CEO FOCUS: Peter Sweetbaum, CEO of IT Lab

March 7th, 2018

CEO FOCUS: Peter Sweetbaum, CEO of IT Lab

Peter Sweetbaum, CEO of IT services business IT Lab, talks to Rachel Bridge at Drax about strategy, teamwork, and the excitement of the private equity investment cycle

When the founder of IT Lab asked Peter Sweetbaum if he’d be interested in coming in to run the business, Peter was immediately intrigued.

He had already successfully built Wavex, one of IT Lab’s competitors in the market, and so knew the IT services industry well. More importantly, he understood the enormous potential that the market had to offer.

So the two of them sat down together and devised a strategy in which they would scale up and re-position the business to a point that it would be of interest to an institutional investor and at the same time provide an exit for the founder, Sebastian Gray, and then use the business as a platform for further growth.

They delivered their strategy exactly as planned. In 2014, Peter joined IT Lab as CEO following which the company made two acquisitions. Then in 2016, he brought in private equity investors ECI Partners to help IT Lab achieve its growth plans, including through a buy-and-build strategy.

Having whittled the offers from PE houses down to a shortlist of three, Peter and his team ultimately chose ECI Partners because he wanted an investor who not only understood the technology industry but who also recognised that the industry was changing rapidly and that the business would need to constantly adapt to that.

He says: “I knew we needed an investor who understood that our industry is changing dramatically at pace and therefore that what they were investing in, in June 2016, would inevitably look different in 18, 24, and 36 months’ time. Understanding that and supporting the evolution of the business, including investment in our team and IT Lab as a platform for growth where profitability may be lower initially, were really important factors.”

He was also impressed by the way ECI’s investment team had engaged with the wider IT Lab management team. He says: “I specifically watched that carefully because the appreciation of the need of the investor to build a bond with the wider team is important. Everybody they engaged with felt that ECI was very smart, very approachable, and would add value to their journey in many different ways.”

In return, Peter has been very happy for ECI to be closely involved with the business. He says: “Philosophically and financially, we have the same objectives and we welcome their engagement in the business.”

He adds: “As a PE-backed business you have to be prepared to be open and collaborative and recognise that you are acting as a fiduciary to other people’s money. Therefore it is perfectly rational and reasonable that your investors are going to want to understand your thinking and your rationale and test it. Some people don’t like that, but I would rather our strategy and thinking were tested by smart people because it can only make the outcome better.”

He thinks that the secret to having a good relationship with PE investors comes down to two things – communication and realism. He says: “It is important to be realistic about the future and to be timely with the information they want. For first-time PE businesses, it is a challenge to get up to speed with the production and expectation of the board pack process, but it is important not to look at the board pack as a burden and to look at it instead as a significant opportunity to get perspective on your business.”

Now 21 months into the investment cycle, the relationship is clearly working well. IT Lab is growing, having expanded its team from 150 to 420 since Peter’s arrival in 2014, and has carved out a significant presence in the cloud-based technology and cyber-security market.

Peter says: “One of the things we have been very good at is recognising the dynamism of the marketplace which means there is confusion on behalf of customers. We help our customers navigate what is an increasingly complex technology landscape in the market, we help them integrate the right solutions and services based on a really strong understanding of their strategic objectives as a business, and then we give them the day-to-day assurance of operation and stability. To be really good at what we do is a huge source of pride and a huge source of energy and motivation.”

As a first-time PE-backed CEO, Peter is clearly relishing the personal challenge of the investment cycle too. He says: “It is hard work, but I absolutely enjoy it. There is a pace and an intensity to the work that I love. It is an exciting journey.”

He adds: “The timetable of the PE environment forces you to be faster, more focused, and more deliberate in your decision-making and your choices. That is a good thing. Particularly in the technology space, given how much noise and change there is, you need to be smart and you need to have a vision.”

Drax sector lead: Ruby Sheera
Director, Technology and Tech-enabled businesses
Email: rs@draxexecutive.com 
Tel: 0203 178 3668  

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