Alex Glasner, thank you for joining me today, tonight your time, on Acquiring Minds. It's Hello, it's great to be speaking with you. In September, so just about 4 months ago, you acquired Work Pace, a workforce training firm in Chesterfield in the UK. A lot of interesting elements to this story, to to your search, and to what is now your business. So, let's let's dive right in. To kick us off, Alex, tell us about yourself. Tell tell me a little bit about yourself and your bio. And specifically how you arrived at this decision to go out and buy a business. Yeah. Um, so really it begins with my father. He's uh he actually runs his own business. He's an accountant. Um he runs a small practice in London. Although I said that before to someone and my my mother gets very upset when I say it's a small firm, but that's neither here nor there. Um he My sister and I always used to say that my father has a three children. He's got um me and my sister, and he's also got his business. And there's definitely one company, you know, when you could see from the conversations around the dinner table, there's definitely one of his children that he loved more than the other two, and that, you know, who he still counts as his baby. And so really from a very young age, I wanted to I wanted to be I say an entrepreneur, but I wanted to be I I wanted to be an entrepreneur and running my own business and helping run a company successfully. Um When I went to business school, that was honestly my aim. So, I So, most of my career before business school was in finance. I did a bit of politics, which I'll speak about in a second. But when I went to business school, I honestly thought that I was going to come out and my job title was going to be entrepreneur. And I had no idea what that actually meant. And I came out and I wasn't an entrepreneur. I was working in banking. But when I was at business school, I saw these two guys who were So, sorry, a few a few guys who were They started doing this thing called a search fund. I didn't know that's what it was. Um During I was thinking for a number of years after business school, what can I do? What will actually finally let me be an entrepreneur? And I discovered that book, um you know, the the the ones by those those two Harvard professors. And I read it and I thought, this is what I want to do. This is going to allow me, someone who doesn't have a clear idea of what kind of business I want to run, just knows that that's what I want to do, um to be able to do that. Um Most of So, that's that's that's what kind of what led me on the path to search more from a personal side. My professional life has been mostly um has My my professional life has been mostly in finance and I did a bit of strategy as well. Um I have a bit of an American accent, some people tell me in the UK because I spent 6 years in the US. I went to business school up in Boston. Um but the first thing that I did actually after undergrad was working in Parliament. I worked for a for a um I I I worked for a member of Parliament as a speechwriter. And that gave me a What that did is it kind of lit a fire in me to want to be able to have a job to to to to it lit a fire in me to have a to want to want to work in a career where I felt like I could actually be helping people. Not so not not and have find a vocation, not something that was simply just earning money, but where actually I felt we were doing something for the the greater good. And actually when I was doing my search, that was something I was really focused on as well. Okay. Yeah, well, that that um obviously the business that you chose um touches on that and we'll get into that. But a couple follow-up questions. So, you went to HBS, uh Harvard Business School, and there are courses at HBS that are given around search. Did you take those courses or did you just hear through your social network about these guys doing a search fund? And and really that's how you learned about it and having read that the the book. Yeah. So, two things. So, one, did I take that Did I take those courses? No, massively regret it because I think it's Yod Is it Professor Yodkof and Wright? Is that right? They are like the doyens of this and I wish I'd known about it. I think when I was at business school, again, I wasn't quite sure what I wanted to do, so I took a bit of a course of a bit of everything. And I also did I've got a lot of big interest in politics, so I took a lot of political courses, which So, no, I didn't take that course. However, actually the guys who were doing it at business school started running their search. They were they were acquiring lots of vets actually across the the middle of the US. They started doing it in their first year. Um And but I didn't know what they were doing. I thought this was only something that people who, you know, who I didn't know how they were getting their funds. I thought it was something that only if, you know, your parents gave you money to buy to buy a company. Obviously that's not the case. So, you learn about search you from these guys, you read the book, you say, this is what I want to do. And then in I haven't actually read the book yet. Shame, shame. I need to. I have it actually sitting next to me here on the desk. Um but what did you learn about how viable this was for somebody that you didn't actually need to already be rich to do this? Does the book I assume the book goes into that? Tell me how you worked out actually the mechanics, the financial mechanics of doing this. Oh my gosh, every single page is is like gold dust. Every single page is absolutely amazing this book from start to finish. So, I must have kept that book on my table while I was running Constant Peak, the name of my search fund, throughout. I would reference it at every single stage. Before I sent my first IOI, before I sent my first LOI, before, you know, actually the day that I acquired Work Pace, I think I reread the last few chapters when it talks