February 27, 2020
Serial private equity CEO Sam Pemberton talks to Rachel Bridge at Drax about the secret to achieving successful exits
Sam Pemberton clearly doesn’t believe in doing things by halves. Of the three successful exits he has so far delivered as a technology CEO, two of them have generated an outstanding 12x return on investment.
Sam started out as an entrepreneur, founding his own technology business, The Metadata Company, in California in 2001. He successfully sold the business to the media technology firm Softel five years later and in the process stepped up to become CEO of Softel itself, spearheading a private management buyout of the company. He sold the business to media tech giant Belden six years later, generating a 12x return on investment for shareholders.
Sam then spent two years advising private equity firms until in 2015 he was asked by PE firm Connection Capital to come in as CEO of ailing education technology business Impero to attempt to salvage a serious situation. The business was hit by free-falling sales, disintegrating profits, significant software issues, terrible staff morale and embedded cultural problems. So on his arrival, Sam implemented a radical change programme, improving the culture, refining the products the business offered and expanding into markets overseas.
He also put in regular 18 hour days and made a point of meeting unhappy customers himself in person.
He says. “During one particular trade show, BETT, I met literally hundreds of irate and upset customers who had been promised the moon on a stick but had frankly only been given the stick. I explained that although we weren’t going to be able to give them everything they were looking for, we would do our best. When you are honest and transparent most people understand it, and that turned out to be the case here.”
Within the space of two years Sam had managed to transform the business and in 2017 sold it to Investcorp for US$36.3 million, generating a 3.5x return for original investors and an impressive 12x improvement in shareholder value during his own time in the business.
He is particularly proud of the fact that despite having had a toxic culture when he arrived, by the time he left Impero, it had been recognised as one of The Sunday Times Best Small Companies to work for.
Sam thinks the secret to success as a CEO is knowing your weaknesses as well as your strengths. He says: “Just because you are CEO doesn’t mean you have to be brilliant at everything. You just have to be honest with yourself and others about where you are strong and where you are weaker. There are some people I know who can sit down with a profit and loss account and within 20 or 30 seconds will know a lot about the business, whereas it would take me 30 minutes to do that. So I rely on others around me who are good at that and instead I am good at leading a team, spotting opportunities, pulling together a vision, and understanding where money could be made.”
He says it is also important to listen closely to your team. “The one mistake I made was over-trusting someone quite senior within the business and not realising that they were actually being destructive behind the scenes. I should have listened harder to others around me telling me that there was an issue and gave the ‘benefit of the doubt’ for too long. If you are not sure of your team, you need to make that change quickly and I perhaps didn’t make the change as quickly as I should have.”
Sam is now CEO of The Learning People, a technology training business backed by VC investment firm Talis Capital.
He offers this advice to CEOs going into a private equity-backed business for the first time: “Be professional, be consistent and be analytical. When you are running a private business that you own, you can be somewhat haphazard and still get away with it, but with private equity backing you are expected to do your homework and follow through on the things you say you are going to do.”
He adds: “You need to be determined and protective of the things that you know you are good at, but also be very open and willing to listen to ideas that are outside your comfort zone.”
Drax lead: Stuart Jansze
Partner, Agile Transformation – Digital
Tel: 0203 949 9536