Expanding a Business through M&A Without Sacrificing Culture 

Kison: [00:00:00] I am Kisan Patel, and you are listening to m and a Science where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies and what actually happened during m and a deals.

Kison: Hello, m and a Scientist. Welcome to the m and a Science podcast. [00:00:30] This podcast is part of a mission to rethink how m and a is done. The old school settle led approach, it's dead buyer led m and a is all about strategy, alignment, and efficiency. And let's be real. It's not about just closing the deal, it's about making it successful.

Kison: We uncover what truly works in m and a by learning directly from the best. Episodes, resources and tools to elevate your m and a game, visit ma science.com. Follow us on LinkedIn. I'm your host, Kisan Patel, founder and CEO of Deal, room, and Chief Scientist at m [00:01:00] and a Science. Joining me today is Claire Roberts, OBE, founder and CEO of Kids Planet, a rapidly growing childcare company with 225 nurseries across the uk.

Kison: I started the business in 2008 and has since scaled it through strategic m and a and Greenfield development. He's also a brand ambassador for Girls Out Loud, advocating for the empowerment of young women. Today we're gonna talk about balancing organic growth with m and a, [00:01:30] managing relationships with sellers, and building a scalable business while preserving core values.

Kison: Claire, thank you for taking the time from running a big business and doing deals to have a conversation with me.

Clare Roberts: Not at all. Thanks very much for having me.

Kison: Can we kick off with a little bit about your background?

Clare Roberts: I originally am an IT graduate, but I did my degree prior to the internet really launching properly, so my degree was becoming outdated as I was studying it with technology.

Clare Roberts: Moving [00:02:00] forward, I ended up in various sales careers, first of all in recruitment for a number of years. And then I was in the pharmaceutical industry for about seven years prior to becoming pregnant with my oldest daughter, who's now 17. I took voluntary redundancy, as you do when she was five weeks old as a baby, and decided that I was gonna try something really new and different and I needed to find a nursery and hadn't been able to when I was pregnant.

Clare Roberts: And I [00:02:30] decided that I was gonna basically buy a nursery. And operate my own nursery to fulfill my own childcare needs, but hopefully to help other people who are having the same struggles as me on the journey of trying to find childcare and balance work as well. Well,

Kison: it's a good place to stop because I wanna like get the full story.

Kison: I gotta ask, what's the OBE by your name? Stand for?

Clare Roberts: It stands for Order of the British Empire, and I was awarded it for Services to Education in [00:03:00] 2022. So I was awarded it by the Queen in her last honors list, and then I was actually given it by the king at Windsor Castle and I took my three daughters to come and, um, watch me receive that.

Kison: That's awesome. I gotta ask, you know, because we're Americans. Yeah, yeah.

Clare Roberts: It's part of the award system that's in place in the uk and it's one of those things that you never really think about until someone tells you that you've been nominated and you're being awarded one, and then you're like, oh, that's quite special.

Clare Roberts: I was thrilled. It was a real [00:03:30] privilege and an amazing experience.

Kison: Awesome. That's really impressive. Let's do some storytelling.

Clare Roberts: Okay.

Kison: I wanna build a story on this thing that's really unique and interesting. Mm-hmm. You were pregnant, you couldn't struggle finding the right nursery.

Clare Roberts: Yeah.

Kison: Somehow you said, Hey, why don't I just buy the nursery?

Kison: And,

Clare Roberts: yeah. So I, I live in a village which is in between Manchester and Liverpool, sort of right in the middle. I was pregnant and like many people was thinking, how am I gonna carry on doing the job, [00:04:00] which I've loved for many years. And make sure that my child's being well looked after and that it works for me and her dad.

Clare Roberts: I looked all around and part of the problem that I came to was that where I lived, nothing was particularly flexible, and it was all geared at dropping off at the earliest at 8:00 AM now, I was on the road every day before half seven. Already. I was starting to think this sounds like a nightmare. I came to the conclusion that lots [00:04:30] of people, and I saw this through friends who'd had children, people really struggled to try and find that way to go back to do a job, but also to make sure that their most treasured possession, which is their child, is well looked after in the right environment that's of a high quality standard.

Clare Roberts: I got to the point where how Izzy, she was five weeks old and my company went through a restructure. And I basically on a Friday, spent the weekend talking to my husband at the time saying, [00:05:00] I'm gonna take voluntary redundancy. And absolutely that was not something that had ever been on my agenda at all.

Clare Roberts: But I think I just realized that I was basing an impossible task of not having childcare that was gonna work for me and I was gonna go back to work and really struggle. But the problem was, like many people, we'd bought a house relying on two people's incomes. So it wasn't as simple as sit at home and look after the baby and don't do anything.

Clare Roberts: I had to go to work and I was a bit like, well actually, [00:05:30] do you know what? If I am struggling to find this, other people must be as well, so why don't I look and see whether I can find an nursery and buy that? And basically that's where it all started from. What was lucky, I don't really know whether it was deliberate.

Clare Roberts: It certainly wasn't deliberate in my mind at the time. I ended up with my dad buying two nurses in the very beginning. He may say now, if he's asked that he deliberately wanted us to buy two nurses, I dunno, I've [00:06:00] not actually asked him. I should do really. But that was a really important factor because really quickly, we were a group.

Clare Roberts: Sometimes with business, if it's particularly multi-site businesses. You get so absorbed in the day-to-day of things in one setting,

Kison: right. That

Clare Roberts: you can't get out it, if that makes sense in terms of seeing it from the growth element. So I suppose I know no different than having been very quickly a multi-site business.

