Chris Peters, former CEO of Addo Food Group, shares his experiences of moving from the corporate world into private equity with Rachel Bridge at Drax
Chris Peters began his career very much on a corporate plc track, working for a pharmaceutical company and then joining Geest plc as Business Director before becoming CEO of Hibernia Foods, an Irish NASDAQ listed food company. But as he approached his 40s he realised that he wanted to try a different way of working. So he made a conscious decision to pursue a new path in the private equity world, initially as an interim CEO at a cheese company backed by Duke Street Capital, and then at a family firm that was considering private equity.
He quickly discovered that he loved the pace and energy that a private equity environment could offer. He says: “One of the attractions to me of private equity is that it actually takes a longer term view than a plc can, because you only file accounts once a year, whereas in the plc world, you are reporting every 12 weeks and therefore you have to be quite short term in some of your commercial decisions. What attracted me about moving into private equity was that mindset where you could do what is right for the business, not what is right for the short term results all the time.”
One day he was approached by a former colleague who was putting together a management team for Vision Capital, a venture capitalist company, which was doing a portfolio purchase of the Northern Foods group. The group was split into separate businesses and Chris was chosen to become the CEO of the convenience food business, then called Pork Farms. It was his first private equity backed role, and it was a big one, with Pork Farms spread across six sites in the UK.
It was an exciting time. Chris says: “There were effectively three of us – myself, a CFO and a COO. The COO was amazingly analytical, the finance person was extraordinarily cash focused, and that left me to be the visionary. It was my job to be the ebullient glass half full, let’s get on with it, come on, why aren’t we making this decision, person, and I was backed up by somebody who had data and by somebody who managed cash with infinite rigour.”
Vision Capital backed Pork Farms for ten years, during which time the business changed its name to Addo Food Group, and it exited in 2017 on a significant cash multiple. Chris stayed on as CEO for two years with the new PE investor, LDC, and stepped down to become Non-Executive Director in 2019. He is now looking to create a portfolio of non-executive and advisory roles.
As a result of his experiences, Chris is able to offer several pieces of advice to first time PE-backed CEOs.
The first is to make sure that you understand exactly what the VC or PE house is expecting in terms of an exit. He says: “It is absolutely vital to understand from day one when and how the VC wants an exit and what they perceive as being a successful exit, because then you will understand what you need to do. Too many people talk about writing a three year or five year plan, when in reality the VC might actually have a two year horizon, or a 6 or 7 year horizon. You need to understand what the expectation is because PE is about making a promise and then delivering on that promise. ”
The second is to understand what the PE investor’s priorities are. Chris says: “Understand the agenda of the person you are dealing with, and their bosses agenda, because you may have an investor who is very focused on investing in the people within the business, or it may be that they are very focused on the numbers and how they move. Understanding that difference makes a fundamental difference to the way you act.”
His third piece of advice is to focus on the cash. “If you manage the cash really well, then private equity will love you. Our business was run round the Tuesday cash meeting and so we never gave the PE house any surprises on cash. Cash is king, far more than in a plc world, and you ignore it at your peril. Cash first, EBITDA second, always.”
Drax sector lead: Mark Sherman
Partner, Consumer and Leisure
Tel: 0203 949 9556