Private equity chair Andrew Vaughan talks to Rachel Bridge at Drax about his portfolio life
Andrew Vaughan is not your typical PE-backed chair. For a start he is one of only seven chairs in the UK to have achieved more than five successful exits since 2010. Then there’s the fact that he became a chair at a significantly younger age than his peers, taking on his first chair role at the age of 40.
Still only 56, he has worked with private equity houses across the mid-market including Inflexion, ECI and Livingbridge and completed 10 successful PE chair and chief executive roles, including Citation, Reward Gateway, Nexus, Red Commerce, Clarity Blue and Enviros. Together these have achieved over seven times average money multiple returns for investors.
Andrew actually fell into private equity by accident. It was certainly not a world he was familiar with while growing up. The middle of three sons, he was brought up in rural Staffordshire where his father was a building engineer and his mother a full time housewife.
After studying economics at Leeds University he joined ICL because he wanted to become a professional salesman. He did well and spent 11 years there on a fast track career path, with every intention of staying there for much longer.
He says: “I never did a job for more than two years and each time they moved me it was to something bigger and better. It was fantastic.”
Attending a young managers’ programme at INSEAD also helped him see that sales skills were essential for good leaders. He says: “I realised that the people who could lead and get the best out of a team were not necessarily the super bright specialists with the amazing qualifications, but people who had well-developed sales skills. That was a real light bulb moment for me. It really made a difference to the way I thought about myself and what I thought I could do.”
On his return from INSEAD Andrew was sent to run a small ICL subsidiary called Workplace Technologies which designed and installed building infrastructure, and together with two equally motivated directors set about transforming it into a network integration business.
But one day his boss called him in for a meeting and told him that the subsidiary he was managing was being put up for sale - and that Andrew would be going with it. Feeling horrified and somewhat betrayed, Andrew briefly contemplated leaving, but he fully realised how much potential the business had.
So instead he and the other two directors bought the firm themselves in a management buyout backed by 3i. Within six years they had taken it public, sold it to NTL and delivered their backers a 14 times return on their investment.
By now 39 and financially secure, Andrew decided to take time out to reflect on how best to proceed and moved to Portugal with his wife and young children for a few years. It was a bold move but it also turned out to be incredibly astute, giving him the space to figure out how he’d like to spend the second part of his career.
He says: “It was the best thing I ever did. I rediscovered what was important to me and what really mattered.”
He soon realised that his experience as a PE-backed chief executive meant that there was a great deal he could offer as a chair.
He says: “When I was a chief executive I didn’t want the kind of chair who had been hired because of their contacts or because they were a big cheese who would look good with investors; I wanted somebody who actually knew what I was going through. I realised I could be a different kind of chair who would be sufficiently engaged to be of value, but detached enough to allow the chief executive space to do his job. I wanted to bring some empathy to the role, having done exactly the same role of chief executive myself. It was about finding the balance.”
It was not long before private equity houses also realised the unique insight Andrew could bring to the role. His first chair role was for a consulting company, WCI, which was backed by ECI Partners. ECI liked the way he tackled the role and more roles quickly followed.
Over the past 15 years as a chair Andrew has deliberately picked roles in a diverse range of sectors and locations to broaden his experience as much as possible, and only takes on roles where he is confident he can really add value.
He says: “I work hard at trying to figure out the situations where I can really contribute. Just because you have been successful before doesn’t mean you are going to be successful next time round. If you have that attitude it keeps you on your toes and it keeps you flexible and adaptable.”
He deliberately only takes on up to four chair roles at a time in order to give each business the attention they need. He says: “I am constantly asking myself what we should be doing, who do we need, what can we be doing better? And that might be completely different from one business to another.”
He adds: “When you are a chair it is important to remember that nobody goes to a football match to see the referee. They want to see the players. My advice is that if you want the glory and the praise and the plaudits and the power, be a chief executive. For me, the very best chairs are often completely invisible, and their impact is only really appreciated when they're gone.”
Andrew clearly loves the challenge of being a PE chair and plans to continue doing it for a long time. He explains: “I love working with bright, capable people and getting involved in businesses that may be full of energy and enthusiasm, but also may be a little bit rough around the edges, that are on a journey and have great potential. And I absolutely love that feeling of achievement when you have a successful exit; when you get to that point where you just say ‘done’, and you can look back and see a result. It is such a thrill when you can do that.”