Clare Roberts: Well, two sites to start with.

Kison: You started with the two [00:06:30] sites, so it already gave you the thinking like, hey, we basically have a platform.

Clare Roberts: Yeah. And obviously that taught me from day one that integration was key. Having two separate nurseries doing totally separate policies and processes, et cetera, you have to have a common ground for that to make it work.

Clare Roberts: So I suppose I learned that just naturally as I started. And for me that's really been part of core basics and the values as we've [00:07:00] grown and progressed and move forward.

Kison: How'd you put the money together? Private at that point? Yeah,

Clare Roberts: so initially it was through private investments, so my dad and I founded the company together.

Clare Roberts: He had some money. He was prepared to invest that money into the business, and that's how we started. Could I have gone to a bank possibly. I think once they decided to do it, it was a quite a quick decision and we needed to go and move forward with it. When I look back, it was a bit of a whirlwind, really.

Clare Roberts: Literally [00:07:30] within six weeks of starting a health clinic came up for sale in the village that I lived in, and I was like, this is a no brainer. This is my answer to a nursery in the village, which is what started all of this in the first place. Within six weeks, we'd already decided we were going to the third setting, and obviously that was a building conversion, which then brought me into sort of the development side and the creation side of doing a greenfield site.

Kison: Was that the first, I [00:08:00] guess it was the timeframe.

Clare Roberts: So we started in September, 2008. By the end of October, 2008, we'd agreed to buy a clinic. In the village where I lived, that'd come up for sale.

Kison: Third one?

Clare Roberts: Yeah, third one. By September, 2009, we'd got a builder. We'd developed that building into a nursery and we'd actually got a fourth one.

Clare Roberts: So within 12 months we had four. Wow. So really, so at some point as well, I probably should add in, I had at [00:08:30] some point in life, a 5-year-old, a 2-year-old, and a baby. So in the first sort to five years of Kids Planet, I had three children. I always joke and say that growth was able to escalate once I'd stopped having children.

Clare Roberts: So we probably grew on average at either about two nurseries a year for the first five years. That was genuinely just being real. I think when you're an entrepreneur and you're a female and you're having children, there are natural distractions that halt [00:09:00] your ability to scale. And that was probably mine then I, I sort of kids planet being my fourth child managed to escalate further once I stopped having babies.

Kison: When did you get to the point when you started working with institutional or private equity investors?

Clare Roberts: We got to the point in 20, sort of 16, where we had 15 nurses. At that point, the blend was probably about 50 50 of nurseries that we'd [00:09:30] acquired, or buildings we'd converted. Or buildings we'd built from scratch and we had other properties that we owned that we were either gonna develop and build from scratch again, or convert.

Clare Roberts: We decided to bring an investor in really, 'cause by that point we'd got bank funding, but in order to escalate the growth faster, we needed to bring in a partner who would invest more cash into the business and stop that looking like a three to five year plan and actually rapidly scale it up. BGF. [00:10:00] Which stands for Business Growth Fund.

Clare Roberts: They're a minority investor internationally now, but they started in the uk. They invested a minority stake in the business when we had 16 nurseries and grew from there. Really?

Kison: Is that the only private equity that you worked with

Clare Roberts: BGF in August, 2016? They're still partially invested as in, they rolled in when we did our next round of raising finance.

Clare Roberts: It's from an international who are our main [00:10:30] investor now. They invested in November 21. At that point we had 82 nurseries, so we'd grown over that five year period significantly, obviously, as well. Remember that during that period of time, COVID happened as well, which threw a few bumps in the road for us.

Clare Roberts: We probably had a period. During Covid where there was about 18, just maybe just under 18 months where we didn't do any acquisitions [00:11:00] or grow. Oh

Kison: wow. Well even with that, you're still uh, doing good with overturn right? Today. Yeah.

Clare Roberts: But do you know in some ways when I sort of look back, obviously no one would wish a global pandemic on anyone's business.

Clare Roberts: It's not ideal, but actually that pause was fundamental for us. 'cause we'd got to a scale just before Covid of having 52 nurseries. It enabled us to sort of look at what we'd done and really reflect on the structure and the infrastructure [00:11:30] and put in place what would be definitely more stable foundations for escalating and making that growth more rapid.

Clare Roberts: And that definitely helped us. It wasn't obviously deliberate, but sometimes things that happen give you that time to sort of pause and reflect and become stronger.

Kison: Yeah, that's a good point. That's a good point. P firms working with them. Yeah. Do you got any key lessons in terms of working with the right partner?

Clare Roberts: It's really important that you do your [00:12:00] homework during any process. You have to see P as partner because I think that's key. It is a partnership. You are all invested in the same company, and if you don't see it like that, it's like any relationship. You've gotta work on it and make sure that you are all supporting each other in the right way.

Clare Roberts: BGF were a minority investor and they tended to back the entrepreneur and allow them to sort of run with what their sort of growth strategy or plan was. When [00:12:30] Reman came and invested, they were really looking at us scaling at the next level, and I would say that they were a lot more involved. In terms of helping us think and reflect on the structure and the strategy as we move forward, it's really important that you recognize the value of what a PE investor is going to bring to you, because obviously someone in your business, if they're gonna be involved, you need to make sure you are utilizing, getting the best outta their skills and expertise as well.[00:13:00]

Clare Roberts: For a CEO and a founder. You have to recognize the value that they're adding and see it as that partnership. 'cause if you don't, it's quite difficult if people come into your business and have opinions and ideas of direction and things.

