Most private equity firms and investment funds acquire a business, make it more profitable, and then quickly sell it. PieLAB is different, in that its investments are always made with a long-term focus. That means PieLAB is very unlikely to sell any business it invests in. But why is that?
In this article, PieLAB partners Chris Rolls, Shaun Bassett and Richard Anderson explain how PieLAB works, what it takes to gain investment from the organisation, and what those businesses will gain when they join the PieLAB portfolio.
Why does PieLAB invest in businesses for the long term?
“The simplest reason is that in order to build excellent, sustainable businesses, a long-term view is critical,” says managing partner Chris Rolls.
“And because we invest in the leaders of those businesses as much as we invest in their actual business, it takes time to put the resources they need around them to grow into the kind of leaders that can create sustainable results.”
Chris is a serial entrepreneur who has built several businesses throughout his career, and says the best businesses and leaders understand that building an impactful, sustainable and profitable business is an exercise in patience.
“The people who invest in PieLAB’s funds are owners and operators, or former owners and operators of businesses themselves,” he says.
“They appreciate that patience plays a key role in getting a good outcome. Our investors, our partners and our company CEOs are absolutely aligned.”
What kinds of businesses does PieLAB invest in?
Partner Shaun Bassett says PieLAB has a very specific criteria for the kinds of businesses it will invest in. PieLAB refers to this as its mandate, and businesses need to tick these boxes to ensure they’re ready for the kind of support and investment the fund delivers its portfolio businesses.
“For us the perfect business is one generating revenue of between $3 million and $15 million, profits of at least $1 million EBITDA, and has a really stable revenue model,” Shaun says.
“We like to see recurring revenue, a subscription model or very strong repeat customers bases. That stability of revenue is a key part of our mandate.”
However, that is only one piece of the pie. Shaun says the leadership and key staff are just as important.
“We don’t just invest in businesses, we invest in the people who make those businesses tick,” he says.
“Great leadership is paramount for us. Leaders who want to develop and grow are a must.
“We also want those leaders to retain their key staff, because they are the ones who have built the business to that point, and they are best placed to take it to the next level.”
How do businesses work with PieLAB?
“PieLAB offers several avenues for businesses looking for investment,” partner Richard Anderson says.
“A lot of businesses don’t have a succession plan. They may assume their business will stay in the family, or that they have to sell it. PieLAB is a solid, future-proofed pathway to succession planning for those businesses.
“Often we’ll find the founder is ready to exit, and the executive team is primed to take over but can’t access the capital to do so. We can help with that, especially if those leaders have the qualities and drive to grow and develop the business and themselves.”
Richard says the businesses that work with PieLAB have generally built something special over the years, and for those founders, maintaining the legacy is vital.
“With PieLAB’s long-term investment focus, our founders and their key staff can continue to operate the business with the resources we bring, but without being in it alone,” he says. “And if they are ready to move on, we can facilitate their exit from the business on their terms.
“We add something a lot of investment funds can’t – a framework that helps them to succeed, but without that burden of owning and operating a business alone.”
What kind of leaders run PieLAB’s portfolio companies?
Business leaders who align to PieLAB’s values are absolutely vital, Chris says.
“Successful leaders are the ones that have a get-up-and-go quality,” he says.
“But they’re also quite humble and highly inquisitive. That might be more important than anything. That curiosity means they want to learn more.
“That’s a great alignment for us to have – leadership teams who are keen to learn, grow and who are coachable. Collectively we can have a lot of impact with that.”
What is it like to be part of the PieLAB portfolio?
A permanent home. Tools and network to help you grow. Freedom to operate. Those are the key benefits of joining the PieLAB portfolio, Shaun says.
“We don’t want to interfere in the day-to-day operational decisions in a business. We think that’s up to the executive and staff,” he says.
“Our role is to wrap resources and capital around the executive team, help them overcome issues and obstacles, and advise them of the risks and mistakes many have made before them.”
Shaun says for a lot of founders, there are things they simply don’t have the experience to navigate as their businesses grow.
“They can talk to us about the problems and opportunities they simply don’t know how to overcome or how to capitalise on,” he says.
“We don’t invest in a business to take it over. We want those leaders to continue operating the business, because in most cases they’re best placed to do it.
“But we can wrap them in resources to make that job a whole lot easier and more effective.”
What expertise does PieLAB bring to your business?
The expertise PieLAB’s executive team brings is just the start. PieLAB also has a CEO Council, the members of which are all seasoned business veterans. PieLAB’s portfolio businesses get to tap into that knowledge at any time.
“The members of our CEO Council have all built really great businesses. That’s the first level of our network and all of them are investors in the fund,” Richard says.
“The next level are those who are invested in our fund but not part of the Council. The majority of those actually come from small-to-medium businesses, so they’ve run and operated their own shows.
“Then there is our expanded network. We have worked with a plethora of talented leaders in the various businesses we’ve been involved with. We have that reach, and our portfolio businesses get access to that.”
If you think your business is the perfect fit for PieLAB’s portfolio, get in touch with the team.