about, you know, now it's now it's on to now it's up to you. Um Your question was about the financials and how I how I thought about that. So, It does So, the book actually laid Firstly, the book lays lays out how much it costs. I also did my own I also tried to work out how much money I needed and how much runway I would give myself. And I knew that really a general search takes two I think it's 26 months I think is the average average number of months for search. So, I made sure that I had enough money for at least 36 months, so I gave myself 3 years. At which point I thought, okay, I need to That's when I probably if I wasn't successful by then, maybe I'd give up. So, I was just I just worked out how much money I had in my bank account and how much and how much money I needed to spend and was very careful. On the other hand, I was also very lucky. Um I am very lucky. I am um I'm I My partner works in private equity. We met at business school. And so I was I I I I was immense spent that I didn't need to spend quite as much money as if I was kind of renting by myself in a kind of place in Manhattan. Sure. Sure. And you did a self-funded search? That's right. to traditional search. Okay. And how did you make that decision? Did you consider a traditional search? Yes. Yeah, it was actually a really So, I was I was just thinking about I thought of every single permutation, whether I do it a partnered search, whether I do it in the US or the UK, whether I do traditional or self-funded. Ultimately, I I spoke to a lot of people while while thinking about doing this search, and the feedback I was getting was that doing a self-funded search gives you a lot more flexibility. Um and that And so, yeah, that was that was the key decision for me. I didn't need the money given that I already had saved from my current job. I was working pretty hard in investment banking, so I had no time to spend any money. And also I had Andrew, my partner, who was, you know, if worst comes to worst, he could support me. Um So, just it I didn't need the money and I also realized the flexibility that doing a self-funded search gives you in terms of the sort of companies you're looking at, the the fact that you you're not constrained geographically made just made it a bit of a no-brainer for me. Yeah. I think you told me in our pre-call that you spoke to something like 50 people as you embarked on this journey. Um and so, sounds like they oriented you toward a self-funded search. Were there any other things that you remember emerging from those 50 calls that were like really key in in in in your in how you structured your search? Yeah. Um so actually I must I have copious notes from every single call and um Man, there's a book right there. No, yeah, exactly. I'm not I What I was trying to do was actually trying to look at um look at trends for things that would work and things that didn't work. So, I tried to speak to a number of different people. Um I spoke to um I spoke to a couple of investors at first. I spoke to people who had who were searching, people who had found a company, and then the most important people I spoke to actually were people who had not been successful. Yeah. And that was by far understanding why they weren't successful then was really influential for my search. And so you know, there were a couple of themes that I noticed. And I think the most prevalent one was just there was a lot of indecision I noticed. And so, making sure just being as decisive as possible was really really important. That was one. And then secondly, almost as importantly, was making sure that you have a really good structure to run you to run your search fund. So, making sure that, you know, I I spent even though I set the search fund up, I really I had to look this up today for my partner. I even though I set the search fund up in mid-November, I didn't reach out to the first company until December the 27th. I spent way over two way over 6 weeks setting up all my materials, setting up how I was going to run the search, thinking about, you know, the coming up with a list of companies, making um various presentations that I would send to people, um making even a script. And all of that were things that I'd been told previously on on the call. Um Yeah. So, the the the 6 weeks of preparation that you took, you don't regret that. That was That was 6 weeks well spent, you're saying? 100% Yeah. So, I actually did my search I was pretty quick about it. So, from sending out the first email December the 27th, speaking to the first company January the 2nd or so or some some point time after New Year, to acquiring the company was about 9 months, which is pretty quick. And I think that came purely because of set the all that that that first 6 weeks where I was setting up the company. Also goes back to the what you asking what you were saying about when I spoke to those people. Um all the searches you could see the the ones who One thing I noticed was that it's about the being a search, it really is very binary. You're either a successful or you're not successful. And obviously of course you you don't get to search unless you want to be successful. And so, just trying to understand what they were doing what people who perhaps hadn't acquired a company had done. And so, that's why I just kind of going back to that, just being as I thought the one key takeaway for me was being as decisive as possible. Yeah, and it just can you elaborate on that? Decisive about like what? Like I am doing this, like I will not fail in this process, or just every little decision that comes along you just make quickly and empower through the process. What decisive how? Yeah, so you you know, was it that the good perfect is the enemy of the good? Yeah. Yeah, yeah, yeah. No company. And let me tell you, I I will I will wax lyrical about how Work Play is the best company in the entire world. And I and I and I really do believe that. But of course it's not perfect. And you