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People First

Chris Tossell
Cofounder and Former Commercial Director at The Access Group

Learning outcomes

  • How to analyse the founders and people of the target company before software acquisitions
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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

You touched on valuation and you mentioned that the first acquisition you made was roughly two times revenue, back then. What metrics or specific KPIs do you look at? You mentioned churn and recurring revenue. Anything else that you look at or what type of hurdle rates do you have?

People first. I have met quite a few businesses, have gone with our CEO and met them, good businesses, very profitable. We have walked out of the meeting saying, that’s a great business. I could never work with them. That’s the end of it. So, people first, every time.

What exactly, about people, do you look for?

When you go to acquire a business, you’re on a fast-track path. We want to buy that business, integrate it into our business. We’re looking for people to stay, not leave, so we’re a buy and build. Our question to companies will be, look, how much will it cost us to invest in your business, to double the size of it and how long will it take? Can we double the size of your business in a year? Two years? We need to double the size of your business. You have access to all our sales staff. Our class acquisition strategy in Access was, find a business that’s very profitable and has got a poor sales team. The owner is probably sitting there with £300,000 to £400,000 in the bank and you’d say to them, if you had unlimited funds, where would you spend it? They will almost always say, I’d get a couple of really good sales people.

So you say, why don’t you do that? You’ve got £300,000 or £400,000 in the bank. The classic answer would be, because I’ve done it before and it doesn’t work. They’re not very good. When we bring a big sales team to the table, who really want to sell their product, it gives us every opportunity and it gives us the opportunity to construct a deal, which works for them. In that smaller sector, where the businesses are turning over £1 million to £3 million, they’re all struggling for sales resource; they always are.

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