Kison: You got a good point. So it's beyond the money. Everybody's got money.

Kison: And that's something I've been looking at too, is like how well can they support your growth?

Clare Roberts: Yeah.

Kison: Especially when m and a is gonna be instrumental.

Clare Roberts: Yeah.

Kison: How do you think that actually panned out? I feel like you get the pitch a lot, but then does when they actually [00:13:30] work with you.

Clare Roberts: For us, it did really work out.

Clare Roberts: We've gone from today eight to two nurseries to 225 at the moment, which obviously that's pretty rapid growth in over three years. For us, it was helping us look at things from a technology and data point of view really differently when you scale, knowing the detail in your business and sharing that data and being able to make sure you can unpick what's going on across multiple sites and [00:14:00] locations.

Clare Roberts: But actually using it in a really sensible way to inform decisions is key. And you can't know what you knew about 10 settings when you've got 225. It's been fundamental to us that investment in the platforms and the technology that we use across the business. And also in terms of the key personnel, like obviously when I founded the business, I was doing loads of different roles at various points.

Clare Roberts: [00:14:30] And I think it's really important as you scale that you bring in the right expertise to come in and support you because you are a CEO. You're not supposed to be a superhero. Being able to have all the knowledge for everything as you grow.

Kison: Really good point. Let's talk about deals. Yeah. I'm curious, when you find an opportunity, what are you looking for?

Kison: Like how do you know this is gonna be a good fit culturally? Or does this anything goes? What's the criteria that you know this is gonna fit your platform?

Clare Roberts: So for us, we've [00:15:00] grown in quite a controlled way geographically. So one of the things that's key is having the right support structure to that growth.

Clare Roberts: So I know when things were stretched for me in terms of the direct reports to me, and it's been really important as we've scaled up that platforms in place. So a lot of it has been around location and making sure that we've not just randomly picked. Places that are hours away from each other because people don't support [00:15:30] businesses in the right way when it's too far away to be able to have that direct contact.

Clare Roberts: We look for either single setting acquisitions or small group acquisitions. Where people have good quality asset for us, really with a nursery, ideally it would be a nursery that's over 50 places just because of terms of the scale. If it's much smaller, it doesn't really make sense, and it's making sure that we can support them [00:16:00] and add value in bringing them as part of the kids pilot family.

Clare Roberts: But also that they're already on the way with our journey, and they've got the same to a certain degree. They don't have to have the perfect culture or perfect value alignment, but the need to share the fundamentals of wanting to deliver high quality childcare, having good people, a decent management team, and then we support them and integrate them.

Clare Roberts: And I refer to our nurses as a family. And that might sound really cheesy, but for me, [00:16:30] that's how I see it. It's really important that people feel that they're part of something special and they get that magic and they get what our values are, and they don't feel that we've, they've joined a sort of cold corporate because ultimately we are providing a service to people's most treasured possession.

Clare Roberts: We shouldn't ever take that for granted. You need to have the right people. People are key. In our business, we employ nearly six and. So people are fundamentally the key to delivering our [00:17:00] brand and what our offering is.

Kison: Okay. Culture's a big element. Let me even back it up a little bit. Yeah. Of the whole process.

Kison: I feel like you, you look at the data, you have some general criteria on Yeah. Demographics and, yeah. Location and stuff.

Clare Roberts: So genuinely we don't really have to go out looking for these acquisitions. There's enough acquisitions that we can grow. Through people who are coming to market, through people who approach us directly.[00:17:30]

Clare Roberts: I think this is quite important in an m and a business. There's loads of things that CEOs can do to promote their brand and make them known in their sector that actually later on if they're looking to grow, can add real long-term value. We get about a third of our acquisitions as direct approaches to us.

Clare Roberts: People who are looking to sell that come to us and want us to be the buyer or acquirer,

Kison: just because you have a good reputation,

Clare Roberts: what you see is what you get. I think [00:18:00] it's really important that in any business you have someone who's the sort of figurehead in that business and that they talk and articulate what's important.

Clare Roberts: And for me, I'm really honest and I've done lots of talking in our sector, and that's important because. People don't go into childcare 'cause they don't care about it. People really care about what they're doing, so it's really important. Obviously money's a fact. Of course it is. But it's really important as well that they get the right person to take on their legacy.

Clare Roberts: And that's [00:18:30] really sort of key. You invest your love, your time, and your efforts over the years into your business. And you, yes, you want to do well at the end of it and do whatever you want to do next. But you also want that legacy to continue and to be left in a, with a safe pair of hands. And obviously my job and our team's job is to make sure that they recognize that we are that chosen person or people to look after their business.

Kison: Yeah. So it sounds like now you got a big [00:19:00] reputation. What about backing up to maybe in the earlier days when you didn't have that, what was the approach?

Clare Roberts: I did all our m and a visits. And Ev and everything. My dad would, my dad's an accountant. My dad would look at the numbers and make sure that they seemed to stack up.

Clare Roberts: I would do the, I would do the visit. I would talk to the owners. I would meet the team. I did that till we had 82 nurseries.

Kison: Teach me like what's the approach?

Clare Roberts: It's about being personal. It's [00:19:30] about talking about what?

Kison: What does that look like? Is it a phone call? Is it an email? No. No. It's why I used to

Clare Roberts: spend my evenings and weekends traveling throughout the country, visiting nurseries when they were closed.