know, you you when you the number of people I spoke to who had found companies which were they there was just like one little niggle and they said to me, "Oh, I just didn't want to buy it because I just there was just something wrong with it." You know, the the I my my my EBITDA threshold was let's say $750,000, but this EBITDA was $740,000. You're thinking, "Does that matter?" Or you know, one of my investors asked the question, "Does this sort of does this company it's only got 60% recurring revenue, not 80% recurring revenue." Yeah. Okay, that's something that you can come in and change. But just being decisive being you know, being decisive about buying a company thinking actually though I'm doing this to buy a company and doing everything kind of for that. The other thing I would say is moving moving as quickly as possible. And one thing that I was told a lot was being slow is the worst thing that you can do for sellers. So, being as decisive as possible for sellers. So, the what the second I signed the yellow the the IOI with Work Play, I sent them a calendar of this is what's going to happen over the next few weeks. And we kept them we and we really really kept to that. And we made sure and that that meant that A the process moved quickly and B they always understood what I was doing. So, being very decisive and actually having these stage posts throughout. I actually spoke to a searcher or a potential searcher a few days ago who said to me, "I want to before I even sign the IOI, I want to know absolutely everything about this company." And I'm thinking that that's that it it that's great for private equity where you're earning a lot of money and it doesn't matter. You can do one deal every few you know, you can do one deal like one deal every couple of years for one person, but you have 20 people. So, it's it's fine. But for a search, it really is make or break for you. And the folks who didn't buy and we're talking about you know, the EBITDA was 10,000 less than it should have been or the recurring revenue was 20% shy shy of the 80% threshold or whatever. Were they talking about this um and regretfully? Like with the benefit of hindsight they wish they had pulled the trigger? Or or was this your conclusion that like, "Oh, maybe they shouldn't have like they they shouldn't have been so picky." Or were they themselves saying, "I was too picky." No, so actually I I asked people who hadn't been successful in their search. Um I was really I was really surprised by the response to this question. That I I would ask people, "Why weren't you successful?" And the people I asked all the people I asked I must have spoken to like two or three people who failed only because it was difficult to get hold of them actually. Um they said, "Wow, you're the first person that's asked me this." Um which I was really quite surprised by. I think people I don't know if people actually regret not being successful only that they just they some people it might be like a waste of they might see it as a waste of of two years. Um so, I think that people don't regret where they are. I don't think those people regretted where they are now, but I think they might have regretted you know, spending so much time on a search. And did you speak with anybody who successfully completed a search and then during the transition or thereafter it was a disaster or was it somehow a failure? Yes. Yeah, that no, this is great. Um no, and it's and what you realize is that Jim Sharp said to me um you know, Jim he's got this he's got this great website. He said to me, "You know, this company is not the company any company you buy is not going to be the same company three four years down the down the road." So, I actually spoke to some guy a British searcher who bought a company. Day one um they had and they had a huge concentration. So, and in day one I think 40% of their revenue was lost because they lost one of their customers. Oh. Absolute disaster. Now, that was a year ago. scenario. Right. But but it's fine now. And he's turned it around. And so, it's just you know, with a lot of hard work with everything he was also at HBS but yeah a few years above me. And everything that he'd learned fine, you just you work hard. So, yes the stories I'd heard the Stan the study the Stanford study says that only 70% or 60% of searches actually once you've bought the business are successful. That that that wasn't my experience of people who hadn't that been so successful actually. Mhm. Mhm. And I assume and this is a big digression, but this is too interesting to not go into. So, we'll bring it back to your story here in a second. But I assume these 50 people were all part of the HBS ecosystem, kind of HBS grads and and so on. So, there there's a little bit of selection bias there cuz these are going to be these are going to be capable people, but just just to be clear. No, definitely not. For exactly that reason. No, I did not want to have um I did not want to just speak to HBS people. So, maybe maybe 40 to 50% were because that was my that was my kind of search fund network. But no, actually Jim Sharp actually has loads of people on his website and I literally just went through I must have read his website equally as many times as I read that book. And I just actually emailed all those people from his website saying, "I saw you on Jim Sharp's website. Do you mind if I have a chat?" I looked at Search Funda and spoke to loads of people on Search Funda as well. I didn't want to speak to any people from HBS because I wanted to understand because I don't think you know, they say when you get into HBS you always believe you are an admissions mistake. So, I was thinking, "Well, hold on. If I am the admissions mistake, which is not unlikely, what what would you know, what would what would anyone else?" And I also don't think HBS people have all the answers to everything. So. Yeah. Yeah. Great. That was great, Alex. Okay, let's get back let's get back to