February 27, 2020
Portfolio Chair Catherine Wall talks to Rachel Bridge at Drax about challenging perceptions and developing talent
There is more than one way to become the Chair of a private-equity backed portfolio business, as Catherine Wall has discovered.
Instead of taking the well-worn CEO route to get there, Catherine came over from the other side of the fence. She was a Director and Partner with private equity house Equistone Partners – formerly known as Barclays Private Equity – for more than 20 years, during which time she led 14 new investments and 23 exits.
Catherine has no doubt that this has given her an edge in her role as a PE Chair. She explains: “I think like an investor, so I understand what the private equity house wants, what their pressures are, and what their questions will be, and that is undoubtedly a big help. I have also seen more than 30 portfolio companies in my executive career so am very well positioned to explain to the management team what is really important to the investors. It is about taking the broad list of things that the PE house wants and saying actually what is really fundamental to their judgement of your performance are these two things, so let’s do those.”
She took on her first chair role while still at Equistone, overseeing the investment cycle of convenience store group Day&Nite, an exit which delivered a 5x return on money.
She left Equistone in 2013 and was then asked by private equity house Phoenix Equity Partners to chair one of their investments, Signum Technology, which makes safety critical flow control equipment. By that point Phoenix had been holding it for three years but growth had stalled. Catherine came on board as executive Chair for the first 18 months before stepping back to non-executive Chair when she brought in a new CEO to replace the existing one.
She says: “Whilst we had a talented CEO, all his strengths were in operations and engineering, and all of our issues were in sales and marketing. So I hired a CEO who was much more focused on why we were not making an impact in the market and how we were going to change that. That was one of the main paths that resulted in success.”
She was however determined to make it as smooth a transition as possible. “I exited the existing chief executive on the Monday and brought the new chap in on the Tuesday and explained why, and everyone was fine with it in about 24 hours. You don’t have to make these things into a big drama.”
Catherine also reduced the number of objectives the business was trying to achieve. She says: “The private equity owners wanted more growth and kept suggesting initiatives, and the chief executive felt he had to say yes to them. But I started saying no, we are going to do three of them and we are going to do them well, and until we have done those three, we are not talking about any of the others.”
She looked closely too at whether people were in the roles best suited to them. She says: “One of my particular interests and strengths is that I am very focused on assessing and developing talent. If the right person really wants to take on a challenge and is really well positioned to do it, you can unblock the barriers that are stopping them from taking it up and then sit back and wait for the numbers to go up.”
At Signum Technology, for example, she identified that the Managing Director of one of the sites would be far better suited as Group Technology Director in charge of new product development. She says: “Suddenly we had unleashed a demon. The increase in productivity and new products was a fundamental driver of how we doubled the profits.”
The changes she introduced more than paid off. During her four years as Chair of Signum Technology, profits rose from £5 million to £11 million and in 2019 it was sold to a Swedish trade buyer for a healthy investment multiple, with both Phoenix and Catherine exiting at the same time.
Catherine is now Chair of a media planning business, The Kite Factory, which is backed by Key Capital Partners, and would like to take on one more Chair role.
She clearly loves what she does. She says: “I help businesses double in size, which means they make twice as much money, they hire young people to work for them and they give people more opportunities. It is fun and it is very satisfying to do.”
Drax lead: Rob Lanham
Associate Director, Industrials
Tel: 0203 949 9563