Posted: 26 May 2022

From initial investment to successful exit – a case study

From initial investment to successful exit – a case study

WestBridge recently sold its channel marketing agency bChannels. Valerie Kendall provides an insight into the deal, from initial investment to successful exit.

The founders of bChannels, Matt Rowland-Jones and Phil Gowing, met when the two leading field marketing companies they worked for in Europe and the USA, entered a joint venture. Although they were both enjoying successful careers, they shared a common frustration that the big corporates didn’t understand the nuances of working with channel partners and  therefore weren’t supporting the end users most effectively.

Their shared vision became a reality when they completed a management buyout from the joint venture and set up bChannels in 2005.

In its earlier iterations, bChannels provided bespoke advisory services to the large hardware and software providers to allow them to find and onboard the most effective channel partners for their products in any particular region. It managed their promotional activities through targeted use of their marketing development funds and ensured that their clients secured the best access to their end users across the world.

Having built a successful company, both founders recognised the business required investment if it was to achieve its full potential. In 2010, it was acquired by a larger group.  However, the economic downturn in the UK negatively impacted the wider group, so they instigated a rapid, short term, management buyout. 

In 2013, they felt the time was right to broaden the senior executive team and to build business resilience before fully internationalising the company. This made another MBO the next logical step.

Following the inevitable beauty parade, WestBridge was chosen as investment partner in 2014 because, “We really liked the team and felt comfortable that they understood our business and how we could accelerate our growth”, said Gowing.

From WestBridge’s perspective, bChannels was an impressive business which was hiding its light under the proverbial bushel.

Although the bChannels team had nurtured excellent relationships with its customers, which included 18 of the top 20 technology companies in the world, we recognised there were still areas ripe for improvement and growth.  

We just needed to find ways to replicate the business model without losing the individual attention given to clients, and also introduce different ways of working to enable the team’s ambition.

With excellent references, long term contracts and a blue chip customer base that included SAP, Seagate and Cisco, we knew the team at bChannels was doing something right. 

Most importantly, we really liked Matt and Phil, who had very different but complimentary skills. In short, they were a powerful combination.

Team augmentation

A key part of the investment journey was building capacity and resilience into the management team such that it could scale effectively, and provide the senior executives with time to think as well as do.  This allowed Matt Rowland-Jones to focus on client engagement and Phil Gowing to develop the service offering and establish how artificial intelligence could be used to ensure better outcomes.

bChannels had historically prospered despite the lack of senior financial resource.  We recruited Mark Truby to be our CFO and were fortunate to find someone who quickly became an essential part of the team, bringing invaluable organisation development skills, as well as a different scale of professionalism to the company’s financial management.

On the advice of our operational consultant, Sales Blueprint, we undertook a thorough review of the sales function which led to the appointment of Vaughan Mordecai as sales director. Vaughan brought a discipline to the sales function which ensured a greater visibility of revenues and a significant increase in sales capacity.

The final piece of the jigsaw came in the form of Richard Bandell, who was appointed as non-executive chair.  Richard was a natural marketeer whose experience at developing professional business services would prove invaluable to bChannels.

During the WestBridge hold period, a significant investment was made in the development of the C-suite and the senior management team.  This encompassed leadership and management training and personalised development plans such that a robust succession plan could be created.  This would be invaluable on exit.

Value creation

As a board, we identified the need to simplify the service offering which had historically relied on the creation of one-off bespoke solutions.  While this was clearly the right approach for larger companies with appropriate budgets, it meant the company’s services were inaccessible to a sizeable section of the market.

A range of ‘off the shelf’ and modular product packages was developed that would be easier for the second tier technology businesses to digest and get value from. This was facilitated by a significant investment in IP. Technologist Gowing was passionate that an artificial intelligence offering could be created which would allow quicker and more effective access to channel partners. Over a period, the Intelligent Index was created which collated and analysed vast amounts of data to allow effective decision making.

The positive impact of introducing new products and a new approach to selling is evident in the sales figures which more than doubled from £7 million to £16 million during our holding period.

Globalisation

One of the company’s most valued USPs was its network of talented employees based both inside and outside the UK.  As well as enabling bChannels to offer a global service 24/7, they were able to communicate with the target audience of resellers in their native tongue which was a powerful differentiator.

To capitalise on this and to protect ourselves against any impact from Brexit, we identified Madrid as a suitable location due to its multi-culturalism and significant talent pool.  With offices already established in Malaysia and the USA, this meant bChannels was genuinely global. The business was also a pioneer in remote and hybrid working well before Covid-19 made this the norm.

Challenges

Alongside the obvious impact of the global pandemic, we faced a number of other challenges.

Brexit, especially the 12 months leading up to it, meant that some of our European graduate marketeers felt that they weren’t welcome in the UK and took the opportunity to return to their homeland.  This was a contributive factor in the opening of our Madrid office and illustrates the point that out of adversity comes opportunity.

A more acute challenge came when a team of three employees conspired to woo a customer away by telling them bChannels no longer wanted their business.

With solid evidence on our side, we took the main protagonist to court.  This was as much a point of principle as defending the integrity of bChannels, commercially and reputationally.

Although we won our case and won the customer back, it was a huge distraction for the business and added a considerable layer of stress to our management team. On a more positive note, the experience galvanised everyone and demonstrated the strength of loyalty and commitment to the bChannels brand.

Planning for exit

Knowing when to exit a company is as much about instinct and intuition as it is about the financials.

With the ‘right time’ approaching, we implemented tactical PR and marketing activity to raise the company’s profile and position it as poised for great things.

We also appointed Grant Thornton early in the process to ensure everything was in order and well prepared before we entered discussions with potential acquirers.

In early 2022, bChannels was sold to The Channel Company, an American company offering similar services.  It was a natural fit.  Both companies had matching strengths but in complimentary geographic regions.

Our involvement with bChannels perfectly exemplifies our Value Creation Model in action. By implementing our systematic approach, we worked constructively with our management team to introduce enhancements throughout the business that left it better structured, more efficient and more profitable than ever before.

The management team and other shareholders received healthy returns, while The Channel Company acquired a very robust business, a great reputation and an exceptional management team. 

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