you and your search. Or let's move down the search a little bit. Okay, so you you've you've talked to all these people. You've spent invested six weeks up front just putting together a really a nice infrastructure for your search. And so, you're doing are you doing any brokered looking at any brokered deals or is this all proprietary? All cold emails to business owners? Oh, no. I did um So, one thing I learned was there are a couple of ways of doing the search. If you do a proprietary search, there are two ways of doing it. There is you know, the spray and pray speak to as many companies as possible. There is the do a very deep dive into a sector that you think is really interesting and select maybe 10 companies. Or there is a brokered search. I tried to merge all of those together. So, yes I had set myself targets every week that I had to speak to at least one I had to reach out to at least 20 brokers a week. New brokers I had to reach out I had to have a at least one chat a day with a broker. And I also had to reach out to a certain number of companies a week. I can't remember how many that was. So, yes I was doing I was doing both actually. Okay. But my I will say though that the the companies I got from brokers were I was it was the process obviously was was a lot more competitive and so therefore I wasn't you know, it was generally I would bow out pretty early on. And to add a further wrinkle to this, you were searching you were in the US as you conducted your search, but you were looking solely in the UK. So, tell me a little bit about that. Yeah, that meant so but I was working UK hours. So, I had a I had some visa issues. I So, as I said I'm I'm dating someone called Andrew. We are we got married sort of kind of at the beginning of January last year. And so, I was waiting while you turns out while you have a while you're applying for a green card, you're not actually allowed to leave the country unless or you abandon your application. So, yes I was searching from the UK. So, I was searching from the US but in but only in the UK working UK hours, which was pretty painful especially when we spent some time in LA. It also meant that when I was I kept on telling Helen and Anne who were the who were the previous owners of Work Play that I'm coming back I'm just waiting for my visa. And I wasn't sure whether they actually believed me because they'd never met me. And then of course I had to I actually had to ask for an emergency I had to get my congressman involved in Florida to be able to leave the country so I could actually go and meet them. Which I managed to were able to to they made an ex the USCIS or whatever made an exception. That's right. Yeah, USCIS. Yeah, no exactly. I had to get something called an advanced parole. That's right. And yeah, I got my congressman involved. I went to their their local office to beg them to let me go. You have to prove that it's going to cause economic harm. I thought it meant to me, but actually meant to the US. So, I had to give details of all my American investors and how much they were investing to show that actually by me not going back by my sorry, by not going back to the UK was actually going to have an impact on the American economy. But that's right. I did most of the search from the US. Yeah, it meant UK hours. But I will say thank goodness for it was one of the good points of the pandemic that everyone moved online. And again, I spoke to this searcher last week who said to me, "But hold on you know, I want to go and meet all the businesses. I know it's going to be really expensive to meet the businesses. I put zero in for my budget for traveling because even when I spoke to some people who were in their 80s, everyone in at least in the UK was able to use Teams or Zoom." Yeah. Were they not somehow skeptical though that you're in the US? It just it just like I I feel like so many sellers look at the likelihood that the buyer that they're talking to could actually get across the finish line. And there's so much friction to getting across the finish line. And being on another continent even though you are a British citizen, even though you have every intention of going back, you're conducting a search. I mean you know, you you have a lot of arguments to to to to say, "No, I'm serious about this." But you could just see how it might spook sellers that now this guy he's in LA or he's not going to come back here to the Midlands and buy my business. Did anybody Did anybody kind of have a mental block to talking to you cuz you were conducting the search from the US? Let me tell you firstly I think the Midlands rivals LA like there's no I think the Midlands is one of the best places in the world. I'm just going to say that. Um Yes and no. So but there there are ways to mitigate that. So the one of the first things I would do I would be I'd be up front. The first I I started every single call by saying oh so where are you at the moment? Are you in your I know in your office was are you in you know I don't know Chesterfield or Derby or whatever. Um and I would say look I'm if I'm honest it is 3:00 in the morning in um in I don't know you know in in to Austin we spent a lot of time in as well actually. It's 3:00 in the morning in Austin but you know I I and you as long as you were open up front I found that made it easier. That's one. Two um I had you know I had a I'd built up links with a number of investors so and some of whom were very happy to give me a letter you know I it's I can't remember the name of this letter where they where where it says you know I am supporting Alex I'm going to I will invest up to X amount. And so I would get I had that from a British investor I had that from American investor so it then it made my case much more real. So you really didn't encounter um any pushback. You you just you kind of nipped it in the bud at the outset and you were good to go. I had absolutely no um you know pushback whatsoever. Yeah and it the only