Clare Roberts: And meeting owners. You can look at Osted reports, which are our regulator. You can look at numbers, but really the only way to go and tell if you want to do something is to go and look round them. And that's what I'd do. I'd meet the owners, I'd ask them questions.

Kison: You just show up unannounced.

Clare Roberts: You'd have made appointments and done that, and you'd [00:20:00] have made an arrangement.

Clare Roberts: What

Kison: does that look like though? What's the message to get them interested to wanna visit with you?

Clare Roberts: So these visits that I'd have been doing would've been people who'd already gone through a broker and wanted to sell their businesses. So they'd already decided, okay, that they were going to sell. So the message is exactly what I'm talking about.

Clare Roberts: It's about talking about our values, our culture, how our colleagues are the most important resource that we have, how we invest, what our support structure is, what the opportunity is for people in terms of [00:20:30] career progression, and they're all the things that I talk about and make sure that. They felt comfortable with.

Clare Roberts: It's really important as well as a founder that they hear that message and it doesn't become diluted. But I think there was a lot of homework that we'd do before we'd get to the point of doing a visit. I. We're almost by that point, unless there was something really fundamentally wrong, it joined the visit or someone told you something, it was something you were really interested in and wanted to do.

Clare Roberts: The other thing that we've always had a [00:21:00] reputation of as a company, which I think is really important, is if we say we're going to do something, we deliver on it. Unless there's some real sort of unexpected things that come out during due diligence. The offer we make, we stand by. And we're not in it to chip people or to undercut things at the last minute.

Clare Roberts: We're in it to give them a fair valuation for their business and to do it in the timeframe that we agree on. That's really important because people don't want [00:21:30] everyone knowing what they're doing as well and don't want failed processes and all kinds of things, which you see quite often in our sector and in many other sectors.

Kison: A lot of the businesses you mentioned, you'd find 'em through a business broker. Was that how it started? And then you, did you do a number of deals just sourcing them yourself?

Clare Roberts: A lot have been through business brokers. Some have been through tenders where different institutions have reached out to us directly and have asked us to go through a tender process, and then we've been awarded [00:22:00] either single site or a group.

Clare Roberts: Some have been. Property that's been for sale that have gone to view. And then we've worked with a developer who's developed on our behalf and then we've opened nurses from scratch. It's been a real blended approach of Greenfield development and acquisitions, probably more in the last three years.

Clare Roberts: People then that know people who we've acquired nurseries from have contacted us directly 'cause it's been on referral and [00:22:30] recommendation. I get quite a lot of people reaching out to me on LinkedIn who have heard about us, recognize our reputation and think we'd be an easier option to sell to their colleagues as they look to exit.

Kison: Well, you got a lot of different areas that you source these deals. What does the terms ultimately look like when you do have this private owner and you're selling is it's. You're off to the [00:23:00] races or are you creating different structures, earnouts, roller equity, things like that? Do you have a template that you use?

Clare Roberts: We don't really have earnouts or things like that. It tends to be two ways. Either someone looks to exit Totally and we would acquire the nursery and the freehold property. Or as is quite common, more so these days people might want to sell the business, but retain the property and give you the property.

Clare Roberts: As a leasehold, [00:23:30] we sort of open to what someone wants to do in terms of exit with that, but ideally, we always used to have, everything is freehold, but it's not always possible to do that. So we're quite flexible in the model and that's also what enables us to grow at pace because it's not just a one size fits all approach.

Kison: That stuff's sounding so easy right now. Like what's the hard part of doing these deals and working with the sellers?

Clare Roberts: The first part is once it's yours, and integrating and making sure that one, the

Kison: deal is easy. It's the [00:24:00] after no,

Clare Roberts: doing the deal isn't easy, but. It is if you come to an agreement and people, uh, doing what they say in order to make that process complete.

Clare Roberts: Once you've completed the hard part is the integration and 'cause lots of our nurseries have been single site acquisitions. It's the number of integrations and that process and making sure, making sure that it's personalized, making sure that people get it, making sure it's not just something I say that isn't then [00:24:30] delivered by my team beneath me.

Kison: Let's talk about buyer led, and this is something I've noticed big advocate around, is that first time you do a deal, it can be very seller led.

Clare Roberts: Yeah.

Kison: Let them drive the process, but then as you get your reps in Yeah. Process evolves and changes and it ultimately becomes buyer led. Love to hear from your view of doing this number of times that's true.

Kison: And how do you see it evolve?

Clare Roberts: Slightly true. Depends if you end up working with same lawyers and things like that, you start to know what [00:25:00] your points are that you want in a deal to complete. We have set things that we would have as part of our heads of terms. There's lots of nurses that have been for sale across our sector and probably what our expectations are, refer ones.

Clare Roberts: Sometimes for some sellers, they think they might have to hang around for much longer than they actually do post completion. You need them around for a few weeks in case there's anything that you need to ask them. But the reality is sometimes it's quite difficult [00:25:30] if a seller hangs around for too long.

Clare Roberts: It is quite awkward 'cause obviously you do need to make sure that you are integrating things properly and make sure that team that's joined you. I feel that the part of your culture and your company, and it changes from every deal to the next. It depends how experienced the seller is as well at deals and things like that.

Kison: You know, that's what I thought. The crux of being more buyer led is ultimately being able to. [00:26:00] Better planned integration and execute integration. Yeah. Versus when seller driven, you don't do as much planning or have an opportunity to just fast track timeline to close a deal.

Clare Roberts: See, the reality is pro, the fastest acquisition we've ever done is probably in about eight weeks.

