Matt Parker, CEO of private equity-backed tech firm Babble, talks to Rachel Bridge at Drax about the enduring thrill and intensity of his role
Matt Parker has a warning for anyone thinking of becoming the CEO of a private equity-backed business – it can be curiously addictive.
He says: “Once you get involved with private equity it can feel as if it is difficult to get out. It isn’t the money - it is the pace, the energy and the excitement. You are building businesses and there is an excitement and energy about what you do because you are constantly being challenged by the investor to push harder and go faster. This is something I really enjoy and can’t imagine doing anything else.”
Babble is Matt’s third CEO role running a private equity-backed business, after leading a management buyout of Lumesse, a software business backed by HgCapital which was recently sold to Saba, and spearheading a rescue attempt of retail analysis business Path Intelligence.
He joined Babble, a cloud communications business, in 2016, when it was still called IP Solutions, and led a management buyout backed by LDC in October 2017.
Matt says the initial challenge for a first-time CEO in private equity is to understand how their investor likes to operate. While all PE firms share a common goal, they tend to go about achieving it in very different ways.
He says: “I have been involved with with seven different private equity or venture capital firms and they are all different. At one end of the spectrum there are firms who want to be involved in the minutiae, be in your office every single day and sit in on your management meetings and be involved in your executive team. At the other end of the spectrum you will get firms who, if everything is going well, are happy for a monthly update.”
Matt says it is also important to build a good relationship with the investors, something he admits he initially failed to make a priority.
He says: “The biggest lesson I have learned as a chief executive in private equity has been managing relationships with your stakeholders - the private equity investors, with the board and with the non-execs. There is no question in my mind that I could have done a much better job of that, particularly early on. I had zero empathy and I didn’t ever think about how they felt. But I have realised that it helps to understand their point of view and see what the world looked like from the other side of the table. I think I am now much better at my relationships with these people.”
Matt says that no matter how daunting it may feel, it is important for a CEO to be open and straight with the PE investors right from the start, and to have the confidence to challenge them when required.
He explains: “If you don’t push back it is only going to end in tears at some point. You have to feel that you are in an environment where you can say your piece. The private equity investors who sit on your board will be involved in at least three or four businesses, each with multiple projects, and they will also be looking at half a dozen other businesses to buy. So in order to engage with them you have to be straight with them and tell them what you think, otherwise it is going to be a painful journey.”
You also need to expect the same level of openness in return, Matt says. “I have yet to meet a private equity person who won’t tell you what they think. People speak their minds and can be very direct. I like that approach, because it is the way I approach life, and I never get offended, but if conflict situations bother you, then you are going to struggle.”
Indeed, Matt has always made a point of asking for constructive feedback on his performance, something he suggests that first time CEOs entering the investment cycle should consider doing too.
He says: “It is important to learn from your mistakes. One of the jobs of my Chair is to tell me when I am wrong. I have been on the wrong end of this sort of conversation a few times, one of these resulting in me making a call to an investor. I learnt from this, and now my relationship with that person is much better.”
You also need to be able to manage the pressure and the intensity of the role, something that Matt clearly relishes. He says: “I don’t let things stress me out because life is too short. If there is a problem, I deal with it and move on. Personally, I enjoy the intensity, I like the pace that we are trying to work at, and I like the openness about how I am doing, because it is always about moving forward.”
Drax sector lead: Ruby Sheera
Director, Technology and Tech-enabled businesses
Tel: 0203 178 3668