pushback the only difficulty was was doing this work pays deal actually from afar was it was actually it was frustrating because I was I was I think I was more mindful of it than anyone else was actually. Okay so let's talk about work pays. So um that it was that deal came part as part of your purely proprietary outreach or was it also was it brokered? No purely proprietary. So we were looking at um training companies. Um so the UK has firstly I think it's a really interesting industry. Secondly I really do care a lot about education and thirdly it has a real social good and so work pays is is as an amazing example of company that so again I was um yeah we found it uh I think we it was it won an award it was it was like up for an award. Um it's one of it's won a number of awards and so we that's how we found it. And so I the social good angle I understand but tell me you said that the industry just interests you. Um what about it interests you? So I have had I mean in the UK with with a very class-based society I don't know. It's it's very it's so foreign in in America I realize um but I I I hear that but I always wonder if that's just a anachronistic characterization of the UK and that that's very in a It's still It's really in 2022 you could still say that. Yeah no and and if you can from with the second you meet someone in the UK it's you can tell a lot about them whether they went to a private school whether they went to a um I guess what you guys would call a public school. You can tell that very quickly and it's at least before I went to the US and my I actually became American I you could tell that I'd had every single opportunity thrown at me. Um I've had a you know I've had been lucky enough to have really good education that has and a fam a very supportive family um that care that cares a lot about education that has propelled me to go to not only good universities because that was always what my parents wanted but also into good jobs and also to ultimately to work pays. Um I understood the value of that. I also used to do a lot of teaching when when I left undergrad so I when I was working in parliament the salaries aren't amazing there so I was teaching on the side. I spent a lot of time teaching people in um I think you guys call it social housing we call it council estate so I spent a lot of time doing teaching not only kind of earning money to help me pay you know pay for my food cuz I wasn't as I said in parliament you salaries aren't great but also helping people who otherwise might not have access to someone who got a degree at Cambridge. Um and so I I I know the the power of education to propel people forward. Um and I and I and that's so that's what really excites me about this. Mhm. Mhm. And as an industry just now just putting on your entrepreneur hat you know just purely capitalistically how did the industry interest you from growth prospects and all the just hard cold hard numbers perspective? Um yes and no. So on the one hand the industry um is not it hasn't been growing significantly for our source of income. So most of our income actually comes from the government. The both so that has not been growing most that has not been growing over since 2010 we had a lot of austerity actually in the UK. That that is changing around a bit. The private sector which we don't really deal with right now that is probably seeing you know growth alongside GDP. Um that said so that is maybe like a negative on the positive side this is a great industry for a buy and build and the opportunity to buy very similar players to us um and then amalgamate to create a you know a much bigger provider. And you saw that um before before acquiring work pays that was part of your thesis. Exactly. That's completely correct. And and actually since I've gone since I've come here I firstly I've realized that actually doing another search while um running a business is actually a lot more complicated than and time consuming than you'd think. Um but secondly um I've I'm even more sure that that's that's that's the right path. I also when you look at work pays you our success rates are very high. So for example on apprenticeships I think the national average success rate is of people who complete your course successfully is 64% we're at 89% plus. So we we are you know we are doing very very well and I would love to be able to expand that to you know to even more people. That that's phenomenal. You know without knowing anything about the industry I would have assumed that one of the frustrations of the industry is that your the the attrition would just be huge that people wouldn't stick uh but it sounds like it's just the opposite um and and that you guys are even outperforming the industry. So that's great. And we keep saying the industry let's define that more specifically workforce training is the industry that we're referring to. Yeah it's we call it employ employability and skills provision is how I describe how I describe what we do. So we support employability is actually supporting people into work that is not training that is um giving people guidance. We even provide clothes for people to go for interviews. Um that's that's one thing we do. Um the other thing we do is supporting people to upskill outside the workforce and then the final thing we do is when they're in the workforce we actually help people to upskill in the workforce as well. So we help people throughout their employment journey. Um that it's it's all part of the employability and skills industry but it's three very separate divisions. Okay. Okay. Okay. Let's get back uh there's we still got a lot to go in your story so I just I'm keeping my eye on time but let's get back to um Helen and Anne. You reach out to Helen and Anne you come across work pays in your research they've won an award you reach out. Um so tell me about Helen and Anne and the history of of work pays and and how that those early conversations went. Oh my goodness. Helen