Clare Roberts: The reality is it normally takes three months. Our due diligence process for even single site acquisitions. It's quite thorough. But the thing that we do that's really important 'cause particularly for a single [00:26:30] site seller, is it's quite a daunting process to go through a sales process, probably with an organization that's the size of ours.

Clare Roberts: So we support them and we try and cut through some of the legal chat to make it as simplified a process as possible. Not everyone's as prepared as they decide to sell. About what they might need in order to complete that sale. So we help them and tell them how we want things to look and be presented.

Clare Roberts: And actually that helps us [00:27:00] in terms of, once it becomes our acquisition, we've got a platform to start from of some of the stuff that otherwise, historically we might have been creating post completion.

Kison: Wow. So you're giving 'em an idea of. How they can prep the need to integrate better basically.

Clare Roberts: Yeah. And probably a lot of those things are there.

Clare Roberts: They might just not have the hands on them as easily or as quickly as possible, which for us, that's quite important as we scale.

Kison: Do you have like an example of something like that? [00:27:30] Like of what you would. Have a company do to

Clare Roberts: even like looking at recruitment files, making sure things are organized in the right way.

Clare Roberts: If someone started a business 30 years ago, recruitment would've been different 30 years ago. Whereas obviously for us, when we acquire it, whether they took someone on in 1985 and didn't need references, then that's not that helpful to us as we come in and acquire sort of 40 years later. So. The seller to do some of that [00:28:00] work.

Clare Roberts: That means we don't have to, so that we'd get them to make sure there were references on all the colleagues in every single folder, even if they have to go and get them from somewhere, or have to provide statements of employment themselves. The world's changed a lot. So you find that when you go through due diligence it could be really different.

Clare Roberts: We've got people who've worked in nurseries that we've acquired for 40 years and you joke and they bring out their cvs and they might be handwritten 'cause you didn't even have a typewriter as they applied the jobs and [00:28:30] things. That's some of the sort of more fundamental parts really.

Kison: Yeah, it's really interesting.

Clare Roberts: The other thing is obviously for single settings, we have a nursery software platform that we use, which is our registers, our future occupancy, our bookings. Everything's on it. Loads of people who have single settings wouldn't have a system like that. It might be done on wood by getting everything in an organized way prior to completion.

Clare Roberts: It means we've got the visibility really [00:29:00] quickly of how we want it to look.

Clare Roberts: I used to try to think, what's your problem after completion on a Friday? What's going to become your headache or problem with what's missing at the moment on the Monday?

Kison: You um, have like key operational areas or factors that you focus on when you're doing like a new integration.

Clare Roberts: Everything from recruitment, purchasing, policies, procedures, everything.

Clare Roberts: We have an integration process that [00:29:30] takes probably six months from start to finish. It evolves all the time because we listen to the feedback from the acquisitions that we do as well to make sure that we're always being fair, doing it in the best possible way and making sure it's personable as well.

Clare Roberts: It's really difficult 'cause some acquisitions integrate faster and others do as well. Like typically if we've got a group that we acquire. Often that integration can be [00:30:00] much quicker because they're already used to group reporting, that kind of thing. Whereas for someone who's not got some of the systems I'm talking about, that on its own is a bit of a shock on day one.

Clare Roberts: And it's also as well important that they know who everyone is. 'cause we have such a large head office, central support team that they've got to know what everyone's job is. And that's one of the big USPS actually during an acquisition. Lots of people go into being a nursery manager 'cause [00:30:30] they love children and that's why they went into early years.

Clare Roberts: They end up doing a load of things that they never imagined they'd want to do, like invoicing, payroll, all those kind of really important but probably less interesting things for a nursery manager. So one of the things that we try to do is to make sure that we can remove some of the burden of that side of things.

Clare Roberts: And I think that's a real USP during an acquisition for us because. We're actually able to give them some time back.

Kison: Yeah. Hey, you can make it easier [00:31:00] to operate your business. Yeah.

Clare Roberts: Do the bits that are really important. Look after the team, look after the children, and make sure those sort of pillars are right, rather than being distracted with things that often everyone's like that.

Clare Roberts: Oh, they always look so relieved when they find out that payroll and invoicing has been removed.

Kison: Yep. Me, culture and values earlier. Mm-hmm. Good acquirers put a big emphasis on this.

Clare Roberts: Yeah.

Kison: How do you preserve it or how [00:31:30] do you approach it with these newly acquired businesses?

Clare Roberts: I'm working really hard all the time to make sure that everyone lives and breathes the culture and values.

Clare Roberts: It's a bit like stories around the fire from the elders years ago. If you don't keep talking about them, they just become stories that no one really knows about or understands the importance of. At various stages, we often have a big reflection on values. We do a sense check of, do people really know what our values are?

Clare Roberts: Because if they don't, [00:32:00] you're doing something wrong. So we make sure that our values are embedded in everything that comes out to parents, to colleagues, and it's interwoven in all aspects of their role. We have an acronym for our values, which was designed deliberately by our senior leadership team to make it easy for people to remember them, and the word is care.

Clare Roberts: As long as they remember care, they have a pretty good chance of getting what our four values are, but they are real values. They [00:32:30] are the things that were important in 2008 that continue to be really important as we move forward. The more you talk about your values and your culture and how you want to look after your team and how you want people to feel as a leader, the more everyone else does that, and you make sure that is something that they know is really important to your organization.

Clare Roberts: Being

Kison: very proactive.

