Peter Sleigh & Debbie Story
When practice owners Peter Sleigh and Debbie Story decided to exit Sleigh & Story, there was only one route they were interested in - a management buyout by their senior managers Jonny Stead and Ifat Jhugroo
Peter and Debbie's exit strategy was always important to them. "We felt that if our exit strategy worked then we would have run the perfect business," said Peter. Debbie agreed: "An exit strategy that handed over the business to internal people rather than an external sale was always going to be the perfect end to our journey."
“We put all our eggs in one basket," they recalled, "a large part being because of the culture of our practice. It was important to us that it continue with the culture we felt we’d created with Jonny and Ifat’s help, and we didn’t want a different culture coming in from an external sale. We wanted the culture we’d created to be our legacy and we wanted the best for our clients and this was always going to be the best option. If it hadn’t worked, we’re not sure what we would have done – but it did work!"
They had received letters from brokers so had an idea on price based on that – between 0.8 and 1.2 of gross fees. "Jonny and Ifat were senior in the practice before they took it on and we all sang from the same hymn sheet. We had a few conversations about price but it didn’t take long to reach an agreement. Because we had that strong value culture, trust and being fair were values that we always came back to. So hopefully we came up with a fair sale price that all four of us were happy with.”
Peter was already decided. “I’d pulled out from doing client work a couple of years before we sold the practice so it was more about whether Debbie would be happy that her clients would be going into good hands, but also for her clients to be happy – that they felt looked after. It was a two-way thing and we recognised how important that was and that the communication was done right.”
“Having Pete out of the client-facing role was good” recalled Debbie. “It made it easier to sell the practice. Retrospectively, should I have gone out of the client-facing role a bit faster? But that’s a very fine balance to leave everything client-facing in everyone else’s hands. There’s a risk element there because what’s stopping them from starting their own business themselves?”
"Finding the right time to talk to your senior staff about succession planning is a fine line to walk. "
Peter elaborated: “You can unsettle them if they are not ready, but if you don’t talk to them then how can they know that there is that opportunity that they can prepare for? Jonny was our first employee and we talked to him about it quite early on. He was initially opposed to the idea but as he grew into the role, it made sense to him and then when Ifat joined, he could see that it would work.”
Jonny and Ifat’s age wasn’t a concern for Debbie. “They’re both quite young but we were completely confident that they could do it and the culture fit was perfect. You do need to find the right people from within the practice. Trust was always an important value in our culture, and it went both ways – we trusted them and they trusted us.”
Peter agreed. “We all had enough skin in the game to make it work, so there was no Plan B.”
Peter and Debbie were agreed on the timing. “We both had a timeframe in mind of exiting at the end of 2020," said Debbie, "and we always knew that an internal sale would the ideal, but we had to be realistic. So we told Jonny and Ifat in 2018 that we wanted to exit in two years’ time and if they weren’t willing to take on the practice then we would need to look for an external buyer. Jonny had come round to the idea and Ifat was on board so it all worked out."
"Communication was the most important part of the transition. It was in all our interests not to lose clients. "
“Once we’d agreed the price, we didn’t stress about it," said Peter. "Nothing was written in about losing clients and there was no claw back clause in the sale agreement.”
Debbie was clear on the focus going forward. “We focused on what we needed to do to make sure Sleigh & Story continues. They’re paying us back over 10 years (with an interest rate built in) so we’ve got a completely vested interest in making sure that practice continues to thrive. It would have been an issue for them to have to look for external funding, and we didn’t want that for them either – these are young people and we didn’t want to tie them to loans and debt when they’re trying to buy homes. We had enough confidence in the business to know that they would be able to pay us out and for them to have a good return and not to have to look for external funding.”
“You’re looking for win-wins all the way down the line,” said Peter. “So that was a win-win because they didn’t have the money burning a hole in their pockets. Giving them 10 years meant they didn’t have to find the cash, and it also gave us a return on our money.”
“We did get a lawyer slightly involved to draw up an agreement," admitted Debbie. "Even though we couldn’t imagine that anything untoward would happen, there was an element of needing to make sure that they couldn’t just shut the practice down and set up another company. There’s also something in there about personal guarantees because there is an element of risk for us, however much we trust them."
Debbie had thought about the post-sale period. “We knew we could help them post-sale and we would have given them whatever they needed - which has turned out to be very little - to make sure that the practice survived at least 10 years and paid out. But it was obvious from the beginning that they were driving it forward and that there was no risk." Peter agreed: "It’s all been very easy going and everybody wanting the best for the practice".
“Our departure – when it came – was quite abrupt," said Debbie. "It ended up being during the pandemic when there was minimal face-to-face contact with clients or the team. We’d already stepped back as much as we could from the client-facing role, so Jonny and Ifat had already become the face of Sleigh & Story before we went.”
Debbie valued additional counsel that they had. “We used a company that helped guide us on strategy and they were on the journey with us. We always took time out to look at strategy, we always recruited another person when we only needed half a head, and we tried not to fire-fight.”
“We spent time thinking on the business, not in the business,” added Peter. “I’d been on a big self-development journey which has since led me into coaching – and if anybody is thinking about this kind of stuff, I’d be happy to offer them a complimentary coaching session. Having a coach for running a practice in general - but particularly for shaping your practice exit - can be really helpful so I would strongly recommend anyone to have business coaching - certainly around exit strategy but also in running the business.”
Peter and Debbie were clear on their top tip: "Our top tip to other practice owners is to think early! You need to give it some advance thought – it’s too late to only start thinking about it when you want to exit."