and Anne are two of the most incredible women. I mean it's it's it's amazing. Helen um Helen has got she's just won an award actually while we were doing the acquisition called an MBE. An MBE is um actually a prize you win from the Queen. It's not it's it's in recognition of um it's in recognition of doing something good for the country or doing good doing something good. Um so she won that for services to young people particularly during the pandemic. Um we were one of the few providers that didn't close and she has been she is the person who started work work pays she's been the driving force behind it and every time I meet anyone in the industry everyone seems to know her and wax lyrical about her. She is very very well known and and she this is very much this is very much kind of her her brain put into a company. Um so she set it up in 2011 I believe um as a consultancy she'd been working in other places in industry she had I believe that she got some equity from some from a sale for of a company that she'd been working at and then she set up work pays and joined the company as ops manager because by that point we'd won some contracts and joined in 2015 um and I think then be she then bought into the company a couple of years later. And why was she open to selling? Was she already thinking about selling or was she just at retirement age or what was your how did your email land in when she saw it in her inbox? Yeah I think so when so firstly Anne and I are co-owners of the company and Anne has rolled over equity in the company. So we run we run we run work pays together. Helen who was a majority shareholder before the acquisition you know even when we when when we put the LOI I put the end date as the kind of the maybe the first week of September she said no I actually want it to be um 27th of August because I want it to be before my birthday. I think she had always said in her mind it was a milestone it's not the biggest milestone birthday but it was a milestone birthday and I think she has said to herself you know what I want to um this is the age I'm going to retire by. Oh. She is yeah so I think in her head yes so she was definitely had been thinking about it. I think actually with a search if the seller isn't you're never going to persuade someone to sell if they don't want to sell so there's you know if you hear they're not going to sell you give up the phone call but obviously she'd been thinking about it. But but a business broker hadn't gotten to her first. Um in other words it wasn't publicly listed she hadn't got started the process of selling. So you just happened to find her in that window of time before she started reaching out to brokers herself to talk about selling the business and after she had decided that in fact she did want to start thinking about retirement. Knowing Helen I do not believe that she would have gone to a broker. I think that she is incredibly um this business is run it's a very very tight ship. It is run using KPIs everyone is cost conscious. We have our head of finance is if someone wants to spend £5 she's going to come to me and tell me about it. Um I believe that Helen probably would not have gone to a for to a broker for that reason. So, I think you know, I was but I was lucky. I think it was you know, I think they might have done an MBO actually. I think she might have you know, Anne might have acquired the company otherwise. Just tell us a little bit more about about Workpays. You mentioned what it does. You mentioned that the government is the primary client. So, tell me a little bit more about that and any numbers you can put behind the business would be helpful as well. Yep. So, we are a we have we have three arms as I said, we have skills, employability, and apprenticeships. So, we support people throughout their employment journey. On the one hand, people who are outside the workforce, we help and they want to find a job or even if they don't want to find a job, they still are forced to come to us by the government. We support them to upskill. Let's say they want to become a construction worker, we'll give them a course in construction. We then have employment we have then have people we have then have our employability side that supports people who we have we have you know, weekly fortnightly sessions where we give people good advice and guidance and help help them find jobs. We work with local employers employees sorry employers to help them find jobs. And then when they are in the work, we have a second we have this another other arm which supports people once they are in work. So, those are the three elements of what we do. We are the the apprenticeship arm, the third part is the smallest part but our fastest growing. The other two we are about 50/50. Yes, most of our money comes from the government nearly all of it. The exception is the apprenticeship arm where the the route to get us getting money is a bit more indirect. So, the way it works is we tend to the government releases could be anything from thousands to like one contract a year. So, for example, last year they had this they did a quite a lot and we won something called the Restart contract. The government will invite people to tender and then we win a contract of let's say you know, 6 million pounds or 12 million pounds over four years. And so, the contracts do last a long time. The Restart contract for example is four years and it has I believe it has two two possible renewals of two years each. So, that contract could actually be up to up to eight years up to nine years. So, you know, we have pretty steady revenue. The problem is and this is where it's it's really important to note that we have really great visibility, right? We know that we won a significant amount of the Restart contract. Like literally we won we probably have just under like just about 12 million pounds of Restart. We know how that that said, the we have that money is not ours. The money is I say the money