Negotiating with an investor considering supporting your business with finance can sometimes feel like a long process, but completing the deal is actually just the moment when your relationship really begins in earnest. At BOOST&Co we invest in businesses for between three and five years, and we believe a close relationship with our investee companies every step of the way is in everyone’s interests – after all, we’re all in this together.
Roux Brits, portfolio manager at BOOST&Co, explains what that means in practice – what he is looking for from management teams over the life of our investment, and what we can offer too.
1. What are you looking for from management teams?
At BOOST&Co we are fortunate to work with some of the most talented management teams in the UK, and it is certain qualities that set them apart. I want our management teams to be coherent and articulate – members of the team may well have different ways of working and different views about how to rise to the challenges faced, but they need to be able to come together to work collectively towards a shared vision of the end goal.
2. Does a good management team always agree on everything?
As with any relationship, healthy friction can be a good thing. Businesses will achieve more when senior leaders are prepared to challenge ideas and to push each other to new heights. Each member of the team brings different skills, experiences and perspectives to the business, and harnessing that breadth as a positive force will drive the business forward. Constructive, healthy debate delivers better outcomes, as long as each member of the team is open to listening and learning, while working toward the same goals.
3. Is it a two-way process between BOOST&Co and its investors?
I believe in an open and transparent approach from both sides; my experience is that everyone has something to learn from everyone else. Strong relationships develop easily with the companies we invest in when everyone is open and honest. We never expect companies to get it right all the time but we do put a lot of value on how a management team goes about its business. In return, we hold ourselves to the same standards and try to ensure that companies feel supported when needed, whilst not being intrusive and trusting management to do what they do best. Ultimately, since we are fully aligned with the management team to make sure the business achieves its ambitions, we are there to support these businesses on their journey.
4. How do you help businesses develop?
We pride ourselves on picking exceptional management teams to back, which makes my job very easy – in most cases as I quickly gain confidence in a team in the way they operate and communicate. Members of the management team bring their own expertise to the business, whether in finance, marketing, operations, or another discipline. But a siloed approach can prevent a company achieving its full potential. The best leaders are continually curious about every other area of the business, so I encourage them to challenge themselves as a team, and sometimes I help them ask the right questions. Occasionally, I need to get more involved and then we are there to help management through difficult decisions and to offer support where we can; we are all in it together, with the same goals and aspirations.
5. What about when the business hits a rocky patch?
Any business will face challenges and that is even more true for entrepreneurial SME businesses. The key is to see and understand these challenges as soon as possible, to deal with them head-on as a management team and to communicate effectively throughout. I encourage our businesses to be prepared and vigilant. Strong leadership teams plan ahead, take action and don’t duck tough decisions, and while they may be full of good ideas they know how to maintain focus on what really matters. Good leaders also understand the key drivers in their businesses: they know how to articulate them, ensure they are constantly measured and communicated; and have confidence in their colleagues to respond accordingly.
6. How do good teams remain focused?
I believe businesses need to have vision, but it’s also important that good leaders live in the present, unburdened by anxiety about what happened in the past or fear of the future. So while a strong track record may be impressive, I gain a lot of confidence when leaders show me they understand that what’s really important is the action they are either taking or planning today. What are the actions required right now to continually drive improvement, keeping in mind future aspirations?
7. Are there any danger signs that worry you?
The best leaders have a laser-like focus on what their organisations are trying to achieve and don’t let anything else cloud that focus, so when that’s not the case, I get worried. Politics, personalities and diverging interests can easily become distracting and disruptive, inhibiting the team’s efforts to move towards their collective goals. The key is to maintain focus on what is important but also to take people on the same journey as the business strives for continuous improvement.
8. What’s the most important element of all in your relationships with businesses?
Trust – both between BOOST&Co and the business, and within the business itself. Each member of a successful team trusts the person to their left and to their right completely and enjoys learning from each other. They’re prepared to challenge one another, safe in the confidence of their ability to deal with challenges and opportunities collectively. The result is that a potentially daunting journey can be richly rewarding. Those are the kind of ventures we love being involved in. We feel truly privileged to have the opportunity to learn from the companies we invest in and to share their journey with them.
Have a question about BOOST portfolio management?
Connect with Roux on LinkedIn.