The former head of private equity at H.I.G. Capital is embarking on a new adventure and setting up a private equity firm of his own. He tells Rachel Bridge at Drax about his plans.
Paul Canning is a familiar face in the private equity world, having spent over 20 years in the industry, most recently as Partner and Head of UK private equity at H.I.G. Capital. So when he returned from a year-long world trip with his family last September, he had no shortage of interesting offers.
However Paul realised that he really wanted to get back to doing what he loved most – discovering and helping smaller businesses with untapped potential.
He says: “What gets me excited is meeting a management team for the first time to talk about their business and its opportunities. There is nothing better than jumping in the car or train and heading off, be it Devon or Derby, to hear a team’s passion for their business - then trying to assess the challenges and risks and looking at how I could help.”
So earlier this year he and fellow industry veteran and friend, Alex White - formerly a senior partner at BDO and founding member of their M&A and private equity business - set up their own private equity firm, Treun Capital (www.treuncapital.com), to provide small firms with equity investment of up to £10 million and the financial, strategic and operational support to grow equity value faster with more certainty.
Paul says: “I am jokingly calling this ‘Back to the Future’, because it is where Alex and I started all these years ago with a simple old-fashioned approach to helping companies by bringing them experience and knowhow as well as capital. There are a lot of owners and teams seeking sub £10 million equity funding who are looking for genuine experience, help and added value - as opposed to ‘here is the cheque and we will see you in five years’ time’. This is about us rolling up our sleeves and working together with a company to help them join up the dots.”
Treun – which means bold and courageous in Gaelic - will focus on backing firms in the business services, technology, speciality manufacturing and consumer sectors, areas which Paul and Alex know well.
Paul says there is a growing gap in the market for the kind of assistance they can provide as other private equity investors increasingly chase bigger businesses and larger deals.
“So much capital has come into private equity that the whole market has moved upscale. There was a time when a £10 million equity investment cheque would have been regarded as a midmarket deal, but now it is seen as a micro deal. This smaller end of the private equity market is definitely more unloved and under-served, yet this is where there are transformational opportunities and companies genuinely need experienced investors and industry expertise to help them with the challenges and issues of how to grow faster.”
Paul points out that businesses of this size are often owned and run by families, and so may face the classic challenges of retirement, divorce or bereavement. “The problem for a lot of these businesses is that the management team are the owners and they are flat out dealing with other issues so they don’t have the time to think about what they need to do to grow the business, and wouldn’t know where to start looking for someone with the right expertise to help them.”
Indeed Paul sees a fundamental part of Treun’s role as introducing industry experts to management. He is ideally placed to be able to do this, thanks to the extensive contacts that he and Alex have built up within private equity over the years.
He says: “There is an amazing cadre of very experienced people in the UK who have built global businesses in their respective sectors over the past 25 years. Now they want to help the next generation of business leaders. Yes they want to work with businesses which can deliver them a capital gain, but it is about much more than that. They are passionate about working with management teams and making a difference.”
They plan to keep Treun Capital’s approach personal to stay close to the businesses they help, and have already identified the first potential investments.
Meanwhile Paul is clearly loving his new role. He says: “If I come across an opportunity which I think has real potential and I think we can make a difference, even if it is only a modest equity cheque, I still get excited by it. This is about working hard and having fun, and offering businesses the personal touch to make the biggest difference. It’s what gets me out of bed in the morning.”
Drax lead: Graham Roadnight
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