Meet Oli Field-Johnson and Vitten Varma, two entrepreneurs, doing things a bit differently.
In a world gravitating towards technology start-ups, incubators, accelerators and all the hype that surrounds them, their gaze is set elsewhere: they’re looking at a more mature enterprise that is now in need of support, succession and fresh ideas.
Just one year ago, Oli and Vitten set up Landale with a singular goal: to buy one such company, from a very particular type of seller: “The opportunity we are interested in is understated and flies under the radar. It is likely not exciting enough to make the headlines, but yet accomplishes something critical for its customers.”
“Success in these fields is built on a bedrock of gradualism and hard work”
Vitten, started his career as a petroleum engineer: “I cut my teeth in an industry that, over a century, spawned an ecosystem of critical service providers across many communities. The industry makes the headlines often, but the real jobs on the frontline are still unheard of: pumping, disposal, cleaning, mulching, reclaiming – these aren’t sexy, they simply need to get done. The ones who take up the challenge aren’t chasing unicorns; they are doing what it takes to put food on the table. For them, there is often much more at stake: it’s not simply about investors or lenders, it’s about families and communities. Success in these fields is built on a bedrock of gradualism and hard work. We see as many examples in the north as around London, and cannot help but be in awe of what they have achieved.”
“…a lightbulb moment”
Oli and Vitten met in business school, and bonded over a common desire to follow an entrepreneurial path that built on their operational experience. Well into their MBA programs, they attended a talk by a gentleman named Simon Webster. Simon had purchased RSL, a prosthetics and orthotics manufacturer, and between 1995 and 2005, he grew RSL from £3.5m to £30m in sales and EBITDA from £0.4 to £2.4m. He successfully sold the business in 2005 (now RSL Steeper) but remained CEO until 2007, generating an annualised return of 20% over a 10-year period. What Oli and Vitten learned was that instead of raising funds to start a business from scratch, Simon had convinced a group of investors to back his search for the right company to buy.
This was a lightbulb moment: buying and growing a smaller enterprise sounded like the perfect opportunity to leverage their skills and chase an entrepreneurial dream. However, this excitement was still mixed with some trepidation: how supportive and understanding would experienced investors be of two first-time CEOs?
“They knew how to support, not where to kick”
What gave them hope was the rest of Simon’s story: three months after the purchase, RSL lost a big contract that put his company in peril. In any other situation, investors would have sidelined a thirty-something, first-time CEO. Thankfully, Simon’s investors empathised with what he was going through, having walked a similar path as past operators. To quote Simon, “They knew how to support, not where to kick.” Simon successfully weathered the storm, leaning on his board’s experience.
The model of entrepreneurship Simon used to execute his acquisition is known as a ‘search fund’. The first known search fund was formed in 1984 by Jim Southern, under the mentorship of Harvard Business School professor H. Irving Grousbeck, widely known as the father of the search fund model. Jim bought a $43m printer of specialty insurance documents, ended up returning his backers over 30 times their original investment and went on to become a serial entrepreneur, investor and mentor.
Oli and Vitten founded Landale, their search fund, after their MBA. They have secured the financial backing of a group of experienced entrepreneurs who have invested their personal money and offered practical knowledge and mentorship. Much like Simon’s original investors, they are intimately familiar with the model and understand the path Oli and Vitten are on. Simon is one of their backers.
“Here to roll up our sleeves and learn”
Oli and Vitten have almost two decades of collective operating experience under their belts, but realise that they do not come with deep domain expertise: “There may be things we are good at, but we are certainly not experts, and we will not pretend to be. We are here to roll up our sleeves and learn, and we understand the business characteristics that will allow us to do just that.”
They also believe that there is strength in not coming with any preconceived notions about any industry: “Existing knowledge can cut both ways. When you come with prior knowledge, you are less likely to explore and ask the questions the experts might think are too silly to ask. It’s often well worth it to take a fresh look at things, not being either jaded or clouded, or necessarily ‘informed’ by your past experience.”
Landale is stepping into a market that is not without its challenges. The current pandemic situation has taken a toll on even the most resilient businesses. Brexit implications aside, owners have had to keep employees and customers safe, put buffers in place to deal with a prolonged recession, and manage a remote workforce.
“It’s hard to predict where things go,” says Oli, “but the one thing we know for sure is that every owner is dealing with unique circumstances and has unique needs, so it does not make sense to take a ‘cookie cutter’ approach. For some, wealth diversification may have come to the fore. Others may no longer wish to be in the hot seat, but yet want to preserve the sense of purpose that drives them. The time spent understanding what matters, and exploring if we are right for them in the first place, is time well spent.”
“All we want is to learn, bring in a fresh perspective, and make a real difference over time”
“We simply want to work with honest and caring owners,” says Vitten. “It’s encouraging when an owner feels like it’s worth preserving an element of what they have created a bit longer. It’s what we hope to bring to a deal.”
Landale’s search for the right match continues: “We are lucky and thankful to have the support of some all-stars in the search fund space. All we want is the opportunity to learn, lead courageously, and make a real difference. We are looking for a perceptive business owner out there who will resonate with this approach.”