Clare Roberts: It is hard work if people don't know that it's frustrating, but rather than being frustrated, [00:33:00] you have to work out how that message has got diluted. When you grow in an organization, if you are not careful, it gets forgotten what's important, so you have to keep talking about it all the time.

Kison: Yeah, very true. How about you have organic growth happening? Managing that alongside a high volume of acquisitions. How do you do that?

Clare Roberts: Reviewing our core estate, looking at the occupancy across our nurses, it's, that's where the data [00:33:30] piece is key. You have to know what the performance of each of your, they're like mini businesses really wrapped up into one.

Clare Roberts: So you have to know individually how they're each performing and not just now what the future looks like to our system. Gives us visibility like 12 to two years ahead. So we need to look at that all the time and look at either how we can expand the facilities that we have in a certain site or how, [00:34:00] if necessary, we can then actually go and actively seek something else out to meet the needs in that local area.

Clare Roberts: But it's by having a structure in place where everyone knows that's what we're doing and how we all work together on it.

Kison: That makes sense. You gotta get the system to really track everything, and that's a big part of it. That's interesting. Is that sort of the general theme of how you've seen things evolve as you grow?

Kison: It sounds like there's a lot more investment in the people [00:34:30] kind of upskilling.

Clare Roberts: I go out and visit nurseries as regularly as I can. Probably not as much as I'd like to, but when I do go, I try and make sure that the next layer of management and the one below that there with me, and if I spot something, I'll talk to them about what I'm spotting.

Clare Roberts: So they almost learn, like even looking and thinking, how could you expand this? What could you do? Sometimes it's easier for you to see it when you are there, but it's funny, not everyone always, I suppose that's what being an entrepreneur's all about, isn't it? You often spot things that others might not [00:35:00] see the opportunity in, and it's how you get their mindset into it, and it's been interesting even going to areas.

Clare Roberts: When I've done visits and we've been full, and I've said to people, why don't you go and find another building? And actually the reality is nursery managers have gone and found buildings that were developed or acquired, which obviously that's key. 'cause they know their local area and often live there and know the people, the community, et cetera.

Clare Roberts: So that's important as well.[00:35:30]

Kison: How do you do that while maintaining operational quality and efficiency?

Clare Roberts: We review things quarterly. We look at what's coming through in terms of acquisition, what we've got. We always make sure that there's capacity within the areas that we're growing geographically as we're starting to move into new regions, that there's availability there of resource to support those acquisitions.

Clare Roberts: That's the most important thing. You have to always be ahead of the growth. [00:36:00] Rather than running to catch it up. And between sort of myself, my sister, who's my ops director, our CFO, our people director, et cetera, we sit and look at what we need to do to make sure that we're ahead of it at all times. And obviously, like I say, because acquisitions from signing heads of terms typically take three months.

Clare Roberts: You always have time to do that, but we also have. Key geographical areas that we [00:36:30] know we're growing in or going to expand in. So if we've got capacity there, it naturally makes it really easy to absorb more growth. But no, it's by measuring the quality, visiting it, auditing it, making sure that you are checking that the things that are important are being done and having team that are field-based.

Clare Roberts: We have a big field-based team across all our departments. And that's so that they can support locally, the nurses and what they need.

Kison: [00:37:00] All right, Claire, we're making all this sound way too easy. We shift it and just let's talk about the bad. Let's talk about what goes wrong.

Clare Roberts: You do your due diligence. I.

Clare Roberts: The staffing elements may not be right, and on day one, you inherit a massive hassle of someone who uses agency staff, and it might be nearly 50% of the team in a small group that you've acquired. Now, some of those things you'd know about, but you wouldn't really know how challenging that. So we don't use agency staff at all [00:37:30] across our business, but we've done acquisitions where that really has happened, and it was with a group of about five.

Clare Roberts: A recruitment challenge there that you've got to basically get your arms around very quickly and sort out, because once you've acquired something, it's your problem. It's not someone else's problem anymore. That's the kind of thing that can happen Sometimes. You could complete an acquisition on a Friday, and on a Monday you get inspected by your regulator.

Clare Roberts: Now that [00:38:00] is not an ideal scenario 'cause you've done your due diligence. Of course you have, but it's only become your nursery hours before. It is a bit like what you get there. It's like rolling a dice, scaling and growing a business. It's like a rollercoaster. There's highs, there's lows, but I have a philosophy where you can be slightly wounded for a moment by something going wrong, but with every problem you have to find a solution.

Clare Roberts: The sooner you find the solution or what the learning is. The sooner [00:38:30] you can put it to one side and all stop wallowing in the misery of what's happened. For me, that's in our DNA and our culture. That's really key because you have to learn and you have to move on. And I am a believer in yes, everything that goes wrong is a lesson.

Clare Roberts: You shouldn't just keep rehashing it out between yourselves and trying to go over and over it again. 'cause once you've found out what's happened and how it's gone wrong and how you're gonna fix it, so you're hopefully not gonna have that problem again. Move [00:39:00] on and put it in a box as part of our.

Clare Roberts: Company. As we've grown, it's been important to make sure that other people have those problem solving skills. And often, rather than giving the answers, it's saying to people, what do you think you should do? And even though you wanna say, this is what I think you should do, letting them come up with those conclusions themselves.

Kison: You're had a walk away from a deal.

Clare Roberts: We, they were, we once had a deal where someone wouldn't sign as part [00:39:30] of the SPA to say that they'd adhered to the Children's Act. I was like, I just cannot understand, like the Children's Act is like legislation that everyone should have done, and I'm not, I don't know whether they were just scared legally by their lawyers of everything that was put in front of them, but we were just like, if you are not prepared to.

