Private equity chair Richard Houghton talks to Rachel Bridge at Drax about accidentally going plural
It is always satisfying when things come full circle and you discover that what you were busy learning in your 20s has turned out to be useful to you later in life.
That’s exactly what has happened to Richard Houghton, who started his career as an engineer with Esso, and is now chair of British Engineering Services, an engineering testing and inspection business.
Richard studied Chemical Engineering at Cambridge University and then spent a happy few years working at Esso, including a stint in their oil production operations in the Bass Strait off the southern coast of Australia.
He says: “There were a few thousand of us in rural Victoria with a private plane shuttling daily between Sydney and Sale, where I was based. If you played your cards right, every now and then you could get on the shuttle on a Friday evening and spend the weekend in Sydney.”
After taking an MBA at Harvard Business School, however, Richard realised he was more interested in business and so joined McKinsey, the management consulting firm. He got a chance to help build a business in 1999 when he co-founded Xchanging, a business process outsourcing firm backed by venture capital firm General Atlantic Partners.
Richard started out as COO but later took on the role of CFO too and in 2007 led the company’s flotation on the London Stock Exchange, which put Xchanging straight into the FTSE 250.
It was an incredible experience. He says: “Having started the business with just a handful of people in one room in Berkeley Square, by the time I left in 2010 we had nearly 9000 employees in nine countries and revenues of about a billion dollars. So it was quite a journey.”
When Richard left Xchanging he initially expected to take on another executive role. But Vitruvian Partners asked him to be a non-executive director at utilities provider Verastar, then called Unicom, in a role that was very similar to that of a chair, acting as a bridge between the management team and the private equity house. That led to other non-executive roles and before he knew it Richard had a portfolio.
He says: “It wasn’t necessarily my intent to go plural. When I left Xchanging I just fancied a change. It had been a very intense experience for eleven years and I wanted to do something a bit different. I was plural without ever really having planned it that way.”
Richard quickly discovered, however, that he loved this way of working.
He says: “I enjoy it very much. There is a lot of variety, in terms of working with different management teams, different private equity houses, different industries and different types of challenges.”
Richard has always deliberately embraced chair roles which require a fair degree of hands-on involvement. He says: “I have enjoyed and flourished in businesses where there has been quite a lot of transformation. It has a been a theme throughout my career. I enjoy that challenge.”
For example, on joining Target Group as chair Richard found a business that was underperforming and oversaw the replacement of the senior management team within the first six months. At British Engineering Services, the challenge has been to create a new entity after the business was carved out of the RSA.
Richard says: “If it is business as usual, tweaking this and that, then it is probably not really my forte. I prefer something a bit meatier where I can really help the CEO and the management team in a more fundamental way. I would rather do fewer chair roles that are more challenging than a wide range of roles where I literally turn up to the board meeting once a month. That’s not what I find particularly enjoyable and is not something I seek out.”
Along the way he has found that his previous experiences have been hugely beneficial in bringing an insight to a particular situation. On being an entrepreneur for example, he says: “I have been in a start-up so I understand the challenges. That has definitely helped me.”
He adds: “I have found that having been a CFO is as helpful, and perhaps even more helpful, in my current role than having run a business as a CEO. Having done a CFO type role is not a bad background for a non-executive chair because there is less tendency for you to try and run the show; it is more about supporting and helping a CEO. Having some experience of finance is also extremely helpful, otherwise wool can be pulled over your eyes.”
As well as being chair of British Engineering Services, Richard is also chair of aviation technology firm Vistair Systems. He clearly relishes the challenge of working in private equity-backed situations, saying: “There are high expectations because of the high returns that are required in private equity, so everything has to be done with a greater intensity. I find that quite stimulating.”
Indeed he sees part of his role as ensuring that others in the management team feel the same way.
He says: “A lot of my role is helping the CEO build a team of people who thrive in that environment. Often when you come into an organisation, particularly if it is the first time that private equity has been involved, you don’t necessarily have a management team who are comfortable with that kind of intensity. That is why there are so many changes in the first few years, because you are trying to build a team that can see the vision - and are prepared to put the hard yards in to make it happen.”
Drax sector lead: Nick Harlock
Director, Chair Network
Tel: 0203 949 9559