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Private Equity Roll Ups

Chris Tossell
Cofounder and Former Commercial Director at The Access Group

Learning outcomes

  • The essence of how private equity companies look for platform companies to build on

Executive Bio

Chris Tossell

Cofounder and Former Commercial Director at The Access Group

Chris was a co-founder of Access Group, a UK-based enterprise software company, in 1991. Chris left in 1995 and returned in 2005 during a management buyout to lead M&A with a private equity sponsor. He led over 18 acquisitions during 2005-11 and helped the business grow in 2005 from £25m revenue to over £240m in 2019. Access is owned by TA Associates and Hg Capital and is valued over £1bn in 2019. Read more

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Interview Transcript

The private equity players came in and, clearly, they saw room to roll up different software businesses. Was growth slower in the core business? What was the rationale for the buy and build strategy?

One of the drivers, in private equity, is to find what they call a platform business. Access is a classic platform business. We provided core accounting functions, such as payroll, purchase ledger, purchase ordering, procure to pay, general ledger and finance, with some other things that we had already built ourselves, which helped us stay inside of business, once we’d caught them, as a customer. We were a classic platform because, if you think about, an ERP system like that, you can add all kinds of things.

You can go down the employee health and safety route, HR, absence tracking. You can look at where that business has a concentration of customers. For example, we had a concentration of customers in the charity sector, so we then looked to go out and find software that assisted charities, which we could integrate with our own, to make it one offering. That’s why the private equity route was a good route. The easier route would have been a trade sell, but you take the money and you run. With a private equity, you don’t take any money. In fact, you lend them money. Actually, they lend you money, to lend to them. That’s the way it works, but the returns are much higher and the risks are, of course, higher.

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