Clare Roberts: To sign that this is the deal breaker and we're done. And even though it was an amazing opportunity, we walked away

Kison: at SPA. You signed, you walked away?

Clare Roberts: Yeah. Yeah. We'd gone through a [00:40:00] load of due diligence. We spent a load of time, we'd had architects drawing up plans for this. Stuff like that to me is a red flag.

Clare Roberts: That's the real red flag. We normally, if we get on the road to that point, we're all in alignment. We've picked up other deals where other people have got at very advanced stages, and then they've tried to be price chipped by someone else.

Kison: Oh, I see. You don't like that.

Clare Roberts: And often we might have been like the second bidder in a process.

Clare Roberts: But the bid that we'll have [00:40:30] made is a fair bid. So they then come to us and say, will you fulfill on that basis? Sometimes some people go in high thinking, they're always gonna chip people in order to win things, but I don't think that's the right tactics to use in business. You should be fair. Otherwise you all end up falling out along the process.

Kison: Yeah, that's true. Build your model and stick.

Clare Roberts: Yeah. Also be honorable and do the right thing. And if it's as it says, that's the price. We're happy to pay and do the deal. And unless there's something outside your control, like [00:41:00] obviously Covid was really difficult because we had deals that were in a pipeline.

Clare Roberts: Overnight as the, as nurseries were closed to most of the public, it was like, we're gonna have to put that to one side and port it. So, but that was naturally the deal. Sort of m and a platform happened in every sector a bit like that during Covid.

Kison: That's true. That's interesting. You're right. There's these places where you may wanna walk away from the deal.

Kison: Currently you're growing and you mentioned [00:41:30] expanding internationally. Can we talk about that? I wanna teach me the playbook because I feel like that becomes the big stretch for any organization is to grow into other countries.

Clare Roberts: We haven't grown internationally yet, though all joking aside, England and Wales operate different childcare models and we have seven nurseries in Wales that we are part of our group, and part of the reason for doing that was.

Clare Roberts: There's a different structure in Wales of how nurseries are governed, how they're regulated, [00:42:00] how they're set up, and I thought that was quite important that before you start getting on planes and flying off to other parts of the world, it was important to actually see what it was like to do that in a different sort of environment.

Clare Roberts: And we've done that. Mainly, a lot of it's been research, looking at other countries, looking at their models, looking at who the big players are, looking at, is it government backed, is it funded? What are their challenges, what are the [00:42:30] advantages? And we've not really sort of moved hugely forward yet. We're looking at some opportunities through deals that are coming up, but for us, this is something that we've done now for 17 years.

Clare Roberts: And it's worked and it's been tried and tested. And actually the next phase is for us to grow internationally because there's still a lot of consolidation in the UK to be done. But you could be doing that on an international platform, which is what we want to do.

Kison: Yeah, like how, how do you think through [00:43:00] that?

Kison: It's almost like you have to research this whole new market. You have to think about what's your approach gonna be? Are you gonna put a local team there to support these equity? Yeah.

Clare Roberts: So it's probably not hugely different to how we started. It's different in the fact that obviously unless I was going to relocate or someone was gonna move there permanently, you'd need some form of team.

Clare Roberts: And that's important. But I think for us. Our start of international expansion will be through a platform and an acquisition of some kind of size [00:43:30] that will have some team that then will be supported by our UK head office to start with. And then obviously you see how that gets in terms of scale and whether or not you need to then replicate that in the country that you go into.

Kison: That's a good way to do it.

Clare Roberts: Yeah, there's huge opportunity. There's other international players. In early years that are out there and have done it already. It's sort of looking at what worked for them or maybe what didn't work for them and [00:44:00] trying not to replicate mistakes that they've made or trying to follow.

Kison: Positives a lot of that. Do you network with other roll-up platforms? And

Clare Roberts: I did quite a lot of networking with other groups, particularly in the uk. Some of those would have international presence as well, particularly because of the sector that we're in, because a lot of it is driven by. Regulation in the uk it's driven by the government and the department for education.

Clare Roberts: We do have to work together because actually you need a strategy to make sure that as [00:44:30] governments come and go, that there's a sense of overall what people are looking to achieve. And also having a voice 'cause it's so fragmented, our sector. Having a voice so that the sector is heard as a whole. So for individuals who have one nursery, it's much harder for them to have that voice.

Clare Roberts: But the reality is we'd all have the same challenges, struggles them just more in a more isolated way, being a single setting.

Kison: Hmm, that's interesting 'cause you've taken [00:45:00] it to a point when you've really built your brand around being the reputation for how you operate your nurseries.

Clare Roberts: Yes, that's true, but it's not just about doing it really selfishly, it's about as well, trying to do good.

Clare Roberts: This is a sector where we're looking after children, so actually it's really important that we're all doing things in the right way, and actually governments as they change, understand challenges in the sector. They understand workforce. Issues. They understand how [00:45:30] sometimes political decisions can make it harder in your sector in terms of workforce, et cetera.

Clare Roberts: To be fair to government, lots of people who go into government aren't people who've worked in businesses. So it's important that you have that quick education piece. That means that there's a strategy and a longer term plan, otherwise you are done to, rather than helping work together on things.

Kison: That sounds like the right way to do it.

Kison: I wanted some advice [00:46:00] if I was gonna roll up. I don't want to compete with you. That's gonna be too tough. I think it'd be fun to roll up the dog and cat nurseries. Yeah,

Clare Roberts: doggy daycare.

