortable with virtual meetings and just jumping on a Teams call. That’s good as it means you don’t always need to get on a plane, but there are some things that are just easier to do in person. I’ve started flying more to meet with acquisition targets’ management teams for example. Going to their office, sitting down with the folks that you’re working with, and mapping out that plan together. There is no substitute.
When ECI opened in the U.S two years ago, why did it feel like a logical step for them to bring you on board?
ECI’s portfolio has looked to North America for growth for some time. So, that didn’t start with the U.S office, or me. They’ve been helping their investments to grow into the U.S. or Canada organically or through M&A for years. As that ambition from the management teams they backed scaled, it was pretty clear it would be easier to have someone physically located in the U.S.
It’s practically easier for me to jump on a plane, versus someone in London or Manchester. So, if it’s to go to a relevant sales and marketing conference, which I’m doing later this month for one of our portfolio companies, or meeting an acquisition target face to face before management might have a chance to get all the way over from the UK. It’s just practically easier.
As well as those boots on the ground, I’ve worked in consulting in the U.S., the UK, and Canada, and it really does help quite a bit. I can add some understanding around the nuances of the U.S. market and the Canadian market, versus the UK one, or just help unpick it. That might be state or regional drivers of customer demands or a little more familiarity with relevant regulations in certain sectors. It could be hiring demand, or even making sure the language you’re using is relevant. It’s a familiarity that can add perspective.
Since you’ve joined, have you seen any change in appetite when it comes to US growth?
Absolutely, we’re seeing it come up a lot when we’re meeting prospective management teams now. A big part of their plan is often focused on new geographies, and predominantly that is still the U.S. Even if it’s just an analysis of the opportunity size, I think more management teams want to understand the real potential there now.
When it comes to the portfolio, about 40% of revenue comes from outside of the U.K. and the vast majority of that is from North America. I’d guess about a quarter to a third of the portfolio is now either actively looking to enter the U.S. market or further grow their presence there, so it has certainly kept me busy since I joined!
After the Great Resignation, how are US firms finding hiring at a senior level?
There are a lot of people making moves and certain functions where salaries have just gotten quite frothy. So you need to be prepared sometimes to over-invest in certain key roles. Hiring is definitely a way I can help portfolio companies as I have a network of executive recruitment firms that we can leverage. That means our portfolio doesn’t have to be as reliant on U.K. firms that may not have the same penetration here in relationships with potential recruits. I often also provide a US lens for CV screening. Then lastly, I think there is something about the location, in terms of whether they are hiring in the right location in the first place and how practical is it for the company, that I can provide.
We’ve recently seen a few firms sell to U.S. trade or U.S. private equity. What impact are you seeing U.S. positioning have on exit?
CPOMS was a great example of the impact it can have. It had a dominant market share in the UK school safeguarding software market and started to have a lot of success with international schools. A project we launched was identifying school districts in the U.S. and Canada that were ready to pursue potential pilots. That helped to show the level of interest in the North American market. Which, given there wasn’t much competition in terms of other players, meant we could really highlight the opportunity to potential investors.
It also meant that the U.S. growth plans were really based in reality, giving conviction to the buyer, which on this occasion was a U.S. trade player, Raptor. Showing that early success created something tangible.
Imagesound is another good example. It was much further along in its U.S. growth story, but we did a really detailed piece of analysis across some of the different end markets there. That helped understanding of the next phase of U.S. opportunity, who the key accounts and clients were, and even how they could be approached. That gave the next investor confidence that the numbers in the management plan were well-vetted. But also, here’s a detailed implementation plan that can be done right away on the back of the investment.
Are you seeing more interest now from US trade and private equity?
There is a lot of interest from the U.S. but only if you can show that there’s a real tangible opportunity. Targeting the U.S. opens up a whole pool of buyers and can have a fuller valuation, so it’s an appealing exit route. But buyers need to have full confidence that you can realise the opportunity you’re saying you can.
Are there any projects you’re working on now that are especially exciting?
Always! My role is quite interesting in that I work both as part of the origination team and the commercial team. Both those teams are really joined up anyway, but I provide a bit of extra connective tissue when it comes to US opportunities for the portfolio. And I have been working a lot over the past year with Moneypenny. They did one very successful U.S. acquisition in 2020, and they’ve just completed another acquisition in Alphapage, announced just this week. And there is definitely more to go after there, both in terms of organic growth along with other US acquisitions.
The first area of focus, an example of a typical commercial team project, was to help them clarify their strategic focus and where to invest time and money in business development and marketing efforts for their Moneypenny brand in the US. How much should this mirror the approaches and customer sectors where they have had success in the UK market, and what purposeful differences may be needed for the US market? I looked at what their competitors were doing, and I used desktop research to model the number of addressable customer markets, as well as identifying partners, industry associations, and even building customer lists to target to build a presence.
I think that’s a key area where we can help. The U.S. is a huge market to take a bite out of, so you need appropriate focus to hit the ground running and have success right out of the gate. Don’t waste time trying to tackle it all; focus instead on the end markets with the demand and dynamics that are best suited for your capabilities.
Now and going forward, what the Origination team and I are helping Moneypenny to do is refine that M&A strategy, map the various telephone answering and live chat businesses in the U.S., highlight the attributes that may make them more or less interesting targets, and then creating a prioritised list with which to do some initial outreach. Where we have received interest in this outreach, we have then set up meetings to understand those businesses, their potential fit with Moneypenny, and their own future ambitions and timelines. That means we can present Moneypenny with a well-vetted list of potential acquisition targets to act on as quickly as possible. With two acquisitions now completed by Moneypenny, I expect even more interest from those businesses we contact. With a third of revenues now being generated in the US, Moneypenny is now one of the few providers of scale in the US as that market only gets bigger.
So, last question, where would be your favorite place to spend a weekend in the whole of the United States?
Oh, a weekend. Because it’s summer right now, and the time of year impacts my answer to this question, my absolute favourite place to visit and to have lived in, was Chicago. I mean I’m always trying to subtly nudge our portfolio companies to consider offices in Chicago or the attractiveness of the Illinois market! So far, I haven’t been successful in that, but I have just been to a conference on behalf of Peoplesafe in Chicago, which was fantastic.