is ours to lose because we have to reach certain targets. So, the government says, "Okay, this is your contract. Let's say it's 10 million." To to get that, you need to support X amount of people into work. That means and and so, the way we get our money is with with Restart for example but that we it's a very similar for all our other contracts is you know, when you when you when someone gets into work, the government will pay you a certain amount of money. For our skills contracts, generally it's when you meet someone you get paid and then once you've got them in once you've gone through your training them, you get another amount of money as well. Mhm. Which sounds like a logical model how it should be. You're basically it's basically performance based. You need to perform and show that what you're doing is is having the effect on the population and on these folks that you're helping to continue to get money. And it's a virtuous cycle, right? Because you win a you win a contract because you have evidence that you're performing really well and then you perform really well then you win more contracts. And that is how we have been able to grow our revenue quite so dramatically because really we've been you know, we are performing our contracts. We are often you know, we'll reach 100% of the contract value and then we'll go back to the government and say, "Hold on, we've reached the end of our contract. If you know, we'd we'd love to do more. Do you have any spare money you can give us?" And so, you know, we've managed to do that in quite a number of our contracts. We have something called the European Social Fund which is from the EU which obviously is changing is going to be changing now but we have we've always won what we call a growth case on all those contracts as well. You've talked about how what a tight ship Helen ran and that's sort of in the culture of the company now. But what are the other elements that make Workpays such a high performer compared to its competitors? Yeah, we are two things. So, we are very nimble and we are driven by KPIs. So, we I am currently sat in Chesterfield. Our biggest office is in Derby. Um we used to have an office in Sheffield that closed during the pandemic. We used to have you know, when when when Helen started the company, I believe it was in we had an office in Mansfield so, which is just down the road from us. So, we are very we're very quick to move and we're very able to um we we can move very very quickly. The other thing is we have a very entrepreneurial management team. So, for example, our Restart contract we originally won um two separate contracts one with with two different with two different prime contractors. We were actually a subcontractor on the on the Restart contract which means we have let's say Jobs 22 work with the government and then we work with Jobs 22 deliver part of their contract. We had originally won part of the contract. We we we realized that another provider wasn't going to be able to to be able to give their part of contract so, we stepped in and said, "We can we will step up and be able to do to deliver that contract that this other provider can't do." So, we've always been we've been nimble and entrepreneurial and then finally the whole company is very driven by KPIs. So, everyone has including me, we all have KPIs that we have to meet and we we know, we have everyone is well managed that. But at the same time, we call it the Workpays family because I feel somehow Helen and Anne have managed to make sure that while people know they have to meet their KPIs, we have very much retained a family feel here. Mhm. Mhm. Sounds like it's a great mix of both elements. I actually just offered a job to 100% and I actually just offered a job to someone this morning and I said, "I really want you to be part of our family." And I really think that is how we do it. And it was very clear that these are the expectations that you're going to have when you come to Workpays Workpays sorry, but this is a we are a family. Mhm. Talk to me a little bit about having the government as your essentially or governments but primarily the British government I think as your sole client. And you have these various different contracts but ultimately it's kind of like the government is at the behind all of these contracts and so, in some sense you really have very very heavy customer concentration. That's not so unusual. There are many entire industries that work to serve the government and that that's always a feature there. But you're the first searcher I've talked to who has worked for who's acquired a company whose revenue comes directly from the government. Yes. So, we actually view it as so, I don't view it as concentration because I see it as our three arms, skills, employability, and and apprenticeship. So, I actually the way I think about concentration is we are right now we have a lot of exposure to the employability over skills and apprenticeship and we are trying to rebalance that actually. Secondly, I'm really excited by the idea of commercializing a lot of our IP because you know, a lot of all this IP goes into we have to come up with our own curriculum and I believe that we could use our online platform to think about commercializing it. So, that's that's a way of getting away from the government. I personally don't see We we also have number of different contracts with various different government departments. The other thing about the UK is that we have a very stable government. With with the exception of Brexit, there's very little disruption to British policy and when one government comes in, they don't come in and then completely change rip up the policy of the of the previous government. You know, you generally have a very long lead time. So, for example, with any of our contracts, if they are four years, actually that that could be that could be over two different governments. When the new government comes in, they're not going to