Published in Autumn 2011
Glenn Elliott, managing director of Asperity Employee Benefits, an award winning and fast growth company, talks to Rainmaker about his career, values and his misconceptions about private equity.
Despite twice being named Entrepreneur of the year, it’s not a label Glenn is keen on. “I always think of entrepreneurs as being people who attain to things like sport cars or the kind of people you see on Dragon’s Den, but I have never really been driven by money or had those types of goals, I’ve never had a career plan. When faced with big decisions I just always try to make the best choices I can.”
Having worked for BT for nearly a decade, after completing a degree in computer science, Glenn decided to start his own creative agency, N1. “At the start we had no clients, no real skills and no processes and we were working from a friend’s bedroom. I remember attending a meeting and not knowing how much to charge for our services, the client wanted a website and he started telling me how much his Yellow Pages advert had cost. So I basically based our fee on that! After a few months we realised we actually had a viable business.”
“One day I realised that I had been giving away all my best ideas for years, someone would pay me £15k to make them an amazing website that would generate them £1m in profit. I felt trapped and I didn’t want to continue living hand to mouth.” But it was while Glenn was starting to wonder where to go next that N1were commissioned to redesign the BBC’s employment benefits scheme, and this fuelled the idea to create Asperity, which has recently been listed as a top 100 fast track company.
“I realised that there was a gap in the market for a business that offered good quality benefits with major retailers. Most of the benefit schemes at that time only offered money off holidays or airport car parking, but nothing off high-street purchases.”
Asperity Employee Benefits provides benefit programmes through its white-labelled and employer branded internet-based platform. Employees login to access exclusive benefits with hundreds of leading retailers, offering reduced price merchandise and cash-back incentives. The company, which turned five this year, has grown strongly since its inception, seeing its revenue more that triple since 2007.
Glenn admits that the lessons learnt along the way are a key factor in Asperity’s success. “I learnt so much at BT, including the politics that come with a corporate environment, the importance of excellent client service and how to successfully project manage. Then N1 taught me the many aspects of making a business work, like cash-flow, employing excellent people, the ability to pitch well and the importance of keeping your clients happy. I was also exposed to less pleasant aspects of business, such as making redundancies and the effects of over promising.”
When Asperity first started Glenn knew that one of the biggest hurdles would be convincing HR departments to trust them. “We had no previous experience or credentials, so we offered it to the BBC, British Airways and Next for free, giving us a strong client list from day one of trading.”
“The business grew quickly and we soon realised the next step was to make an acquisition. I couldn’t even spell acquisition, let alone know where to start making one. A document landed on my desk at the most opportune time. Lloyd’s TSB were looking to dispose of Bring Me, one of our competitors, and rather than wanting to maximise sale proceeds, instead they wanted a safe pair of hands for Bring Me’s 40 odd clients.” Glenn and his operations director, Helen Craik, wrote a robust proposal focusing on quality service but also ingeniously asked for a £400,000 integration fee. Winning the deal, this money was instrumental in fuelling the next stage of growth for Asperity.
Glenn has strong views about when a company should embark on raising funds in the early stages and certainly cautions against external start-up funding. “Owners should start with the smallest amount possible. You see so many people giving away the value of their ideas, dreams and ambitions for nothing in a desperate bid to get their businesses off the ground. Find a way of starting smaller or differently and being protective of your equity. “
Being always very exit driven once the value of Asperity became more tangible, Glenn and his team felt that this exit would come from a trade buyer. “I thought PE companies bought distressed businesses or factories and never thought about the value they could bring to a business such as mine. Clearwater educated me on the benefits of a private equity cash- out deal which would allow the exit of the other founding shareholders, whilst allowing me to not only bank some of the value I had created but share in the future upside of the business too.”
The deal sees Inflexion Private Equity invest for 60% of the equity at a multiple of 8.5 times 2011 EBITDA and 21 times historic results! A clearly delighted Glenn explains why. “Anyone thinking of doing a deal without corporate advisors is completely mad, you need robust talent on your side and people who know the market and we would have sold for a lot less if it wasn’t for Clearwater.”
While Glenn has never been one to have ultimate goals, such as fancy cars and a big house in the country, the deal has made him realise the importance of protecting the value of the business and carefully planning its future and ensuring his staff share in his vision too. “I think it’s very important to know where your business is going and we know that in four years time we want to exit, and all our staff know that as they too are all shareholders in the business.”
Of all the awards, Glenn is most proud that Asperity has been recognised as one of The Sunday Times Best Small Companies to Work For. “I am proud of the company we have built and the morals we abide by. To work at Asperity you have to have the desire to fight and win every client, but do so with ethics, respect and honesty.”
With over 120 members of staff, 600 corporate clients in the UK alone, as well as operations in the US, Ireland and now in Australia, Glenn has certainly shrewdly applied all the lessons learnt along the way.
Copywright Rainmaker Magazine / Clearwater Corporate Finance LLP