July 22, 2021
When private equity firms look to create and crystalise value, few would be as equally concerned with the personality of the managers as they are the business’s numbers.
But that’s how True, a specialist in consumer and retail, proceeds. Once the potential of the investment is confirmed, the attention of the firm’s co-founders Paul Cocker and Matt Truman switches to the management team’s cultural fit.
And having worked together for more than 20 years, starting as graduates at Deloitte, the partners know exactly what they want. They are looking for a certain kind of leadership that will not only make a success of the business but will also run it in a way that reflects their own ethos.
That’s why ideal partner investments are helmed by managers who want to build their business via a balance of people, planet and profit. “We use our influence to do good,” is the True motto.
This preoccupation with leadership qualities, sustainability and cultural fit reflects a philosophy of leadership that has developed almost by accident over their long-running partnership. They recognise that their mutual differences in personality form a kind of creative chemistry that permeates the enterprises they acquire and grow.
“We’ve always got on well but we’re different characters,” explains Cocker when asked to define True’s leadership style. “We’ve both got confidence and a desire to do something different. We’re both quite independent and free-spirited. And we have a high degree of respect for each other. It’s a nice balance.”
Marrying belief and pragmatism
Both, however, bring different qualities to the table. As chief executive and the sales specialist, Truman has an eye for opportunities that may not always be obvious to others. “Matt will say ‘we can do this’ and I’ll say, ‘why wouldn’t we do that?’ It’s these complementary factors of belief and pragmatism that help bring our projects to life.”
Naturally, the partners aim to foster a similar chemistry in the companies they back. Asked if leaders should conform to a certain mould, Cocker identifies the most important qualities as the seemingly contradictory ones of “confidence combined with humility.”
But why humility? “Because humility breeds self-awareness,” Cocker explains. “In each investment we want a core group of founder/owners who have the confidence and humility to lead, but who also recognise that they need to build a team around them with complementary skills.”
Cocker and Truman will lean on trusted partners for leadership capital expertise as well as deploying psychometric profiling techniques. Once again, it all comes down to complementarity.
“Fortunately, at True we’ve ended up with a senior leadership team who are quite different; different but complementary,” explains Cocker. “This was probably by instinct rather than by design, but now we are very deliberate about it when recruiting people into the businesses we back.”
The importance of leadership chemistry grows with the acquisition. Typically, True will invest in companies run by just two or three key people but these senior management teams will probably double during their journey with True. And that’s when a disciplined recruitment procedure becomes critical to long-term performance.
“It’s honestly the biggest thing,” insists Cocker. “You’ve got to be confident and you’ve got to believe in yourself but nobody can do everything on their own. So, self-awareness, emotional intelligence, whatever you want to call it: the ability of the founder/owner to build a team around them is what you’re looking for.”
Today, True are operating in a highly volatile, pandemic-roiled market. After a couple of decades buying and selling companies together, the co-founders have identified what could turn out to be transformational trends in retail. In the year ahead, Cocker suggests that people may well spend half their week outside of the office, which could mean they shop locally much more than before. In other words, retail will come to the people.
Yet however shopping habits change, True’s record suggests its companies will continue to beat the market. For instance, the firm has tripled the revenues of furniture chain The Cotswold Company since its acquisition five years ago. “We’re taking market share from sleeping incumbents,” he explains.
Typically, True invests in relatively small businesses patronised by people in the higher-spending ABC1 demographics, which is currently a cash-rich sector because of the Covid-triggered furlough. This strategy promises a good future for the firm’s broad portfolio of companies that range from ‘intimacy brand’ Maude to sustainable paint firm Coat. “Basically, there’s a lot of pent-up demand,” notes Cocker.
True’s winning formula is based on immersion in the retail and consumer sector – “specialism is key” – and the customer is king. And once the investment is made, they turn their focus to management – “how can we be helpful to the management teams?”
Ultimately, the trust that Cocker and Truman place in the management teams they partner with derives from their knowledge that successful leadership reflects the fundamental principles they developed themselves – a cultural fit based on complementarity and mutually advantageous but diverse perspectives.
Partner, Consumer Practice