Kison: Let's do that. Let's do Roll up the dog. Okay. What's advice, you know, just to guide me, I kind of picked your brain already and I've gotten a lot of things I need to focus on.

Kison: Anything that we missed or of like, Hey. Make sure you pay attention to these things as you go. Pursue this goal.

Clare Roberts: The most important thing in a multi-site business is having the right [00:46:30] manager on site. You have to have someone who is your ambassador in each location that makes sure that all the things I'm talking about are done properly.

Clare Roberts: If you've not got that right person, chaos can take place without you knowing it. I think that's key. It's making sure that they. Understand what you are looking to achieve and make sure that they're implementing it properly, whether it's a doggy daycare business or a cat business, or [00:47:00] whatever. The same principles stand as with any business.

Clare Roberts: It's checking, supporting, auditing, and having that structure in place that supports from a higher level. And that for me is what I learned as our business grew. That was really important, and that's what, as we've scaled up, what has been the key reason for our success? I believe in terms of being able to scale

Kison: people and process, because that's a good point.

Kison: You really gotta put a big emphasis on it. That's [00:47:30] all it comes down to. It's just being super proactive on all these.

Clare Roberts: Yeah, and not assuming that people just do things. There is an element of having to check as. People often tend to do the things that you talk about the most and if you stop talking will help them, you start to think, oh, that's not important anymore 'cause we're not talking about it.

Kison: Yeah.

Clare Roberts: And I sort of learned that even in jobs prior to Kids Planet, I had managers who I knew what they were gonna ask me and I knew what they wanted the [00:48:00] answers to, to make sure you have the answers and you know what you should be doing. That's really important. Doing a lot of these things. Make your life easier because you have happy colleagues, you have happy children and parents, so actually you have less problems or complaints or hassles.

Clare Roberts: But I think also as well, it's listening. If things don't go right, what's really important is listening and trying to unpick what might have gone wrong and understanding that and actually evaluating [00:48:30] on that and using it to make things better. That

Kison: makes a lot of sense. Just taking, being proactive on just leadership in general.

Clare Roberts: Yeah, a hundred percent. And I hate it when I hear people say, oh no, we can't do it that way. You can do anything anyway. You just have to reflect all the time. You can always make things better. And nothing's ever so rigid that it can't be changed as long as it's changed for the right reasons. And that's what, even in a business like ours that's gone for a long time, can't just stay the same all the [00:49:00] time because.

Clare Roberts: Change happens through everything that we experience all the time, and we have to adapt

Kison: big part of it. That sounds like it's been a big part of your journey. Yeah.

Clare Roberts: Yeah.

Kison: The platform. Yeah. What's the craziest thing you've seen in m and a?

Clare Roberts: Some people use businesses as lifestyle businesses. I've seen some crazy things put through people's accounts that you think, wow, gosh, from school fees to all kinds of things.

Clare Roberts: But that's sometimes where you think, gosh, how are people operating? [00:49:30] Like this where they have lifestyle businesses. That's the kind of deal sometimes truthfully that is difficult for us to ever entertain being part of because you look and think this is a bit messy and it's too complicated for us 'cause we don't operate like that, never have done.

Clare Roberts: So, yeah, they're the kind of things that probably are more messy. Sometimes we've had owners who might want to stay and we, that for us doesn't work because I think it's really difficult to have [00:50:00] an owner still being there because often people don't like the change that you might bring in.

Kison: Interesting.

Clare Roberts: Different people have different approaches in their business model. For us, we've always chosen that the seller exits, and that's just the way that we've always gone.

Kison: That's interesting 'cause you're changing their model so much that it's easier for you to do it without them.

Clare Roberts: It's not even just changing the model so much.

Clare Roberts: People get upset even if you bring in new resources and you get rid of [00:50:30] resources and things like that. And toys, I suppose it's a bit like if you sell your house. You don't still live in the house while the new person comes in and redecorate. 'cause you might think, why are you replacing my walls and my carpets?

Clare Roberts: I love them. I did that and it was, I was really proud of it. I suppose it's just sometimes people can get upset with little things.

Kison: Yeah. It's a real different way of looking at it.

Clare Roberts: Yeah. Yeah.

Kison: Claire, this has been a great conversation. I enjoyed it. I learned a lot. You've helped me become a [00:51:00] better m and a scientist.

Clare Roberts: Thanks. It's been great. I've really enjoyed our conversation. I.

Kison: Fellow m and a scientist, thank you for sticking through, especially this far. Love to hear from you. Reach out to me on LinkedIn. Always welcome feedback, criticism, how I'm gonna get better, and any other topic ideas. We wanna keep getting better at this till next time.

Kison: Here's to the deal.[00:51:30]

Kison: Thank you for taking the time to explore the world of m and a with our podcast. We love hearing feedback. Tag us on a LinkedIn post, add a review on Apple Podcast. We'd love to hear from you. If you need help standing up an m and a function or optimizing one that you already have. We're here to help, and if we can't help you, we probably know someone that can.

Kison: You can reach out to me by email Kisan, K-I-S-O-N, at ma science.com, [00:52:00] or you can text me directly at 3 1 2 8 5 7 3 7 1 1. If you just want to keep learning at your own pace, visit ma science.com for a lot more content and resources. That's where you can also subscribe to our newsletter. Again, that's ma science.com.

Kison: Here's to the deal.[00:52:30]

Kison: Views and opinions expressed on m and a science reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.

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