go they're not going to renege on an on on an old on an old contract. So, there's no worry there. Generally what happens is they'll actually go out to the industry and they will canvass all of us to hear what to to hear what we think would work best. So, I actually I personally don't see that as an issue. The other thing I'd say and I only got this question from um Europe some certain European and all American investors was, "Hold on, but isn't it if it's government is is your key counterparty, doesn't that mean that if you if you know if you know someone you're if you're a mate of someone, doesn't that mean you're going to win a contract?" Never got that question from a British investor because it just wouldn't just just not happen here. It when it does happen and it did happen during COVID, it is front page news. So, that that sort of nepotism just doesn't exist for us. But I for me concentration doesn't is not such a not such an issue. And also, we have managed to grow in the industry despite the rest of the industry staying probably pretty stable or you know, even in the beginning of the 2010s sorry, coming down a bit. On growth, not organic growth but growth through acquisition. This was part of I think also part of your thesis and you've you've you've already touched on it. In our pre-call, you also said though that getting into the business you now see that just acquiring rapidly is maybe not as that the rapidity with which you can do that maybe isn't as realistic as you as you thought it was which is something that I hear a lot from searchers. So, please elaborate on that. Now that you're in this seat, how how are you feeling about acquisition? Do you know, I had one investor who I had most investors if they said no, it was because of my terms. I had one investor who said no because I believe she I think they thought or this this this investment group believed that I was thinking about doing having investments too quickly and I was being unrealistic which now I realize I probably was. Um Yes. So, in our industry, you have seen a lot of players who have grown who get VC PE investment and then have these very these these revenue graphs that look like this, you know, right, straight upwards. You give give it 2 years, they fall over. We have to be really, really careful to manage our growth. And you were even seeing that as we've grown organically as well, that we've gone from my head of finance was telling me that when she joined we had 80 people. That was 2 years ago. We're now at 122. Um we might go up to 150 in this year just with the contracts we've currently got. And you're you're seeing you're seeing growing pains as a result of that. So even just organic growth over the last year you have seen issues. And integrating another company with us I think it's going to be pretty it's going to be tough. Mhm. There's no doubt. Um so I'm just very, very mindful of culture, but also, you know, if we do integrate if we do have new businesses, what's it going to what will actually be the, you know, are we going to grow too quickly? What how are we spending too much money? What happens if the worst does happen and the government does change their mind about a about a contract and we have to, you know, give not give back money, but we're not able to perform on something or other. One of my uh guests that his interview hasn't aired yet, but he talks about he's has a vision also of of of growing through acquisition. Um but he's just now done his first acquisition. And he talks about building a a chassis. Um and that this that this this first acquisition is the platform. Um but he just he learned from one of his PE mentors that you just really, really need to to feel that um that chassis, that first foundational platform company um is just super tight, super strong, it's the foundation of everything. Um so so I so which is a subtly but separate problem from just growing too quickly. It's just also like is is that is that foundation company uh strong in all the right ways to support the to support bolting on. Do you feel that Work-Pace is is already or do you also just need to kind of like tighten up the chassis a little bit first? Good question. I think I need I think I need a bit of time personally to understand the business a lot better. It's so easy from the outside and when you're coming up with a um with a you know, an I am you know, a 100-page I am with all your great business plan ideas to say, "These are the list of companies that I want to acquire and that I think would be really good additions." But you get in the business and you suddenly think, "Oh, hold on. This if I acquire this company then this is going to be an issue." Or you realize that actually our business is made up of 122 people trying to do a job. Are they you know, they're not going to get on with someone at the other side of the country potentially. You know, and so actually understanding that personality even personality issues is really important. So yes, 100% um I think that Work-Pace could be an absolutely amazing chassis or um I I yeah, platform is how I I would used to call it. Um but I think I need a bit of time as well to really understand the business better and actually understand where the areas where I think would be best for an acquisition. Mhm. Alex, this has been awesome. How can people uh reach out to you? Oh, yeah. Um I love talking to uh such as actually and well anyone. So I'm actually at alex@work-pace.co.uk. Great. And are you um active on any of the social networks or mostly is email primarily the best way? Um I have I have LinkedIn, but I generally use it as just as as a marketing tool for for Work-Pace which not not that successfully. So yeah, email or LinkedIn is always great. Okay, great. Alex, thanks so much for your time. This was a really fun interview. It's been such a pleasure.
Before embarking on his search, Alex Glasner interviewed 50 searchers & uncovered 2 key attitudes necessary for success.